Overcoming the Returns Challenge
- 2 October 2020
- Written by: jpaultamby
- Category: Finance & accounting
The eCommerce industry has been on the rise over the last ten years, with online orders growing from 670 million in 2012 to 1.5 billion in 2019*. This year, sales have hit a 10-year high, up 24% following customers relying on online shops during the Covid19 pandemic. However, as the ecommerce industry continues to thrive, one of retails biggest problems grows too: Returns.
Returns present an operational headache for retailers that can hugely affect their bottom line. However, getting them right isn’t just important for retailers, but for customers too. Returns are a big part of the ecommerce industry, with 42% of shoppers having returned something in the last 6 months and many customers now in the practice of over ordering to see which item they prefer. It’s essential for retailers to offer their customers a good returns experience. It gives customers the confidence to buy products they haven’t seen and makes them more likely to buy from you again. With the fierce competition in online selling, it’s never been more important to offer the right customer experience to stop consumers turning to a competitor.
The Operational Burden of Returns
As the rate of returns grow, the reality for retailers is operational issues and a huge impact on the bottom line. In the UK, retailers lose out on £60bn a year from returns*, Sellers must find a way to balance the cost and operational impact of returns with the customer experience.
The operational challenge for retails is often to do with lack of visibility or control over the process. Retailers often don’t know what products are being returned, the condition it will be in, or the cost of delivery until its already happened. This leaves retailers playing catch-up and results in delays in getting resalable goods back into stock and potential lost sales. It’s impossible for retailers to plan ahead and manage the reverse supply chain effectively with this returns model. When it comes to international returns, there is an added challenge of duties and taxes. As they are paid when the item first crosses the border, they don’t need to be paid for a return. However, this requires the right documentation to avoid charges or fines. All of this can lead to returns being a burdensome, expensive part of an ecommerce business.
What Do Customers Want from Returns?
Returns cost retailers due to operational challenges, but they can also cost retailers in lost sales. Customers want confidence that if they want to return an item, they can do so quickly and easily. In fact, returns have now become a key deciding factor when a consumer is choosing where to shop, with 78% of customers saying they check a returns policy before even deciding whether to make a purchase.
To ensure retailers don’t miss out on sales, a returns policy should be easy to access and simple to understand. Customers want to know how long they have to make a return, the range of options available, how much it will cost, how quickly they will get a refund and whether it will be tracked. Above all, returns need to be convenient and fast. As well as giving them the confidence to buy, customers who have a positive returns experience are more likely to convert into a loyal customer.
How Cultural Differences Play a Part in Returns
When selling globally, returns are even more critical. Buying from an international seller, customers often feel like the risk even greater due to longer wait times and duties and taxes that need to be paid. A good returns policy for international customers will give them the confidence they need. However, to do this, it’s important for retailers to understand the expectations across different countries to ensure they can tailor the policy. For example, preferences over how to make a return vary – more than half of consumers in France prefer a drop off location, and parcel lockers are the most popular choice in China. Germany has a real ‘returns culture’ and up to 70% of fashion purchases are returned and a returns policy is more important in Spain and China, where customers are more likely to abandon the cart it it’s unsatisfactory. The nuances across the countries means that international sellers must they know their markets, and tailor their policy accordingly.
Returns: Not Just An Afterthought
Choice, flexibility, convenience, speed and visibility – this is what shoppers expect from a returns service. Offering all this is important to build customer loyalty, with 92% of shoppers who have received a good returns experience making repeat purchases. How can retailers offer all this whilst also ensuring their operations run smoothly?
GFS Global Returns Pro is a new returns platform that is here to help. For an affordable monthly fee, it enables retailers to offer fast returns for customers, with tracking and multiple options for how to make a return. Businesses can access technology to help with cross border customs documentation, have full visibility over the returns process, and reduce the cost of returns by up to 50%. By partnering with a delivery and returns expert like GFS, the struggle of operational management can be alleviated whilst also delivering a great customer experience, building customer loyalty and growing sales.