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06/28/2021

How to Reduce the Cost of E-Commerce Returns?

In February of this year, Doddle undertook its latest survey of more than 1,200 U.S. consumers, conducted by YouGov, to understand how important the e-commerce returns experience is to shoppers. It found that retailers’ e-commerce returns practices are not keeping pace with the increase in online shopping.  

Seventy-five percent of respondents felt retailers should be doing more to improve their returns experiences. The survey also revealed that a positive returns experience would encourage respondents to shop with the same online retailer again (86%0. In addition, the research demonstrated that returns were as important as payment and delivery in the e-commerce shopping process (85%, 86% and 86% of respondents, respectively).

Given the importance of the ecommerce returns process and experience for consumers, retailers need to ensure they are not only providing top-notch service, but they also need to do this while being as cost-effective as possible.

If 20% of your e-commerce orders get returned, a small savings on each return can add up fast. Targeting this area for cost reductions can yield both short-term margin improvements and longer-term value through a simpler, more streamlined customer experience.

What should retailers do to achieve this? Following are four recommendations:

1. Restock and Resell More Rapidly
When the product is with your customer, what subsequently happens to it might seem out of your control. However, this is where communication can make a significant impact. It’s possible to prompt your customers to return unwanted items faster, so you can get them processed, back into stock and resold with the minimum amount of impact on their retail value.

How can this be realized? A digital returns portal provides a means to follow up on the goods after they’ve arrived with the customers with appropriate messaging, e.g., “we hope you’re loving your new product, but if you need to make a return, it couldn’t be easier….” Or, once a return has been booked, you can send gentle reminders to drop off the package. If it’s cost-effective, you can even motivate quick returns with discounts or a free delivery code for a future purchase.

2. Treat Different Types of Returns in Different Ways
Not all returns are equal. Different kinds of returns should be treated differently. Easier said than done, of course, but it’s pretty obvious that you ideally want some kinds of products back faster than others, and you often want different products in different conditions to end up in different places.

Yet almost everyone we talk to in retail has a one-size-fits-all approach to returns processing. Everything comes back the same way to the same place to be sorted out – whether it’s a pair of paints with a rip in the seam or a $300 pair of sneakers. That leaves money on the table, and a smarter reverse logistics process can stop that from happening.

You can accomplish this with rules-based intelligence. This is the smart technology that controls reverse shipping. Solutions that offer this can capture the reason for a return and automatically trigger the application of the right method and destination. A customer is just not happy with a purchase? Expedited shipping can get the item back in stock quickly. The item bought was broken or defective? Save costs and use a slower shipping method to a different warehouse. Ex-stock products can even be sent directly to charities or routed into recycling.

3. Access Real Returns Data
The classic paper-slip-in-the-bag return label doesn’t tell you anything until it’s in your warehouse or processing center. More often than not, you have no idea what’s being returned until it arrives. It’s hard to plan and work effectively when you’re working blind. Taking the data from those completed paper return labels and getting it into your inventory management and warehousing systems can be arduous, clunky and time consuming – especially when you have a sudden and unexpected influx of returns. All of this adds up to inefficient (and costly!) resource planning. 

Digitizing the process helps to plan reverse logistics more effectively. Imagine knowing exactly what is due to arrive every day, why it’s coming and what actions need taking. At the point of booking a return, a digital returns solution can connect customer and warehouse, giving visibility of the incoming workload, the ability to plan resourcing, and saving time by avoiding manual data entry.

4. Proactively Communicate With Customers
This has been touched on above, but it can also impact the returns experience from the customer service perspective. Are your customer service colleagues using their time to offer genuine sales support, or are they inundated with customers chasing refunds or following up on items that they’ve returned? This is double trouble for retailers using paper returns, as it’s costing valuable customer service time that could be better applied to growing business, while at the same time it’s frustrating for customers who just want answers.

Pushing alerts digitally to the customer at every stage of their return – through shipping and arrival at the destination to the issue of a refund – is a great way to improve the overall customer experience and create loyal customers, while saving valuable time in customer support. 

It's clear that data plays a big part at every stage of the returns process. Timely and accurate data is absolutely critical in reducing the cost of your reverse logistics. But it can also offer some crucial business insights that can drive down your return rate overall. Data, coupled with effective proactive communication, creates a win-win all the way around when it comes to e-commerce returns.

Dan Nevin, chief revenue officer, global retail, Doddle, which provides, designs, develops and integrates consumer fulfilment and returns technology.

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