So far, the holiday season is once again proving a winner for eCommerce, with Black Friday and Cyber Monday online sales both notching double-digit revenue gains compared with last year. But there’s one aspect of soaring holiday sales most merchants could do without: the corresponding surge in online holiday returns. Merchants should begin planning now to minimize returns in the year to come — and to make the most of the situation when they inevitably occur.
There’s no question that the rise of online and mobile commerce has prompted a jump in returns. Overall retail returns jumped by 66 percent from 2010 to 2015 to reach a total of $260 billion — or 8 percent of all retail sales. And for online orders specifically, the percentage of purchases that result in a return can be double the overall rate, and climb as high as 30 percent during the holidays.
Merchandise churn not only increases costs for merchants, but it also has the potential to frustrate customers as they navigate online and offline return policies and costs. Fortunately, there are ways to minimize the damage caused by returns throughout the purchase cycle — whether by avoiding them in the first place, or minimizing the costs when they do occur. To combat and contain returns, merchants should:
Be transparent before the “buy” button
The specter of inconvenient returns may dissuade shoppers from buying in the first place. More than 50 percent of consumers say returning items bought online is a hassle, which means they may forestall purchasing if they don’t receive reassurance from merchants. Research shows that shoppers explicitly seek out such information, with more than two-thirds of shoppers saying they consult return policies prior to purchase.
Kibo merchant Title Nine makes its returns policy ubiquitous with promotions that start on the home page (including global placements in the header and footer) and are prominently spotlighted at key decision points, such as in the cart.
Promote and deliver convenience across channels (Oh, and “free” helps)
While fully 68 percent of online buyers report having shipped returned items back to the seller, the majority say that they prefer to bring returns to store locations if possible — signaling that merchants have room for improvement when it comes to maximizing returns flexibility. In most cases, driving to the nearest outlet to conduct returns is still more convenient than requesting and printing a return shipping label, re-packaging the items, and scheduling delivery of or dropping off of the package.
And then there’s the matter of the cost. With leading merchants such as Zappos.com promoting “free shipping both ways,” the pressure is on for merchants to slash re-stocking fees and provide shipping labels gratis. Indeed, three in 10 shoppers said the cost of returning items online via shipment was an issue, and 60 percent said a free returns policy was the hallmark of a positive returns experience.
While not all merchants can provide free returns everywhere, it’s essential to highlight what low-cost options are available, and to be transparent about any and all fees involved. Whatever the policy, merchants can ensure that the returns process is as smooth as possible by training customer service personnel and store staff to handle returns with aplomb. Gathering feedback on returns via survey, conducting usability testing, and forming ad hoc focus groups to vet returns across screens and in stores can help merchants detect glitches in the process.
Entice customers to invest their refunds in new purchases
The catchphrase, “If at first you don’t succeed, try, try again” definitely applies when it comes to returns. A whopping 70 percent of customers returning items to stores make additional purchases during their visit, and online, 45 percent of those processing returns find other items to buy, signaling a willingness to maintain a connection with the merchant brand and consider alternative products.
Merchants should take advantage of this receptivity to new purchases by presenting returns customers with an array of alternative products. In stores, merchants can position customer service and returns processing desks near the latest seasonal merchandise, or print in-store coupons on the returns receipt. For online returns, promotional discounts and product recommendations can be included in transactional messaging.
Help re-circulate merchandise via flexible fulfillment options
Retailers with physical stores can not only offer customers flexibility when it comes to return methods, but they also have multiple options for re-using the merchandise (assuming it’s in saleable condition). Outlets equipped to ship-from-store or provide pickup for online purchases (aka BOPIS, or Buy Online, Pickup In-store) can use returned merchandise to fulfill those orders even if the items aren’t in its in-store assortment. Finally, returned merchandise can be sold to in-store shoppers seeking “endless aisle” products not available on the shelves.
Retailers may even want to consider enabling peer-to-peer sales of merchandise otherwise destined for return, or promoting sales of returned merchandise as store events, as outdoor outfitter REI does with its annual post-holiday Garage Sale. The event is open only to members of the retailer’s paid loyalty club, thereby giving shoppers another incentive to join, and fosters a sense of community among the outdoor enthusiasts who attend the event.
How are you preparing for the onslaught of post-holiday returns, and which strategies have been successful?