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Return To Sender

Wrong color. Missing parts. Damaged. Ill-fitting. Returns are pretty much unavoidable in the world of online retail.

Most merchants would agree they’ve had to deal with all kinds of returns — from clothing that simply didn’t suit a customer’s taste, to toy recalls or even items with missing pieces.

While e-retail and returns go hand in hand, successful businesses today are realizing the advantages of analyzing product returns in new ways. By understanding the underlying reasons that often contribute to returned goods, online retailers can begin to appreciate that a good return experience can offer a serious competitive advantage.

In fact, when online businesses implement and follow through with a transparent, comprehensive returns policy, they have a better chance of building a more reputable brand name and protecting their bottom line, as well as improving customer loyalty and overall profits.

The Numbers Don’t Lie
To better understand the consumer-centric mindset as it relates to returns, it can be helpful to gain some insight into product return statistics. With this approach, merchants can then create a game plan for boosting retention, decreasing shopping-cart abandonment and improving customer loyalty.

First, it’s pretty safe to say nobody likes to pay for return shipping. According to recent research conducted by the TrueShip team, 79 percent of consumers said they want free return shipping. But some online stores struggle to offer this option because they are unable to absorb the cost into their bottom line.

The latest numbers paint an eye-opening picture: Between 30 to 35 percent of all products that are ordered online are returned by consumers for one reason or another. The National Retail Federation (NRF) reported that 8.6 percent of total sales are returned, a figure that represents more than $3.1 billion annually. 

Returns Should (And Can) Be Simple

By making the return process easy, retailers create happy customers, who are then more inclined to shop at their store again. Current statistics show that 92 percent of consumers will buy something again if the return process on a brand’s website is easy.

However, be aware that if a retailer does not make returns easy and hassle-free, the numbers can work against them. More than 80 percent of consumers said they are unlikely to come back to a store after they have had a negative experience making a product return.

Yes, There Are Advantages

Emerging technologies have created a new way of thinking about returns management. Smart brands are increasingly working to streamline their returns process by utilizing cutting-edge software solutions. Thanks to many of these tools, retailers today can better manage and process returns, as well as leverage data and intelligence to glean key metrics that drive these returns. Ultimately, this can empower brands to safeguard their bottom line.

Returns can generate a multitude of questions for a retailer: Is it an appliance that’s too complicated to operate? Are the instructions too confusing? Is it a lamp that is missing parts? Or, is a pair of riding boots not selling because the cut is too narrow? There can be numerous reasons why products are returned. But rather than assume those reasons are illegitimate, online merchants would be wise to pay attention to and identify product improvements that could eventually reduce their return rates.

Analyzing what gets returned — and understanding why — also helps retailers identify patterns that can reshape product design and selection. For example, businesses that see a spike in returns of a particular product can capture valuable information as a way to address what may be a design flaw; or a product characteristic that is a turn-off to various customers. 

Once a business understands the importance of an effective returns-management process, the goal then should become how to create a plan that meets its specific needs. This is the point where it makes sense to call in a third-party vendor, specifically a well-qualified provider with experience and a good track record in returns management. 

When handled correctly, an online business’ returns process can be an extremely effective way to positively connect with consumers, earn their loyalty and dedication and become a source of new revenue opportunities.

Any retailer that has yet to embrace the potential within their returns process is missing out on opportunities to connect with their consumers and eventually recapture revenue.

Chris Dunn is in charge of business development at TrueShip, a manufacturer of multi-carrier e-commerce shipping software.