‘Tis the season for processing ecommerce returns. This can be a letdown after the excitement of the holiday shopping season, but it really shouldn’t come as a surprise. Depending on which article you’re reading, ecommerce brands should be prepared for return rates of anywhere from 16% to 30%. That’s a lot of merchandise flowing backwards up the supply chain. Brands that have a reverse logistics plan in place make it through the returns season in much better shape than those that don’t.
The way you handle returns can actually set your brand apart and give you a competitive advantage in the marketplace. Of course, the opposite is also true — when handled poorly, returns can hurt your brand. Today we’re going to talk about what you can do, before and after the purchase, to mitigate the damage returns can have on your brand.
Returns Can Hurt in Multiple Ways
Look at it this way: every time a customer requests a return, it represents a disappointment in your product or your brand. The product they received, for whatever reason (and regardless of whose fault it is), did not live up to their expectations. That puts your brand at risk, which puts the responsibility for making it right squarely on your shoulders. Some damages are measurable in time and money, while for others, costs are more insidious and can do even more harm. Because returns are an unavoidable part of doing business online, you need to protect your brand against all kinds of hurt.
- Sunken costs: This includes the labor and packaging to fulfill the original order, plus shipping, insurance, duties, and any other fees. If the item can’t be recovered and resold, you’ve also lost the money you’ve invested in manufacturing or purchasing, shipping and storing it in your warehouse (a.k.a. the cost of goods sold).
- Lost revenue: You’ve lost the revenue you would have made from the sale. If the item can be recovered, it can’t be resold until it is restocked.
- Cost of return shipping: If you offer free returns, you pay shipping costs.
- Cost of processing the return: This includes labor and warehouse space used to inspect, re-bag, and retag merchandise, or to recycle, liquidate, or dispose of it.
- Customer service time: If the customer needs to file a complaint or can’t easily initiate a return online, they will contact your support team for help.
- Disruption costs: Returns that aren’t handled properly can quickly pile up, interfere with order processing, cause inventory discrepancies, and take up costly warehouse space.
- Loss of repeat customers: If a customer is unhappy with the way you’ve handled a return, they are unlikely to shop with you again.
- Shared unhappiness: When that same customer shares their poor experience on social media, your reputation can be severely damaged, making it more difficult to attract new customers in the future.
As you can see, there are pretty significant costs to mishandling returns. While some costs directly affect your bottom line and financial reporting at year’s end, others can do more lasting damage to your brand.
How to Prevent Damage to Your Brand
The first and best way to keep returns from damaging your brand is to prevent as many as you can. Once you’ve done all you can to prevent them, the remaining returns should be handled quickly and efficiently before they turn into bigger problems.
Prevention Comes First
Customers initiate returns for several different reasons. Let’s take apparel, for example. According to a Coveo Holiday Report, 55% of surveyed online shoppers in the U.S. and U.K. cited poor fit and 48% said the item Another 46% mentioned poor quality. Other reasons included: the item did not look the same as it did online, the incorrect item was sent, or the customer ordered several with the intent to keep those that fit. There is no single fix to prevent all the reasons for a return, but you can start with the low hanging fruit. Even if your business does not sell apparel, the same solutions apply.
- Wrong size: Make sure your product descriptions include accurate sizing charts customized for the brand and type of clothing, as well as a description of how the product is meant to fit (relaxed, fitted, skinny, oversized, etc.). Reviews that encourage customers to evaluate how the product fits are helpful, too.
- Poor product descriptions: Product descriptions should include information about the fabric contents, materials, ingredients, what’s included, what’s not, weight and dimensions, how to use it, return policy — essentially anything you would want to know before purchasing. And this applies to every sales channel. Customers on TikTok or Instagram should be able to find the same information as easily as someone on a laptop. Product photography should show the true color of each SKU, not just a generic color swatch. Products should be shown on models or in use whenever possible. If it’s made in the USA, or made from sustainable, organic or recycled materials, shout it to the rooftops. If it’s not, you still need to provide the information or risk a return for omitting it.
- Damage: Of all the reasons for a return, this is the most preventable. If a product is damaged in transit, it was either very roughly handled or not packed well enough to withstand being dropped, crushed, or left out in the rain. Accidents do happen, but if you’re finding that the same items are being damaged repeatedly, it’s time to look at a sturdier packaging option. Your 3PL (third-party logistics provider) or fulfillment center should be able to recommend an affordable packing solution and ensure inventory is stored properly in the warehouse. Products should also be marked fragile for special handling within the warehouse, as well as on the shipping box.
- Wardrobing: This is the practice of buying clothing, wearing it, and then returning it as if it were new. If your ecommerce business is experiencing this frequently, you may need to change your return policy or do a better job of communicating it. For example, don’t process refunds until the product is returned and inspected; and don’t offer refunds for items without the original tag and packaging.
- Encourage exchanges or store credits: Make it easy to exchange the wrong size or color for an item of their choice. You’ll still have to process the returned merchandise, but you won’t have lost the sale altogether.
- Bracketing: This is the practice of purchasing two or three different sizes of a product and returning the ones that don’t fit. Better sizing info can prevent some of this, but customers who are between sizes or strapped for time will still do it. In this case, consider changing your attitude, not your return policy. If you think about how much it would cost to ship and return each size one by one, this customer is actually saving you money in the long run.
You may not be able to prevent all of these problems, but with a little effort, you should be able to reduce their frequency.
If You Can’t Prevent It, Minimize the Damage
Nobody wants to return a purchase. It’s the dictionary definition of a PITA. But when the business makes it difficult, the pain turns to something else that is far more damaging to your brand: frustration, and eventually anger. That’s the last thing you want your customers to feel. How can you keep this from happening? Lots of ways!
- Make returns easy and free: Are you forcing your customers to struggle with a chatbot or cumbersome call routing system just to make a return? We’ve got news for you. Most shopping carts and marketplaces have online return portals that make it easy for customers to initiate returns or file claims for lost or damaged packages without your assistance. Less customer service involvement means lower labor costs for your brand. According to Salesforce, the combination of self-initiated returns and free shipping is the experience preferred by 64% of consumers. In addition, third-party returns management systems, such as Loop, Happy Returns, and Returnly, give customers easy options for drop-offs and exchanges, while improving the process and reducing costs for the business.
- Speed up the process: Apps and return management systems can also automate the authorization process, based on the merchant’s predetermined conditions, and can issue store credits or facilitate exchanges directly within the returns portal. Other systems issue a refund as soon as the package is scanned at the drop-off location. This can be risky for the merchant, but is a far more satisfactory experience for the customer. How you handle it may depend on the value of the merchandise being returned.
- Offer purchase protection: In cases of damaged, lost, or stolen packages, where the customer is angry, the merchant is on the hook for a reshipment. It wasn’t your fault, but this is not the time to argue about who’s going to pay for it. Delivery insurance eliminates the blame-game. ShipMonk offers a service called MonkProtect™, where customers can insure their order against loss or damage for a small fee, starting at $0.97 per order. If the order is lost, damaged, or stolen, MonkProtect’s Automated Claims Portal allows them to quickly and easily resolve any issues. Claims are centralized and automatically pushed for approval, reshipment and/or reimbursement, making the whole process 10x faster than manual claims processing. ShipMonk reimburses the cost of any lost MonkProtected orders, the customer gets next-level service, and the merchant pockets a net gain for each MonkProtected order.
- Keep customers informed: There’s nothing worse than submitting a form online and wondering whether it went through. Automated emails and notifications reassure customers that their claim was received and that someone is working on it. These messages and status updates should include next steps and clear instructions to prevent unnecessary “where-is-my-refund?” calls to customer service.
- Plan ahead: Have a clearly defined returns process in place for whoever is handling your returns. This prevents bottlenecks and disruption on the warehouse floor. The warehouse should have dedicated space and team members to work on returns. Merchants should supply clear direction on how to handle each product depending on its condition.
- Quickly restock: Getting saleable items back on the shelf as quickly as possible prevents inventory discrepancies and turns that product into an asset instead of a loss on your balance sheet.
- Don’t count your chickens: Use discretion when discussing sales results publicly until you have the full picture. You may have had your best holiday season yet, but if your sales figures don’t account for discounts, returns, and losses, you could be eating your words later.
- Use sustainable packaging: You can use recyclable packaging, or use packaging made from already recycled materials. You can enable and encourage customers to return merchandise in the same packaging it was shipped in. You can recycle or resell your merchandise whenever possible. Consumers appreciate brands that are actively trying to reduce their carbon footprint.
If all this sounds like too much to handle, there is one solution to all your return management problems–outsource it!
Is it Time to Outsource Returns Management?
Most ecommerce businesses are set up to efficiently move products out the door; they’re not set up for handling returns. That’s why some 3PLs, including ShipMonk, handle both order fulfillment and returns for their ecommerce clients. It makes perfect sense. After all, the company that is already storing and handling your products is likely to be the most qualified to quickly get your returns back into circulation and reship orders when necessary. But outsourcing returns with ShipMonk offers some additional benefits.
- We’re happy to use your branded packaging and your choice of eco-friendly packing materials.
- Our Virtual Carrier Network reduces shipping costs, leaving more wiggle room in your margins for free returns.
- ShipMonk offers seamless integrations with all major shopping carts, marketplaces, and most third-party return solutions.
- Our industry leading fulfillment software tracks orders and inventory levels in real time, so you can troubleshoot delivery issues immediately, and see accurate inventory levels at all times.
- MonkProtect guarantees your customers a risk-free online shopping experience and opens an additional revenue stream for your business.
- We have dedicated space and teams for processing returns in each of our twelve fulfillment center locations.
Best of all, you don’t need to be a logistics expert or tech guru to gain all of these benefits. ShipMonk handles all the integrations for you and can recommend a returns-management process that efficiently and affordably meets your business’s growing needs. Reach out when you’re ready to Stress Less and Grow More!