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Returns are more than a headache – they are a huge opportunity

The online retail explosion that accompanied the COVID-19 lockdown has driven a proportionate volume of returns, and the way online brands and fulfilment partners manage the returns process has significant implications for their overall customer relationships.

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Well-managed returns experiences build long-term positive sentiment and loyalty, as well as short-term upsells and cross-sells. When the process is digitised, retailers can also extract additional value from returns in terms of supply chain planning, product insights and overall business strategy.

A poll of 1000 Australian consumers found that customers who have a poor experience returning an item will steer clear of the retailer in future, with 41 percent of respondents saying they avoided them entirely after a negative returns experience. This isn’t simply a matter that customers turn their mind to post-purchase. Nearly three quarters of the poll sample said they would check the returns policy of an online retailer prior to committing to a purchase.

The top frustrations for customers are paying postage on returns, the inability to return a product for a refund, and delays receiving refunds in their bank account. More than four in five customers identified paying return postage as a frustration, and more than three in five were dissatisfied with policies that did not allow refunds.

Customers said they wanted to return items at locations that suit their day-to-day movements, nominating post offices, supermarkets and physical stores owned by the original retailer as the most convenient locations for returns. Providing a range of convenient drop-off locations for returns, such as those provided by Australia Post’s Collect & Return network, can help retailers to speed up the time it takes to get stock back and available for resell. Minimising the volume of markdowns at the end of season and maintaining profitability.

This is where the opportunity for retailers arises. When making returns, customers often purchase as well. Of those who returned an online purchase in store, one in three made an additional purchase in-store with one in five of those purchases valued at more than $100.

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The other incentive for retailers to embrace a customer-friendly returns policy are the insights that a well-implemented policy can yield. At a time when ecommerce players need to build a real-time picture of changing consumption patterns, an intelligent returns solution can provide data that tracks which items are being returned, where, when and by who.

This data can inform warehouse stock levels, identify product issues, feed into marketing strategies and yield important insights into customer profitability and lifetime value. As the data-driven picture of returns behaviour develops over time you can provide incentives to high-value customers and identify which customers, if any, are habitually returning items rendering them unprofitable.

Those companies that try to apply a punitive or discouraging returns procedure may protect profit this week, but it’s a short-term play. Companies that recognise the data and customer experience potential that a well-engineered digitised returns process contains are those who will fully maximise their profitability in the long-term.

Justin Dery is CEO Asia Pacific at Doddle