As workers headed back to their desks on Tuesday 2 January they did so bearing (unwanted) gifts – the estimated record 15-20% of purchased goods destined to be returned to online retailers following the festive season. Already suffering from the January blues after the fun of the holidays, customers are not in the best frame of mind to deal with the trials of what has been dubbed “Takeback Tuesday”; they simply want to be able to return their goods for a refund or replacement with the minimum of effort.
For retailers, their success in handling the increasing volume of product returns is becoming a critical competitive challenge that can make or break their reputation. Add to this the sheer resources needed to process returns on this scale and it’s clear that sharpening up the reverse supply chain will be a priority that continues to top retailers’ agendas.
The riddle of returns
We all love the convenience of online shopping, the ability to buy whatever we want, wherever we are and have it delivered to our homes at a time that suits us. Retailers are becoming increasingly adept and flexible in offering delivery days, times and locations that fit in with consumers’ busy lives. This builds customer loyalty and encourages repeat purchases based on the quality shopping experience they deliver. However, higher customer service expectations can be a double-edged sword, because when it comes to returning unwanted items a poor returns process can cause the relationship to sour very quickly.
The psychology of returns – risks and opportunities
Let’s take a look at the psychology of product returns. When a customer decides to send a product back they enter the realm of disappointment, which is a risky landscape for any retailer. Their product has failed to satisfy. Indeed, research we carried out among consumers showed that 76% of returns are initiated because the product was faulty or not fit for purpose. This means that the retailer is on the back foot and the debt is suddenly reversed – the customer is owed a refund.
The process of return and refund is both a risk and an opportunity for the retailer. The risk is that the method will be complicated and time-consuming for the customer, harming the brand still further. The opportunity is that the company can mitigate the disappointment by providing a process so straightforward that it will actually encourage the customer to buy from them again.
Fast, simple and free
NetDespatch have undertaken research around returns, and research has shown that above all customers are looking for speed and transparency. 53% of customers expect to be refunded between 24 and 48 hours after initiating the return, ideally with the facility to track their parcel back to the retailer. That’s a lot of logistical work in a short space of time and leaves zero room for error. On top of this, thanks to the lead taken by companies such as Amazon and ASOS, free returns are now the norm. With returns to online retailers costing an estimated £20 billion per year they a costly part of doing business that cuts heavily into profitability, yet customers don’t expect to pay for the privilege of returning goods that they don’t want.
This is another layer to the challenge for retailers. They must deliver a convenient, transparent and speedy returns process for the lowest possible cost to themselves. Doing this successfully requires planning the potential returns process from the moment the customer places their order. In fact, emphasising the ease of making returns on the product page at the point of purchase sets the tone for a stress-free process. Our research also highlighted the pressing need for retailers to further educate consumers about all the different returns options that are now available to them. I believe that this lack of understanding around returns means that consumers are opting for the more traditional options which are not always the most convenient or practical. In today’s 24/7 world, surely waiting at home for a courier to collect a parcel is time that consumers would prefer spending on more productive tasks.
Returns have to be as convenient as possible. This means reusable packaging, pre-printed returns labels for a variety of channels and clear instructions for customers – both in-parcel and easily available online – to eliminate confusion. Our research showed that the majority of customers prefer to return goods via the Post Office which was strongly preferred over options such as waiting at home for a courier to pick up the package, or delivering it to a local convenience store. As stated earlier I believe this indicates a lack of education around the returns options and also something important about customer’s attitudes towards returns: they want to trust the delivery channel so that they can demonstrate proof of posting and that their parcel will reach its destination and that they’ll get their refund.
When the returned goods reach the distribution centre, speed and accuracy is paramount. Automated scanning of intelligent labels and supplementary information, such as the reason for the return, ensures that goods are appropriately managed and customer accounts are credited with a refund, or a replacement is arranged, in the shortest possible time. Using automation to manage the majority of the process reduces the likelihood of errors introduced by manual data handling and ensures a lower cost and more streamlined system. With the volume of returns only likely to increase as online shopping continues to skyrocket, getting this right is business critical for companies that need to remain competitive.
While it can’t promise to cure the January blues, making the returns process as painless as possible is a chance for retailers to make ‘Takeback Tuesday’ into an opportunity to impress their customers with the quality of their service and generate brand loyalty on which to build their future revenues.
Source: Matthew Robertson, Co-CEO, NetDespatch