For retailers, the morning-after New Year’s hangover has nothing to do with alcohol and almost everything to do with returns. In fact, UPS dubbed Jan. 2, 2020 “National Returns Day,” projecting holiday returns to peak with 1.9 million returns taking place — a 26% increase from last year’s top returns day.
Simply put, more online shopping leads to more returns. E-Commerce sales grew 18.8% this holiday season, according to Mastercard. The sheer volume of returns during the holiday season and beyond indicates that retailers will be spending big money and allocating significant resources for handling them. CBRE and Optoro forecast that online returns would reach $41.6 billion by applying the standard percentage range for online returns — 15% to 30% — to projected 2020 holiday retail sales.
Even with this projected higher volume of returns, retailers still have time to offer a better customer experience — and hopefully keep the shopper coming back for the remainder of the year. Four last-minute best practices for merchants to optimize their returns include:
- Converting more holiday returns into product exchanges, to maximize item profitability and decrease returns costs;
- Take incremental steps when changing return policies, for example by shortening a year-long policy to 180 days;
- Display more accurate product information (sizing, quality, appearance) on the site before the purchase; and
- Seek out partnerships with returns management platforms, or even other retailers if possible, that are capable of improving the process at the point of purchase or the point of return.
1. Convert More Returns Into Exchanges
Helping shoppers find a new product that they can exchange for the old product can make returns less painful for both the retailer and the consumer. In fact, both Rothy’s and Draper James increased online product exchange rates after implementing the Happy Returns online return and exchange service. The service seeks to convert as many returns into exchanges as possible to maximize the profitability of a given item and decrease the cost of returns.
“This can be accomplished by deploying an online return and exchange flow that promotes exchanges based on the item being returned, the return reason and the availability of size and color variants,” said David Sobie, CEO and Co-Founder of Happy Returns in an interview with Retail TouchPoints.
Carter Shae, VP at Cuts Clothing, a Happy Returns customer, noted that not only did customer satisfaction increase tremendously, but returns processing times were cut in half. “We have also seen a substantial spike in exchange rate versus customers asking for refunds,” Shae said in a statement.
2. Find The Balance Between Generous And Strict: Take Incremental Steps To Changing Returns Policies
In recent years, the advent of “fast and free” shipping caused shopper expectations to skyrocket, and forced retailers to adjust their fulfillment and reverse logistics capabilities accordingly. But as retailers realize how these offerings can spread their resources thin and deliver massive profitability hits, some have pulled back on their fulfillment efforts. For example, Kohl’s, Macy’s and Bed Bath and Beyond all shortened their return policies in some manner during the holiday season.
This of course poses a problem, since consumers are now used to having longer return time windows. Retailers now must handle a balancing act, juggling the cost to having a too-generous returns policy with the potential consumer backlash of a too-strict policy.
“First [long, free return policies were] a differentiator and now it’s about making yourself equal to the big players,” said Mark Lightbody, Partner at Newmine in an interview with Retail TouchPoints. “The pendulum shifted all the way from one side, where you did it on the retailer’s terms, to fast, free, easy. Consequently, you cannot just pull that pendulum back. The market won’t buy it.”
Lightbody explained that retailers must keep taking incremental steps in whichever direction they choose to move, to ensure that consumers both won’t abuse the process or be turned off entirely. For example, LL Bean ended its lifetime return policy in February 2018, replacing it with a one-year returns policy.
“Now you’re seeing retailers that say ‘we’ll give you a 60-day period for returns instead of a 30-day period,” Lightbody said. “It’s a gradual move to try to bring some sanity back to returns. You never know how shoppers are going to react. It’s a push and a pull.”
3. More Complete Product Info Can Reduce Return Rates
More retailers are striving to provide shoppers with clearer product information, for example by being more transparent about an item’s size, appearance, color and overall quality. As many as 22% of returns are due to differences in product appearance, according to Forrester.
“Ideally, retailers should be doing things to reduce or discourage returns like better online product information, sizing tools and discounts for items exchanged instead of refunded,” said David Naumann, VP of Retail Marketing at enVista in a RetailWire discussion.
Regardless of the time of year, it’s important to identify anomalies within the returns process to ensure that shoppers know what they’re getting ahead of time.
“It can be any kind of an issue — it could be a size and fit issue, it could be a quality issue, it could be a mismatch between the description and [the] customer’s expectations of it,” said Lightbody. “There’s a million reasons why people return things. We uncovered a statistic that said 65% of returns are under the direct control of the retailer. Especially for apparel and footwear, how [the retailer] presents it in terms of how it fits is going to make a huge difference.”
4. Seek Out Returns Management Partnerships At All Points Of The Shopper Journey
Retailers, particularly newer merchants that are just starting to get into physical retail, still have time to consider outsourcing their returns processes to a third party.
“Brands have an opportunity to create competitive advantage and build shopper loyalty by solving customer pain points at the point of return,” said Eduardo Vilar, Founder and CEO of Returnly in a statement. “That’s [the point] when customers start their return online. Brands can meet their shoppers’ expectations by offering a customer-centric returns experience that enables shoppers to get the right items before returning the wrong ones.”
New software platforms are dedicated to creating networks that simplify the option of returning online products at a store rather than requiring the shopper to ship it back themselves: Forrester found that 56% of shoppers were “much more likely” to shop with online retailers that allowed for an in-person return (no printing, immediate refund, and cost-free) and another 26% were “more likely.”
While the partnership between Amazon and Kohl’s has been widely discussed as an example of how a retail collaboration can simplify the online returns process, don’t expect these practices to be adopted any time soon by other retailers. Unfortunately, unlike Amazon, most retailers aren’t willing to take the significant short-term hit required to build out a massive network that can handle returns.
“Few online retailers have a large enough volume of returns to forge specific location partnerships and the software expertise to enable a great customer experience,” Sobie said. “One exception here is Rent the Runway, which has a large volume of returns because 100% of sales are rentals that require items to be returned.”