Returns cost you a sale; badly-managed returns cost you a customer

Posted by Sarah Taylor on Tue, Apr 30, 2019

Certain topics are bound to get consumers’ tongues wagging, and one of the biggest is returns. Ask anyone about their experiences and you’ll get a barrage of stories about harassing customer service teams for feedback, or trying to take an item back to the store – only to be found it needs to be returned online. 

These aren’t just grumbles; they are a critical part of the customer experience. Shoppers won’t judge your brand for one poor purchase, but they will take exception to jumping through hoops to get their money back. The challenge for retailers is keeping customers happy when they are buying and returning across more channels than ever before…

Big spender (and returner)
The growing challenge of returns is well documented. Recent number crunching at Barclaycard revealed that over £7 billion worth of products are sent back each year, with 1 in 4 retailers reporting a rise in return rates since 2016.

This upward trend is being driven by a number of factors. From a retailers’ perspective, the focus is shifting more and more towards ecommerce sales. A direct online presence is often complimented by concessions on third party website and diversifying marketplace strategies; Amazon has acquired over one million new sellers this year alone.

From a consumer point of view, the trend towards ‘showcasing’ continues, where online customers use their home as a shop floor. They want to try, buy and return goods at the lowest possible expense; KPMG’s 2018 retail survey found that 67% of consumers purchasing women’s fashion items wanted a free return service as standard

Anytime, anywhere, any way
Gone are the times where retailers viewed returns as a pain point in their strategy. An increasing number of brands are seeing the opportunities in providing a seamless experience; they might have lost that particular sale, but by making it easy to send stuff back, that particular shopper will come back again.

Being able to return items in any channel – regardless of where it was first purchased – is now a standard expectation for consumers. The market leaders are offering money back within a week, with regular updates to confirm items have been received and payment is imminent. Some are going one step further; Amazon, ASOS and Stitch Fix are among those experimenting with ‘try before you buy’ initiatives, so it literally costs the customer nothing to get their initial clothing haul.

The challenge on retailers’ hands is to get the stock being sent back into circulation as quickly as possible, so that sales opportunities are only lost for a short amount of time.  

Return of the pack
While a seamless returns service is part of the customer-facing experience, making it happen starts in the back-end of the business. As channel strategies expand, the opportunities for errors and inefficiencies increase – unless retailers have the right technology to manage returned products.

One of the biggest operational challenges is skewed stock position; if a returned item ends up in the wrong place, it can’t easily be found. When customers are purchasing similar products, or even the same product in 2-3 different sizes, it’s easy for something to get sent back in the wrong packaging, and inexperienced staff to assume it’s correct and put it back on the wrong shelf.

Equally, the increasing number of customer touchpoints is leading to greater complexities in returns processing. Staff may be dealing with different barcodes and packaging depending on where that item was originally sold, and a high level of quality control is needed to get items booked in correctly and back into circulation.

Customer experiences are built behind the scenes
Conquering the returns mountain is only possible if retailers have complete visibility of everything coming in and out of their total inventory, and the technology to simplify making items available for repurchase as quickly as possible.

For example, rather than trying to get a returned product back onto the same shelf as other warehouse stock, many retailers are utilising pick bins at the packing bench. These can be marked as high priority, so they are utilised first when a customer order comes in. So long as goods are processed correctly and their location logged on the system, it ultimately doesn’t matter where they are; pick bins are a much quicker and cheaper way of getting stock back into circulation.

Others are using hand held terminals to synchronise barcodes with visual information about items. If a member of staff scans the item ticket, they will get a picture of the product – so they can tell immediately if something has been put in the wrong packaging on return. This is particularly valuable given the transient nature of the retail workforce.

In addition to reducing margin for error, automating the returns management process cuts down on manual paperwork – making it efficient, effortless and sustainable from a retail operations perspective.

A good example of this is multi-channel retailer Kingstown Associates, which has reduced the time it takes to deal with returns by 50% after adopting an integrated, automated approach.

Don’t throw the baby out with the bath water
As retailers grow, so do returns, and it’s easy to become a victim of your success. To make light work of returns management, your business needs a single system for co-ordinating the entire process – quality control, bin replenishment, picking, packing and stock taking – so that items can be booked in and re-sold as quickly as possible.

Focusing on visibility and efficiency is what stops a single lost sale from draining overall stock availability, and also prevents a poor returns experience from costing you customers. Inspiring confidence is a competitive differentiator in today’s crowded market – and knowing they can get their money back quickly without having to harass the contact centre is a big deal to consumers.

Ultimately, losing customers over one returned order is a bit like throwing the baby out with the bath water. Deal with the situation quickly and they’ll likely come back to you, particularly in the world of fast fashion; by the time the money is back in their account, many shoppers have already identified their next purchase. And don’t forget the social media value of providing a slick and easy service.

Lifetime customer value is such a critical metric to retailers and getting returns right plays a pivotal role. Ensuring your business has the technology to recirculate stock and refund shoppers are quickly as possible will provide you with the right platform for long-term success.

Sanderson multi-channel retail software creates a seamless and consistent shopping experience, wherever your customers are purchasing and returning items. Find out more here.

Topics: Multi-Channel Software, Multi-Channel Retail, Lean Retailing, Improving retail operations