Returns are an unfortunate reality of online selling, and 20% of all returns take place at Christmastime, according to B-Stock Solutions, which sees a resulting spike in returns listed on its B2B liquidation marketplaces in the first quarter of the year. Historically, it sees 60% more items being liquidated in Q1 (January-March) compared to Q4 (October-December).
Traditionally, most merchants focus on fulfilling outbound sales during the holidays, letting returns pile up until after the rush, but this is a big mistake, according to Rafael Zimberoff of Descartes ShipRush.
“If a merchant wants to protect profits, waiting until after the holidays to deal with returned merchandise no longer works as a business model.” Less than half of returned merchandise is sold for full-price, and Zimberoff said companies need to modernize their returns process and get returned products back into the sales cycle when they still hold the most value.
One stat he shared that struck us: 40% of customers now order multiple sizes of items or things they’re not sure of because returns are either free or cheap.
Narvar, which helps merchants improve the post-purchase experience for customers, calls this behavior “bracketing“:
Bracketing: buying multiple versions of an item, trying on at home, and returning those that don’t work.
Recommendation: Minimize bracketing by analyzing return reason data and using these insights to inform fit and color recommendations during the consideration phase.
Among Narvar’s tips on handling returns: Treat returns with the same care as the rest of the shopping experience, stay in touch with consumers throughout the returns process, and simplify exchanges.
Descartes and ShipRush also offer advice on handling returns, and Zimberoff shared five tips online merchants should consider to help tame the problems of returns.
Paying attention to returns can help you identify trends, such as high incidents of defects of certain products, or a high breakage rate of a particular item when shipping – and photography is a great way to document your returns.
1) Create a unique return record to make returns more transparent and enhance analysis. Creating a digital return record attached to the customer’s original order allows merchants to:
- Track the status of each return: Merchants can provide customers with timely updates at every stage, from receipt of merchandise to refund status. If a return arrives with no invoice number, advanced search features can help locate the order by customer name, address, or phone number.
- Prevent fraud: Keeping track of individual customer return profiles also helps the merchant to prevent fraud by setting up alerts for customers with high return rates or open balances.
2) Mine “Reason for Returns” data to improve processes and product offerings. There is a lot to be learned by asking why a customer wasn’t satisfied (e.g., wrong size, damaged, not as described) – and by sharing this information organization-wide.
- Collect and analyze return reasons and trends: Invest in technology to help understand why one product is returned more often (e.g., size tends to run larger than labeled), better describe products, fine-tune inventory, or even drop products frequently damaged in transit.
- Develop a “reason for returns” report: Sort information by manufacturer and SKU to support troubleshooting and help avoid future returns. This list improves future inventory selections by eliminating problem products that are frequently returned.
3) Keep goods handling and customer service separate. Creating a return process that separates reimbursement and inventory management helps retailers speed up both parts of the returns process.
- Process refunds as soon as the item is received: By separating the merchandise evaluation from the refund, the shopper is automatically reimbursed as appropriate. Some companies are even willing to give refunds before a product is received to keep customers happy and increase the speed of processing refunds.
- Restock? merchandise to inventory? immediately: Once returns enter the reverse logistics workflow, they need to be evaluated. If there is no damage, inventory can be updated immediately via a warehouse management system and made available again to all sales channels. Consider upping what is spent on return postage to get returns processed even faster.
4) Classify returned merchandise for more efficient processing. It is helpful to classify returns immediately via simple mobile solutions with barcode scanning (e.g., needs repackaging, discount it, send it back to new inventory, recycle or trash).
- Recycle or Trash: Even identifying what to recycle or trash can save time and money because it limits the time spent on products that no longer have value.
- Use photos to aid in categorization: Including photos of returned items with the customer’s return record can also speed the return classification process. While some merchants photograph every return, others only take photos if something is defective or damaged.
Interestingly, large enterprise customers of Descartes use the company’s mobile app to manage the process, with warehouse workers taking pictures with their phones and immediately adding it to the return record in the app.
But documenting returns with photos makes sense for sellers of any size.
Taking photos reduces a lot of manual, subjective and often complex descriptive writing as well, Zimberoff said. “While some merchants may photograph every return, others only use the function to show certain events, for example: defective packaging, dirty clothes, missing accessories etc. The function offers many ways to simplify the return process and has been well-received by our customers.”
- Returns that require special treatment: Classification helps separate the small number of returns that do need special treatment for customer service attention. For example, was a returned item returned damaged/worn or was it defective?
5) Rapidly return merchandise to the sales cycle. Today, returns are much more complicated with many merchants selling online from multiple marketplaces to a wide range of geographic areas.
- Send returned products to the right reverse logistics channel: Whether it is recycling, trash, discount or restock, identify which channel can best deal with the incoming returned merchandise.
- Automate processes and workflow: The goal of the reverse logistics team is to touch the returned product as few times as possible. Using workflow solutions to automate returns processing quickly means goods can be seen as available in inventory faster and approved for sale sooner to help generate revenue.
Investing in ways to improve your returns process can help you identify problems and reduce the number of returns while making the process more cost-effective.