In 2019, the high street had more empty shops than ever before, but the ecommerce industry continues to flourish with a 20% year on year growth. In fact, in 5-10 years it's predicted that consumers will be shopping online more than in-store. The trend towards online shopping was accelerated further this year as the coronavirus pandemic led those in lockdown to shop online.The ecommerce industry shows no signs of slowing down, but as online spending grows, so does the problem of returns. With 35% of shoppers deliberately over-ordering to see items in person and then return anything they don't like*, the returns process is an important aspect of ecommerce strategy. Larger retailers find it easier to access the budgets and technology to build a seamless returns process. However, for SME's, additional operational complications and trying to offer the same customer experience as tier one businesses can leave them struggling.
Returns Policy: A Barrier to Sales
Businesses often focus on customer experience in relation to the online journey and quick delivery. Returns are pushed aside and seen as just an afterthought. However, for customers, they're more important than that. 42% of shoppers have returned something in the last six months*, so giving those shoppers an easy returns process is a key part of their experience. Crafting a returns policy that works for the customer the matters before the sale is even made. Over three-quarters of customers look at the returns policy before making a purchase. A good returns policy gives consumers the confidence in buying something they haven't physically seen, touched or tried on. Leaving them unsure will make them less likely to take that risk. This can lead them to buy from a direct competitor with a returns policy they have confidence in.
The operational cost of returns
Returns can have a huge impact on the bottom line. UK retailers lose out on £60bn a year from returns alone. With so many customers returning items, it's important to balance the cost and operational impact with the customer experience. Retailers usually don’t have visibility or control over the returns process. When a product is returned, retailers often don't know what products will be returned, their condition, when they will be returned, or the cost of delivery until it already happened. This model makes it impossible to plan and manage the reverse supply chain, leaving them playing 'catch up’.
The upshot of this? A delay in getting re-saleable goods back into stock and potential lost sales. For businesses selling globally, international returns mean further complication such as customs documentation and duties and taxes. All of this creates an operational headache that can drain the resources of smaller businesses and cause a huge dent in the bottom line when stock becomes tied up and handling costs are high.
Getting returns right - What today’s customer expects
When it comes to returns, consumers expect the same level of convenience that they do with delivery. That means quick and simple options for returns that fit in with their lives. Failure to do this has a direct impact on conversions rates and repeat purchases. A bad offering means customers are less likely to purchase, and a bad experience means they’re less likely to buy from retailers again.
So, what do consumers want to know when it comes to returns?
- The length of time they have – when do they need to have submitted the form by?
- Have they got a range of convenient options to return the item? Are there options for couriers or drop off locations?
- How much will the returns cost?
- Are they able to exchange the item?
- How quick will the refund come through if they do return the item?
- How will they know that the parcel has been received?
Customers also need to be able to trust that retailers will refund them quickly and make the process convenient for them. It’s especially important if they aren’t 100% certain on a product, which happens more often online where they can’t touch or try it on. A positive returns experience could potentially convert a first-time customer into a loyal customer.
Transparency and communication are also key to that seamless experience. Customers say themselves that clear tracking and receipt of return is an important aspect of the returns process. Transparency gives them the assurance that their return is in transit, with the added bonus that retailers have less customer service enquiries to deal with.
Managing cross border returns
For international customers, buying online can feel like more of a risk, with duties and taxes to pay, and more waiting time for a delivery or a return. Returns policies are, therefore, even more, critical to international sales. However, the challenges of returns are amplified by cross border logistics.
One of the issues can be that different countries have their own cultures influencing their expectations when buying online. For example, German has a real returns culture, with 70% of fashion purchases returned. In France, 50% of consumers choose to return their parcel at a specific drop off location. Parcel lockers are more popular in China than any other country for a return, and the returns policy is most important in Spain and China where they are more likely to abandon a purchase^. With these differences across countries, understanding the different markets and having a policy specific to them, is vital.
Duties and taxes are a further barrier in cross-border returns. They’re not just important for the retailer, but 68% of all consumers worldwide check if there are any additional taxes paid before shipping overseas*. Duties are paid when the product goes to the customer, but not for a return. However, it's important to have the right documentation to prove that it's already been paid or retailers can risk charges or fines. Technology can help generate the necessary customs relief documentation and the right kind of returns label. This guarantees a seamless returns experience for the customer and helps the small businesses avoid unnecessary costs that can damage the bottom line.
Smooth returns means returning customers
92% of shoppers who have received good returns experience make repeat purchases. ^ Today’s online shopper has high expectations of their returns policy. Retailers need to offer choice, flexibility, convenience, speed and visibility. All of this might be simple for the big players, who have large budgets, sophisticated technology and access to an endless number of services. However, it’s harder for smaller businesses to compete. It's therefore important that they find a returns solution that is affordable and offers a good customer experience.
The solution for many small businesses is to improve relationships with multiple carriers. This gives them access to various services that are important for customer experience. However, it can put pressure on operations, as they deal with multiple picks up times, contracts and relationships. By partnering with a multi-carrier delivery and returns expert, the struggle of operational management can be alleviated at a low cost for these small businesses.
* GFS/IMRG Consumer Home Delivery Report 2019/20
^ IMRG Returns Review 2020
About the author
This post was written by Bobbie Ttooulis, Executive Director at Global Freight Solutions (GFS).