How to Better Manage eCommerce Returns in 2024
Returns are a merchant’s least favorite part of eCommerce. Not only does a return equal lost revenue; there’s also the cost of the ecommerce returns management process itself – and the possible opportunity costs of missed resale.
The problem of returns fulfillment is getting worse, not better. According to Aftership’s 2024 eCommerce Returns Report, returns increased by 15% during Cyber Week 2023, compared with the previous year’s holiday.
In sum, effective ecommerce returns management is no longer optional if your business expects to stay profitable and keep customer satisfaction high. The product returns management process has become an integral part of offering a positive customer experience in eCommerce; if your returns fulfillment processes are not streamlined enough to meet customer expectations for an easy refund or exchange, you’re unlikely to retain shoppers.
So, what does effective returns management mean as we head further into 2024? Let’s take a look:
Seeking Effective Ways to Combat Retail Return Fraud
The phrase ‘return fraud’ often brings to mind nefarious practices, like making return requests and keeping the merchandise, or returning stolen items to a brick and mortar store for a ‘refund’. But the vast majority of return fraud is more benign in appearance.
Practices like ‘wardrobing’, where consumers wear an item once and then return it, or ‘bracketing’ where a consumer buys multiple versions of an item to test out and then return, occur at incredibly high rates. According to Loop, nearly 40% of U.S. shoppers say that they or someone they know had engaged in return policy abuse or fraud in the past 12 months
These habits have become incredibly common because consumers don’t see themselves as doing anything particularly harmful. After all, wardrobing and bracketing are not outright theft. Yet this only makes it more difficult for eCommerce businesses to manage. These incidences of return fraud are very difficult to spot until they’ve already happened, leaving brands to deal with the messy aftermath.
Rather than penalizing customers who engage in these behaviors, try using positive reinforcement to encourage options that don’t bog down the returns process. For example, offering free exchanges for different colors or sizes – but charging restocking fees on outright returns – helps encourage customers to pursue exchanges instead of engaging in bracketing or wardrobing. Likewise, offering customers a discount or extra loyalty points when they accept store credit provides a more appealing alternative to a refund.
Creating a fair, balanced return and refund policy
As eCommerce has grown, return policies from online merchants have grown more generous to gain a competitive advantage. But as no-questions-asked return policies became the norm, this has spawned a range of additional challenges for brands.
Although they might help to encourage sales, unlimited returns policies have a significant impact on other areas of your operation. Constant returns and exchanges can easily throw inventory levels out of whack, making inventory management more challenging. SKUs can swing between stockouts and excess levels, especially if units of returned merchandise and replenishments arrive in tandem.
For this reason, many eCommerce brands are taking a more measured approach to returns management. This includes shortening return windows, increasing restrictions on returns, or introducing restocking fees in a bid to reign in the more destructive return behaviors.
Worried that stricter return policies might undermine customer satisfaction and loyalty? Return studies have proven that these concerns are unfounded. According to a survey by Blue Yonder, 89% of retailers surveyed reported making their returns policies more conservative over the past 12 months, yet over half (59%) reported an increase in return rates over the same period.
In sum, customer loyalty and hassle-free returns might not be as closely linked as brands have been led to believe. Bringing in sensible restrictions, such as offering store credit instead of refunds or return processing fees, helps to reduce losses while improving the returns management process.
Implementing a streamlined process to get inventory back on the shelf
Managing ecommerce returns is far more than approving a return request and issuing a refund. If returned merchandise cannot be resold promptly, your business is looking down the barrel of higher inventory holding costs – not to mention lost sales.
The key reason why eCommerce businesses struggle to resell returned inventory is that they don’t have a robust workflow to inspect and recondition returned merchandise. At the very least, an item may require repackaging or relabeling, or even repair or maintenance depending on the reason for returning. If this can’t be accomplished quickly, returned inventory quickly piles up quickly and valuable resale opportunities are missed.
And if the season comes to an end without being able to shift those returned units, resale opportunities may dry up completely. Over time, this seriously undermines profitability and bogs down your warehouse with dead stock that needs to be liquidated or donated.
Returns must enter an efficient workflow the moment they arrive at your return processing center. This includes inspection, repackaging, reconditioning (if needed), and re-entering into inventory so that levels remain accurate. This way, returned inventory is ready for resale as quickly as possible, so your business can retain more revenue.
Analyzing Your Returns Data Closely
Returns data holds the key to understanding return behavior and how to tweak your returns management approach for better cost and efficiency.
This starts by ensuring that you collect the right data in the first place. When customers make return requests, make sure you are gathering relevant insights that help with returns fulfillment more effectively. This includes:
- Personal details e.g. email or account information
- Order number
- Reason for returning
Tracking customer details allows your business to see whether that customer has a track record of problematic returns behavior, so your business can take action if necessary. Moreover, tracking the reasons for returns i.e. wrong size or color, a product defect, or arriving too late for use, gives you actionable intel to refine both the returns fulfillment process and the broader shopping experience. For example, if a particular garment is seeing a high return rate due to incorrect sizing, you may need to update the product page with more comprehensive information about the fit of the garment.
Effective product returns management in 2024 is not about viewing returns as lost revenue or limiting returns on online purchases, but understanding how returns and exchanges have become a critical strategy for CX management and maintaining profitability. This requires a proactive approach to increase customer satisfaction and reduce the operational and opportunity costs associated with returns. Efforts such as disincentivizing retail return fraud, optimizing reverse logistics, analyzing return data to understand the underlying causes, and refining return policies to strike a fair balance between convenience and cost will go a long toward turning returning into an asset for your business.
