Setting up a Returns Management Process in 2024
JP Arnaud-Marquez
·November 15, 2023
When you run an ecommerce business, developing an optimized returns process is just as important as the customer’s initial transaction.
Product returns happen frequently in ecommerce, where customers don’t have the chance to see products in person, or to try on items like apparel or shoes – in fact, average return rates for online clothing stores average around 26%.
Rather than discourage product returns, it’s important for your brand to prioritize customer satisfaction, making it easy for shoppers to send back their unwanted items and ideally, exchange them for others that they like better.
To ensure customer satisfaction, maximize efficiency, and retain more revenue from product returns, it’s important to build a robust returns management process. With the right returns process, you’ll be able to deliver a great customer experience that keeps shoppers coming back, even after returning a product.
Here’s how to get started.
What is involved in the returns process?
For ecommerce brands, the returns process begins when a customer initiates a return request, whether by contacting customer support or by initiating their request on a self-service returns management portal. The returned items are then routed via a courier service to their final destination — whether that’s back to the warehouse for restocking and resale; to a recycling or donation facility; or to a landfill.
For many ecommerce businesses, the returns management process is heavily manual, requiring large amounts of customer support time, and leads to lost profits. The reverse logistics process can be expensive for the merchant due to the cost of return shipping and restocking merchandise: Returning a $50 item can cost an average of $33. Additionally, product returns have a heavy environmental impact: As many as 9.5 billion pounds of returned products ended up in landfills in 2022.
Businesses that rely on a manual returns process are likely to see high refund rates, high associated expenses, and significant customer churn. But by streamlining your returns process, you’ll be able to improve your customer retention, profit margins, and customer satisfaction rates.
Here are some tips on streamlining your returns process:
- Create a clear and generous return policy
Some retailers mistakenly think that by making their return policy hard to navigate, they’ll cut down on their return rate and improve their customer retention. Actually, they’re likely to lose out on sales before the customer even hits the “buy” button: 67% of customers check the return policy before they purchase an item from an ecommerce store, and they’ll likely pass on your products if you don’t have a flexible policy that lets them make a return for any reason. Or, if they do buy a product and decide they don’t like it, they may not jump through all the hoops to start a return — but it just means they’re unlikely to ever shop with your brand again. - Automate your returns process
Using a manual returns process that relies on customer support to approve each returned item is a time-consuming and arduous process — for both your team and your shoppers. It can take a long time to initiate a return and receive a refund, creating a negative customer experience that will likely result in churn. By streamlining your returns process, you can transform returns into a seamless, self-service experience that makes it easy for customers to initiate returns on eligible items. From there, they can choose to either request a refund, exchange the returned item for a different version of the same product, or use store credit from the return to select any item from your online store. If they choose to send back the item, they can either print a return label or bring the unwrapped item to a nearby drop-off center, where it can be scanned and shipped back.
By improving the post-purchase experience and making it easy for shoppers to exchange products they don’t like for ones they do, you’ll build a better customer experience that improves revenue retention and customer loyalty. - Optimize your reverse logistics process
The return process isn’t over once the customer has initiated the return — the returned product then needs to get to its final destination.
Using a returns management solution makes that process much simpler and can help you save costs on reverse shipping and restocking. Using a returns management solution like Loop, you can automatically calculate the right course of action for a returned product, based on factors like its category, cost to ship, and likelihood of resale. If a product isn’t likely to be resold, you can save money on reverse logistics by offering a “returnless refund” that gives the customer a refund or store credit to purchase a different product, while letting them keep the original product. Other returns can be automatically routed via the most cost-effective carriers and routes, helping you save money when shipping back products to your warehouses for restocking. - Get data insights around your returned items
Bringing all of your returns data together on one platform also makes it easier for your brand to understand which products are getting returned most frequently, and why. Are shoppers frequently ordering the wrong size, or do the product descriptions not match up with what’s being delivered? You can use these insights to improve your product marketing, such as labeling a line of jeans with “customers say this product runs small”, which can help you reduce your return rate going forward. You can also use your data to support inventory management, making it easy to see where each returned product is in your supply chain. Using a returns management platform gives you the visibility you need around all of your returns process metrics to optimize business performance across the board.
When it comes to ecommerce, delivering an amazing customer experience is paramount — so don’t neglect the post-purchase journey. Developing a simple and streamlined returns process will help you boost customer satisfaction, increase customer loyalty, and keep your business profits high – transforming returns to opportunities.
Want to learn how Loop can help? Sign up for a demo.
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