Insights

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?

Deliver fast

Fast e-fulfillment reduces the amount of returns. That’s because consumer psychology dictates that the shorter the time between your committing to a purchase and holding it in your hands, the less chance there is that you will experience ‘buyer’s regret’.

That’s supported by the findings of DHL Supply Chain customers who have found that increasing delivery speed has led directly to a reduction in the volume of returns that they need to deal with.

Access a distributed network and domestic returns location

If online retailers serve European markets and have just one or two distribution centers on the continent, a large number of returns will be international shipments which are far less attractive to the consumer. The business may decide to provide a postage label, but that will be expensive. Added to that cost will be the fact that while the goods are in transit, they cannot put them back on sale.

It’s why many retailers serving the European market choose to partner with a provider that can offer them access to domestic returns locations. That way, they’re closer to their consumers who buy more and return less.

Hassle-free process

With the fragmented nature of the European parcel carrier market, any company that is selling to a number of European countries will find it hard to identify a single carrier that has enough of a presence to be familiar to customers. Also, one that has enough drop-off locations to make it easy for returns to be made.

DHL Supply Chain works with a pan-European partner that has access to over 200 carriers and 320,000 dropoff locations, enabling customers to organize a paperfree, hassle-free return in just three steps on the retailer’s website.

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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.