How to stop internet returns causing a Christmas nightmare for retailers

It’s not unusual for customers to order multiple items online when only one may be required, for example to arrive at the right combination of size or colour options.

It has been estimated that c.£7bn worth of internet purchases in the UK were returned recently over a 12-month period. Retailers are keen to secure the revenue and keep customers happy, but this can be a difficult balance to get right given the costs generated by returns activity, the technical complexity of the process, as well as weighing heavy on companies’ carbon footprints.

The pressure on omnichannel retailers to offer next-day or nominated day delivery is felt across all sectors. Counterintuitively, recent studies have found that rapid delivery can factor in an increased rate of returns, with other contributing factors including ‘higher purchase price’ and ‘new customers’.

Multichannel retailers arguably have the most to consider on this topic, with research finding that sales originating from mobile apps lead to a lower return rate than desktop online sales. However, a hassle-free first return experience leads to increased future spending with the retailer.

A uniting principle emerges: e-comm players this festive period will compete not only on their product and fulfilment, but also on their returns handling given the impact this has on the overall customer experience.

How to improve your end-to end online returns process

Improving the end-to-end online returns process can enhance customer satisfaction and operational efficiency and positively impact supply chain and logistics strategy.

Here are some of the key points to consider when looking to navigate this complex area.

1. Implement a Robust Returns Management System: Utilising the right software solutions can help manage the complexity of returns. These systems need to be able to track the items from the point a customer requests a return until it is received and processed, including the customer refund.
2. Streamline the Returns Process: Simplifying the returns process for customers can reduce the time and effort required. This includes clear return policies, easy-to-follow instructions, and flexibility of return routes such as using local convenience stores for drop-off.
3. Enhanced Communication: Keeping customers informed throughout the returns process will improve the experience. Automated notifications about the status of a return and the expected refund timescale will help this.
4. Collaborate with Logistics Partners: Working closely with logistics partners can ensure that the returns process is efficient and more cost-effective. This includes optimising the delivery of returns to the warehouse for quicker processing.
5. Optimise Inventory Management: Effective inventory management can help reduce the impact of returns on your supply chain. It may be possible to resell items in anticipation of them arriving back at the warehouse and becoming available.
6. Analyse Returns Data: Regularly reviewing returns data can help identify patterns and common issues. This can inform improvements in product quality, descriptions, and customer service offerings.

The impact of trends and technologies in managing returns

 If technology is used in the right way it can greatly improve efficiency but beware of the risks if assuming that all returns will go down a happy path.

• AI-Powered Customer Support: AI technologies, such as chatbots and virtual assistants, are increasingly being used to handle customer inquiries and returns. These tools can provide real-time solutions, manage large volumes of varying requests, and offer personalised recommendations based on customer data.
• Self-Service Technologies: Companies are shifting towards self-service options for returns, allowing customers to initiate returns, choose the method of return (e.g. local convenience drop off) and provide online tracking. So long as the technical systems are integrated this can reduce the burden on customer service teams and provide a smoother experience for customers.
• Sustainable Practices: There is a growing focus on sustainability in the returns process, given the extent to which it increases transportation, packaging and processing costs. More companies are introducing charges to customers for making returns to raise the decision bar.

Applied in the right way, these trends and technologies can help companies streamline their returns process, improve customer satisfaction, and reduce the overall cost associated with returns.