7 Tips for Successful Product Returns Management
First, the bad news: about 30% of all products ordered online are returned. To eliminate returns, some e-commerce retailers consider making the return process difficult for consumers. “Why make returning products easy?” they might think. “I don’t want to deal with returns!” Well, that’s where the good news comes in: 92% of consumers surveyed said that they will buy again if the product return process is easy. So, to keep customers coming back, it’s important to allow returns—and that requires a strong online returns management system.
What Is Returns Management?
Returns management, sometimes referred to as reverse logistics, is the process by which an end-user returns an item for any number of reasons. They may return shoes that didn’t fit, a laptop that wasn’t working, or glassware that was broken.
Once the item has been returned, depending on the product and the situation, the seller must decide whether to recycle the item and save useful parts, repair or refurbish it, resell it, or destroy it. They must also decide what type of action to take with the customer, such as offering a refund or exchange, a store credit, or product repair.
7 Ways to Improve Your Returns Management Systems
Reverse fulfillment logistics can be a large expense for your online business. Thankfully, there are a number of things you can do to proactively reduce your amount of eCommerce returns and the costs associated with them:
1. Understand Controllable and Uncontrollable Returns
Product returns can cost you money or customers, so it’s important to do everything you can to mitigate them. This means understanding controllable and uncontrollable returns.
- Controllable returns are returns that could likely be reduced or eliminated through better forward logistics processes. This includes checking for things like improper product descriptions, poor packaging resulting in damage, slow delivery times, and general mismanagement, to name a few.
- Uncontrollable returns are those that a seller generally can’t do anything about. For example, when a buyer purchases a product, but then has a change of heart through no fault of the seller.
Once you understand both types of returns, you can put strategic policies in place to try to prevent them. For controllable returns, you might consider using more complete product descriptions with photos, different packing material, a different courier, or a different inventory management system. If you find that your descriptions and photos reflect your products accurately but you’re still getting a high volume of eCommerce returns, there may be an issue with the items themselves. If that seems to be the problem, assess the quality of items that are regularly being returned, do product testing, and check in with your manufacturer to address any production issues that may be affecting quality.
For uncontrollable returns, there isn’t as much that you can do, but you might consider something like reducing the window of time a customer has to return the item. Of course, this isn’t a foolproof ways to reduce returns; some studies show that longer time frames for product returns trigger what researchers call the endowment effect, which states that the longer a customer has a product, the more of an attachment they form with it—meaning they'll be less likely to return it. Ultimately, it’s up to you to test both options to determine what works best for your business.
2. Understand the Cost of Returns
Maintaining customer satisfaction with a good return policy is important, and customers love when a business offers free returns. But, it’s important to understand how much returns are impacting your bottom line, in terms of covering the cost of reverse shipping and tracking, as well as how many work hours are spent managing returns—from taking calls to restocking products.
These calculations can provide a lot of insight; for example, if the numbers show that customer returns cost almost as much as creating a new product or purchasing one wholesale, consider issuing a refund and letting customers keep the original to cut your losses then and there. Studies show that 79% of customers won’t purchase from an online store that charges return shipping fees, so it may be best not to do so if the numbers make sense. Plus, offering free eCommerce returns may cause a big enough increase in overall sales that it ends up paying for itself over time.
3. Have a Clear Return Policy
A clear and transparent return policy is a key component of delivering a great customer experience. Much like your shipping policy, it’s crucial to make your returns policy easily accessible to your customers. You should post it on your website, any partner sites you sell on, and enclose a hardcopy with the product when shipping. This puts you and the customer on the same page and helps avoid frustrations down the road by managing customer return expectations regarding refunds, exchanges, return deadlines, etc.
4. Analyze Your Returns
Whenever an item is returned, you have an opportunity to learn something about your products and your customers. Ask "What items were returned, and why?" Be sure to have a feedback forum where customers can tell you what you did right, so you can keep on doing it, and what you did wrong, so you can make improvements.
You should consider aggregating customer feedback as well, breaking it down into several variables, such as type of product returned, product manufacturer, product attributes, etc. By analyzing these variables, you will often find common factors between these products—which will help to pinpoint the cause of the problem.
Learning from your returns also means developing buyer personas, and identifying “serial returners,” those purchasers who habitually purchase products and return them. How does this benefit you? Say you’re planning to hold a huge sale. You might choose not to send the promotional email to serial returners since they may be likely to purchase a high volume of items due to the low price, and then return the majority of them, ultimately costing you more money.
On the other hand, you may set trigger emails to email them after a purchase, highlighting glowing reviews from satisfied customers about the product they just bought to give them confidence in their purchase and reduce the likelihood of a return.
5. Process eCommerce Returns Quickly
Studies show that 88% of customers would limit or stop shopping with a merchant that took too long to credit their refund, and 77% said they’d be less likely to recommend a retailer to their social circles if it takes too long to issue a credit. These numbers have only continued to increase as returns processes and banking processes continue to get faster in order to align with more demanding consumer preferences.
6. Provide Visibility Into eCommerce Returns Through Tracking
After a customer has placed an order, most eCommerce businesses offer transparency into the shipping process (when the product is packaged, when it's in transit, when it's expected to be delivered, and so on). The same transparency should be applied to the returns management process. Customers will want to know the status of their return and refund or exchange. So, it’s important to work with provide visibility into this process by providing tracking information for their return shipment. You can also set up automatic text alerts to notify them once their return has been received and refunded.
7. Use a Fulfillment Center for Returns Management
As your business grows, you may find that you don’t have the time to manage product returns, even with good product returns management fulfillment software (plus, if this is true, managing forward logistics has probably become a burden too). In this case, you may be best served by using a fulfillment center that will store, ship, and custom pack your products for you, and then deal with fulfillment marketing and returns management as well.
The benefits of partnering with a fulfillment center are twofold:
- A reputable fulfillment center understands the proper way to pack a product, uses the best courier services, and is able to expedite shipping, all reducing controllable costs.
- they can also handle after-sales support following a return, recouping money or credit from couriers if an issue was their fault, shipping a replacement item to the customer, and answering customer questions.
It’s a win-win for all e-commerce business owners!
Returns Management with The Fulfillment Lab
If you’re ready to up your e-commerce game by bringing aboard a fulfillment center, you can count on The Fulfillment Lab. Our packing professionals in our fulfillment centers take the utmost care when packing your goods to mitigate returns due to damage.
Of course, accidents do happen, whether it’s a fall from a courier’s conveyor belt or a driver improperly handling the package. But don’t worry, we’ll also take care of the return and replacement process, and deal with the shipping provider.
Want to learn more about The Fulfillment Lab? Contact one of our packaging and product returns management pros today!