The returns dilemma: How to offer a smooth returns process without return rates spiraling out of proportions

10th marts 2021

As an online retailer, you need to offer a smooth and simple returns process to avoid losing customers to competitors. But how do you offer a hassle-free process without your return rates shooting through the roof?

Return rates have exploded over the past year or so. Analysing Consignor shipment data, shows the number of returns increased by 51% in Q4 2020 compared to Q4 2019.

Looking across Europe, Switzerland and Austria are the countries with the highest return rates reaching 33% in each country in Q4 2020. In 2^nd and 3^rd place is Latvia and Lithuania with return rates at 30% and 20% respectively.

This development is most likely due to Covid-19 enforced lockdowns temporarily closing non-essential shops, leaving consumers no other choice than to do their shopping online.

Pandemic or not, the trend is that return rates (especially in apparel/fashion) are high, so an increasing number of online retailers feel the requirement to offer a smooth returns process or even free returns.

According to consulting firm KPMG, the average returned purchase passes through seven pairs of hands before it is listed for resale. Also, to pick and deliver an order costs between £3 and £10 in the UK. It can also cost double or treble that to be processed on the way back through the supply chain.

Naturally, this is a huge cost for retailers to cover, and even though the pandemic won’t last forever, our new online shopping habits are likely to remain.

That’s why implementing a sustainable returns process as well as developing a strategy to reduce the number of returns is crucial to keeping a sustainable economy and at the same time offering your customers a smooth returns experience.

Sustainable return processes

Manual and unstructured returns processes at the warehouse are time consuming and prone to human errors being made.

By digitizing and simplifying returns handling at the warehouse you use a minimum amount of time processing the return, releasing resources which can be used to optimize other areas of your supply chain.

If you offer free returns, you can build it into the price of the product. Also, you could offer free returns through a subscription, providing membership only customers with the free returns option.

Reduce the number of returns

If an online retailer fails to provide enough detailed information about their products such as sizing, weight, measurements, colors etc. this can potentially result in higher return rates.

However, there are a few measures you can put in place to reduce the number of returns:

• Provide better product descriptions on your website, so the customer knows what to expect from the product
• Show high-quality product pictures enabling the customer to get as close a look and feel of the product as if they saw it in real life
• Include product reviews by customers. Who else is better at describing the product as the people who have actually bought and used it?
• Offer virtual fitting rooms to give the customer a better idea of how the product looks when they’re wearing it

By keeping an eye on return data, retailers can also identify wardrobing customers (customers who buy clothes, wear it once and return it). These should be handled with caution, as the majority of wardrobers still keep more than they return.

However, by contacting the wardrober and thanking them for being a loyal customer and ask if there is anything you can do to improve your returns process, could potentially make them aware of their own shopping behavior.

In any case, it is important for online retailers to act on the increasing number of returns in order to not let the costs eat away at profit margins.

If you are interested in learning more about returns and other shipping insights from across Europe, check out our Q4 2020 data report: State of Last Mile Delivery in Europe here.