The rapid growth of ecommerce is one of the biggest success stories in the global economy. Between 2009 and 2019, ecommerce sales soared by 300%. However, this success is a double-edged sword. As order volumes grow, returns invariably increase.
Returns are commonly referred to as the ‘plague of ecommerce’. No business wants to see products bouncing back into the warehouse. But returns are nigh impossible to avoid in a retail channel where consumers are unable to try products ahead of purchasing. According to Statista, ecommerce returns are set to cost $550 billion by the end of 2020 - 75.2% more than in 2016!
With the shift to online shopping caused by COVID-19, returns management has become one of the biggest challenges facing merchants. That’s why it’s imperative for businesses to have a solid returns strategy to avoid major logistical problems.
We’re going to take a look at why returns management matters, and how logistics partners can coordinate a more streamlined, efficient returns process for your business.
The reasons for customer returns are varied and wide-ranging. But in many cases, it has nothing to do with the retailer or product at all. While ‘damaged product’, ‘wrong items’ and ‘not matching the image/description’ are common reasons, these are outstripped by the 41% of customers who buy items with the intent of returning them.
The ecommerce model is one where returns are an integral strategy to drive sales; when consumers don’t have the opportunity to try products ahead of purchasing, the ability to easily return or exchange products becomes a necessity.
As result, it’s simply become a part of the culture of online shopping. When consumers purchase an item, they do so with the understanding that it might not be right for their needs. This is why return rates in ecommerce continue to outstrip brick and mortar.
For this reason, merchants mustn’t fall into the trap of approaching customer returns as a problem that needs ‘fixing’. A business can reduce return rates by providing better product descriptions or using more protective packaging. But making returns policies more complex or restrictive is only going to backfire on your business.
The best strategy for success? Accepting that high return rates are a core part of the channel - while making effective returns management a priority.
Increasingly, success as an ecommerce business hinges on your ability to manage returns quickly and effectively. For many consumers, returns policies are what determine who they choose to purchase from. According to Global Web Index, almost 80% of consumers in the US will check a retailer’s website for details about returns before purchasing. Furthermore, 63% say that they would refuse to buy from a retailer if they couldn’t find a return policy online.
Why? Because online shopping is ultimately about convenience and choice - and a flexible returns policy is one of the biggest signifiers of this. In a channel where consumers can be notoriously difficult to convert into repeat business, good returns management is one of the most successful retainment strategies available to ecommerce businesses.
Surveys show that customers will go back to merchants who offered them an easy returns process - and they do so in huge numbers. A massive 92% of consumers will shop again with you if they had a positive returns experience!
In sum, returns management isn’t just being organized and efficient; it’s about fostering customer loyalty and giving yourself an edge within an intensely competitive marketplace.
One of the biggest difficulties with customer returns is that volumes don’t remain stable throughout the year. Every merchant knows that they will see a huge surge in the aftermath of the holiday season - meaning that your returns system needs to be able to withstand these seasonal ebbs and flows.
For many businesses, managing a logistics operation that requires rapid scaling is immensely difficult. With their sizeable resources, fulfillment providers are much better placed to manage fluctuations in staffing and required storage space.
No matter how efficient your system is, returns can be incredibly time-consuming to process. Moreover, complicated workflows can leave you prone to errors that slow down the entire process - which is especially troublesome when consumers expect speedy returns.
Rapidly growing ecommerce operations require cost-effective solutions to manage both order fulfillment and reverse logistics. The fast pace of technological advancement has enabled fulfillment providers to bring sophisticated automation into its workflows, dramatically speeding up what used to be a highly manual returns process. This helps to control fluctuating labor costs and eliminate costly errors.
As well as fast returns, consumers are showing an increasing expectation for free return shipping options as a part of the process. According to Narvar, 74% won’t make a purchase if they have to pay for return shipping.
While this is a great way to win customer loyalty, it puts merchants under a huge amount of financial pressure - especially during the holiday season.
Because of their ability to negotiate favorable rates with freight providers, your logistics partner is much better-placed than an individual business to get the best possible price for return shipments. This allows you to minimize costs while also meeting customer expectations.
With its real-time inventory management system and fully customizable returns settings, the Whiplash platform allows for seamless integration with third-party services to coordinate a fast and efficient returns process. Aided by over a decade of experience from the Port Logistics Group, Whiplash combines cutting-edge technology with specialist knowledge to create a returns management solution tailored to your business’s needs.