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Overcoming the returns challenge

Bobbie Ttooulis
30 December 2020

The shopping experience is changing and each year more customers take to shopping online. This year there has been a further surge due to the Covid-19 pandemic, leaving retailers to deal with peak online sales throughout the year. For online shops, this is a positive boost in sales in a year that many businesses have struggled, but an increase in parcel delivery inevitably raises the problem of returns.

Retailers lose up to £60bn per year as they manage the complexities of the reverse supply chain.* Returns are important to consumers with 42% of shoppers returning something in the last year and many customers often over-order to see items before they decide what to keep. Retailers must ensure they have the right measures in place so that they can streamline returns, secure customer loyalty and grow sales.

Managing Returns: The Operational Challenges

Returns place a lot of pressure on businesses operations, especially those who have small stock levels and tight profit margins. Businesses often have little visibility and control over the returns process, with little indication of what is being returned and its condition until it arrives. Without this visibility, it can be a costly and time-consuming task and lead to a delay in resalable stock making it back to market.

To ensure they can overcome the returns challenge, businesses need to have control over the whole returns process. Knowing when returns will be coming in and why means they can plan ahead, and not find themselves playing catch up.

Getting Returns Right Can Increase Sales and Build Customer Loyalty

Customers increasingly expect the same quality of service with returns as they get with deliveries. Many businesses have historically given more attention to deliveries and tend to focus more on discouraging returns by ensuring the customer is happy with their purchase. However, this isn’t a realistic proposition, with every customer and transaction very different.

For some people, returns are a natural part of their online shopping journey. In fact, as many as 25% of shoppers regularly return items.* This is particularly common in industries such as fashion, as many customers order multiple sizes and return the ones that don’t fit. Whilst some of this can be combated with special features such as 360° views or sizing charts – offering customers a good returns policy will undoubtedly give them the additional confidence boost they need to place that order. 78% of consumers now check the returns policy when choosing where to shop and 1 in 5 shoppers have abandoned their purchase because they didn’t like the returns policy* – so it pays to get returns right at the outset and turn that basket item into a sale.

What are Customers Looking For in Returns?

Transparency and clear communication are key attributes in what customers look for in a returns policy as well as finer details such as whether an exchange is possible, the length of time they have, how many options there are for how to return it and how quickly they will be refunded. Covering all of this in your returns policy will save time and money in the long term, greatly reducing the number of day to day customer enquiries. It will also give consumers the confidence that a return would be simple and straightforward, making them more likely to commit to a purchase.

As well as helping secure the sale, returns are also essential to promote customer loyalty. 92% of shoppers who have received a good returns experience go on to make repeat purchases.* For shoppers today, great returns are an equal part of the new shopping experience. This means that getting your returns service right will not only attract new customers, but will encourage more loyal customers too.

Global Returns: Providing Reassurance For International Customers

Cross-border logistics present businesses and customers with greater obstacles and uncertainties, especially when it comes to returns. Due to longer waiting times and additional duties and taxes to pay, buying online can seem like more of a risk for international customers. Making sure you have speedy and transparent returns services is therefore even more important.

Meeting the expectations of international sellers can be challenging, as they vary from country to country. Some markets such as Spain (64%) and China (58%) are particularly sensitive to the quality of returns service, and are more likely to abandon the purchase at check-out stage based on a returns policy.* Germany has one of the highest return rates of fashion items, returning up to 70% of purchases. Whilst in France, nearly 50% of customers would prefer their item to be dropped at the local store.*

Duties and taxes are also an added complication in cross-border returns, as duties need to be paid when the product is delivered, but not if the item is returned. Retailers need to ensure during returns that they have the right paperwork for customs to ensure they avoid hefty fines.

Returns: The Key to A Full Circle Experience

For a successful process, returns must be an integrated part of the customer experience. Retailers need to provide a range of convenient returns options for their customers. To tackle the complexity of returns logistics, retailers must find a cost-effective solution to provide the best customer experience with minimal operational impact.

For many retailers, the solution is to work with multiple carriers to ensure access to a range of services that the consumer requires. However, this can be costly and time consuming. Working with a multi-carrier and logistics expert would further reduce the operational pressures by managing pick-up times, contracts and carrier relationships on the retailer’s behalf under one cost. Partnering this with technology which allows better supply chain visibility will ensure that retailers can easily track their shipments and identify bottlenecks early enough to respond - finally shedding light on the returns process.


^GFS/IMRG Consumer Home Delivery Report 2019/20

Bobbie Ttooulis is executive director of Global Freight Solutions, a UK-based multi-carrier shipping and e-commerce delivery company.

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