E-Commerce Returns: Three Ways to Tackle This Growing Challenge
The relentless growth of e-commerce has led to a rapidly growing challenge; increasing numbers of customers returning goods. One online fashion retailer estimates that a quarter of women’s orders in the UK are returned, while in Germany that figure rises to 70%. Two years ago, the company was forced to issue a profit warning as a result of the amount of goods returned.
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Returns are clearly an expensive phenomenon. The list of cost drivers is long: postage-paid returns labels, receipt and grading of the product, a refund or replacement, managing stock levels when inventory is in transit, returning goods to stock, and orchestrating all customer service activities – not easy post-pandemic.
Then there is also the cost of losing future business if the customer is left unhappy, which is why a company’s handling of returns is a key contributor to consumer experience and the consumer’s ‘life-time value’. Get the returns experience right and your consumer will buy more and more; get it wrong – only once – and you might not see the customer again.
A recent study found that 80% of shoppers won’t make a purchase due to an inconvenient returns policy and that 37% of people consider returns as an ‘extremely important’ aspect of their online purchasing journey. Providing a simple return policy for a seamless customer experience is therefore critical for online sales’ conversion rates and customer retention.
Evolving Customer Behaviour
There are two main reasons why the level of returned goods is increasing. Firstly, because in order to improve the customer experience, retailers have been promoting a ‘hasslefree’ returns policy as an incentive to promote purchasing. Today’s consumers are taking full advantage of these more flexible terms.
Second, consumers often buy goods with the intention of immediately returning some or all of them. In fact, research has found that as many as 41% of consumers buy variations of a product online with the express intent of returning – whether because they want to try different variations, or because they want to capture a social media-friendly moment!
No surprise then that DHL research on e-commerce has revealed that 53% of companies consider returns to be one of their main supply chain challenges, with reducing the returns rate having a massive impact on their profit. How, then, can companies enable the easy, seamless returns experience expected by customers, yet do so cost-efficiently?
More sales... More returns
The internet has made it easier than ever for online retailers to access international markets. But the flip side is that consumers’ heightened expectations of e-commerce mean that not only do they buy more, they also return more – and often from great distances.
What’s needed for European retailers looking to grow – or even start – their e-fulfillment business is an experienced partner, able to deliver a fast, seamless, cost-effective returns process. Even better, one that is able to screen those returned items according to the retailers’ specifications, and put them back into stock in the warehouse.