Returns are an inevitable part of online retailing. When consumers buy items online without seeing them in person first, there’s always a chance they’ll end up unsatisfied. In fact, e-retailers in categories like clothing and shoes can experience up to a 30 percent return rate.
High return rates can hurt a retailer’s profitability and customer loyalty. Returns can be a hassle for customers, and costly for retailers — particularly those that rely heavily on drop-shipping, which is a tactic that involves brands and suppliers shipping products directly to retail customers.
Fortunately, there are ways for e-retailers to reduce return rates and at the same time make the returns process as easy as possible. A quality and convenient return process can generate customer repeat purchases and higher order value, and minimize operational costs for your business.
Common returns options for online retailers
Most retailers use a combination of three different structures for facilitating returns: return to store, ship to product returns center or ship direct to vendor. Each option has its pros and cons that retailers must weigh given their product categories and customer habits.
- Return to store: Most retailers with a brick-and-mortar location give customers the option to return products to any one of the retailer’s locations. The biggest benefit with this approach is that it presents an opportunity for customers to buy something else while returning their order. Additionally, many customers find this option more convenient than mailing packages back to the retailer or supplier. However, the logistics of this process can be costly and complex for the retailer.
- Ship to product returns center: With this approach, customers ship products to a return center managed by the retailer. This is a great way for the retailer to control the process and make it as convenient for the customer as possible. However, this approach comes with high operational costs and missed opportunities for in-store foot traffic.
- Ship return direct to vendor: Some retailers choose to have customers ship returns directly to the vendor. That way, they can avoid physical operations and logistics costs, and the vendor receives the goods quickly. However, this means retailers lack control over the process, which can leave customers in the dark about where their returns stand.
Pure play e-retailers have no choice but to offer one of the last two options, which means they miss out on the opportunity to sell customers additional items in-store. Some online retailers give shoppers the option to use the return as a credit to buy something new on the site, or motivate customers to buy more online by providing free returns. In fact, according to CNBC, retailers that offer free returns can increase sales by up to 357 percent.
Tips for handling and facilitating returns
Even with the right processes in place for customers to make returns, retailers need to implement best practices to make the process as easy as possible and motivate customers to make more purchases and remain loyal. According to ComScore, about two-thirds of customers (63 percent) check a retailer’s returns process before making a purchase.
Additionally, following best practices ensures that you minimize the costs associated with facilitating returns and maximize profit in the long run. Some tips for retailers looking to streamline the returns process for customers include:
- Improve order fulfillment accuracy: Many returns occur because the retailer shipped the wrong product. The right order fulfillment platform can combat this issue. Systems like CommerceHub automate the communication between you and the fulfilment center to eliminate the possibility of data processing errors.
- Let the type of product dictate the returns process: For example, returns for small items like clothing or shoes can be easily managed in-store and quickly processed, but bulky items like household appliances might take longer to ship to the vendor from the store, which delays the refund process for the customer. CommerceHub can help retailers manage this on a case-by-case basis.
- Set up an online returns management portal: Rather than including the returns label with the original product shipment, many retailers are finding success with online returns management portals. These portals enable the customer to log in, initiate the return, print the label for their preferred carrier and track the entire process. An effective online portal creates a convenient process for the customer and a cost-effective one for the retailer.
Managing returns processes can be tricky, especially if you’re a retailer within a high returns product category, like clothing and apparel, or if you rely heavily on drop-shipping partners. The right strategy can drastically reduce errors, streamline processes for the customer and cut costs for you. Learn more about CommerceHub’s offerings for retailers today.