Our research reveals 63% of merchants consider returns a significant problem for their business. With high processing, sorting, and restocking costs and ever-rising return rates, it’s clear that returns are implicated in many of the challenges that retailers face today.
The simple truth is that returns are an inevitable part of the shopping experience. It can be hard to look past returns as a problem to be solved, but the truth is that they provide retailers with an untapped opportunity to build customer trust and loyalty, and to ultimately drive growth. The key is implementing an efficient returns strategy that ties into the business’s wider goals.
A returns strategy is much more than just the policy on the website, although that policy is crucial. A returns strategy includes the following elements:
- A philosophy
- An owner
- A process
We’ll explore these three vital elements in this blog, showing you how to move beyond the “returns are a pain” mentality to embrace a smarter returns strategy.
The Returns Philosophy
The returns philosophy acts as the foundation for your returns strategy. It considers a range of factors including customer experience, cost and data to set the direction of your returns strategy.
For example, if market-leading customer service is a big part of your brand promise, you will want to maximize the ease of returns, accepting higher short-term costs to provide a great returns experience. In the long-term, this should net you more loyal customers and increased customer lifetime value – as 92% of customers will buy again if you get returns right.
Alternatively, if your brand prioritizes product improvement, you will want to ensure that returns data is collected and used to optimize processes. After all, returns are data points. They offer valuable insights into your products, fulfillment process, and customer experience. For example, a customer returning an item because the size chart was unclear highlights a potential issue with your product information, allowing you to improve it and prevent future returns. Similarly, a return due to a damaged item during shipping points to a need for better packaging processes.
Ultimately, setting a returns philosophy involves answering this key question: What kind of returns experience do you want to offer, and what are you willing to invest in it?
Without accurate data showing what’s happening with your returns right now, this question may be difficult to answer. But knowing the strategic goal behind your returns will help you to create the returns policy that your business needs and to run the returns process that improves efficiency and cuts costs.
The Returns Owner
A strategy without an owner is unlikely to work.
To implement a truly efficient returns strategy, there needs to be a point of ownership and responsibility. This can be a single person owning the returns process, or a team with collaborative responsibility. Without this ultimate ownership of the end-to-end returns journey, from initial refund request to restocking, it’s difficult for the business not to focus on solving point challenges in a fragmented way, leading to a disjointed approach to returns. It’s not unusual for e-commerce returns to be treated differently to store returns, or for returned items to always be sent back to the overseas distribution center rather than the in-country stores.
These approaches might work at a basic level but are inefficient and costly when considering the entire returns journey. By having ownership for returns in a single place, encompassing all the relevant functions – e-commerce, retail, operations, supply chain, transport, sustainability, etc. – it’s easier to not only identify bottlenecks in the process, recognize opportunities for cost reduction, and implement the improvements needed for a frictionless returns process, but also to analyze and share returns data between teams to implement wider business strategies.
The thing is, the owner doesn’t have to be internal. An external expert can also work in this capacity, pulling together the people, challenges and conversations needed to find and implement the right solutions.
The Returns Process
The returns process is where your returns philosophy meets the enabling technology to power an efficient end-to-end returns journey. The key here is to use the power of data, both customer returns data and internal product data, to:
- Identify return patterns and collaborate with teams to improve product descriptions and fulfillment processes.
- Implement return rules that maximize the cost efficiencies of the returns journey.
- Optimize inventory management to prioritize returns more likely to be resold.
- Gain visibility over the entire returns process, allowing processing teams to know exactly what returns are coming in and why.
Returns strategies don’t get made once and remain forever etched in stone. It’s a continuous exercise in analyzing data, identifying problems, seeing opportunities, and iterating the results. For that, you need an ongoing project, overseen by your returns owner, with the right people in the room who are empowered to make decisions and changes.
For example, if marketing is promoting a discount on a product that has sky-high return rates, they need to take it out of the campaign. The buying team need to consider whether there is a manufacturer defect, whether other products might have similar issues, etc. The logistics team need to know that there’s an influx of returns on the way for them to process. A regular meeting that highlights these issues and addresses them keeps your strategy on track. It can also tell you when you might need to change tactic and adopt a different philosophy, if the results aren’t what they should be.
Having a returns strategy is about taking a position, then measuring your performance and adapting to your customer. To do that requires up-to-date returns technology that works with you to give full insight into the performance of returns and their impact on your customer. Even better, it reduces your costs in the short term too.
Powering Your Returns Strategy
Want to find out more about creating a returns strategy for your business? Get in touch with our team to explore how to turn returns from a problem into an opportunity and how Blue Yonder’s technology can power the entire journey to save costs and increase revenue.
