The rise of e-commerce continues to reshape the retail landscape, particularly regarding the increasingly complex and costly process of returns. In 2023, the total returns in merchandise reached approximately $743 billion, reflecting an upward trend where around 16.5% of all purchased goods were returned to retailers in 2022. The implications of these figures underscore the pressing need for businesses to efficiently manage returns to uphold both profit margins and customer satisfaction.
The management of returns presents several challenges, such as processing costs, shipping fees, and the handling of unsellable items. With customer expectations continually evolving, retailers are under pressure to develop returns processes that are as streamlined and efficient as their outbound fulfilment systems. Customers today are looking for personalised and consistent experiences across various platforms, complete with multiple payment options and rapid refunds.
One significant aspect of modern consumer behaviour is the increasing demand for convenience in returns. As cited in retail reports, shoppers wish to return items through methods that suit their individual preferences. Walmart, for instance, has expanded its offerings to include curbside returns, doorstep collection for loyalty members, and in-home collection services for those enrolled in their InHome program. Such innovations illustrate an industry shift towards enhancing post-purchase experiences to foster long-term brand loyalty.
According to a report by Radial, the costs associated with an average return amount to approximately $27 for every $100 spent in e-commerce. Worryingly, only 30% of returned merchandise is ever resold, highlighting the need for retailers to leverage advanced technologies to mitigate these losses effectively. Implementing intelligent algorithms to optimise return shipment routing can significantly cut costs, limit cross-border shipping occurrences, and allocate stock to stores facing high demand. This technological shift could mirror the advancements retailers have made in refining their outbound shipment processes.
In the face of prevalent workforce shortages, automation is increasingly viewed as a potential solution to reduce workforce strain, particularly in customer service roles. Typical refund failures may require repetitive manual intervention, but with advancements in technology, refunds can often be processed without customer service intervention. Automated systems can handle retries of transactions or even provide customers with links to update payment methods if issues arise during the refund process.
The evolving approach towards return policies has also led to a growing trend where some retailers charge customers for return shipping. This practice, however, runs the risk of deterring potential buyers—67% of consumers reportedly check return policies before completing a purchase, and 74% may withdraw from transactions due to return shipping fees. Instead of passing costs onto consumers, businesses may explore alternative cost-saving measures in areas like return shipping and replenishment fees, thus enhancing the customer experience.
Furthermore, research by McKinsey & Company highlights the vital link between return experiences and consumer loyalty, revealing that 96% of consumers would shop again with a retailer following a positive returns experience. Conversely, a difficult returns experience could lead to 33% of repeat consumers abandoning a brand entirely. Retailers are thus encouraged to view reverse logistics not merely as a logistical burden but as an opportunity to differentiate themselves from competitors.
Providing exceptional self-service tools is becoming increasingly pivotal, as consumer comfort with technology expands. Brands can harness technology to facilitate smooth self-service options while simultaneously capitalising on these interactions to drive further sales. Transparent policies, expedited refunds, and simplified exchanges can become significant selling points, ultimately cultivating increased sales and a loyal consumer base.
As the holiday season approaches, ensuring a positive returns experience remains crucial. Retailers are urged to find innovative methods to streamline their return methodologies, enhancing customer satisfaction without incurring excessive costs. As this sector continues to evolve amid changing consumer preferences and economic challenges, optimising returns processes will be imperative for sustaining growth within the retail industry.
Ellie Crawford, the Director of Product Management at Manhattan Associates, brings expertise in improving operational efficiency and enhancing customer experiences within retail management. Her extensive experience encompasses roles at various well-known companies, contributing to advancements in product management and software implementation.
Source: Noah Wire Services