Managing retail returns

Rob Shaw at Fluent Commerce outlines five ways that retailers can manage the returns tsunami

 

In 2023, UK retail returns hit record levels, and we haven’t even reached the post-Christmas returns peak yet.

 

Analysis shows UK shoppers posted back more than £4.1bn of online clothing purchases, with this figure estimated to rise by 16.7% before 2027. This is damaging not just from a cost perspective but also from an environmental one given the amount of goods that go back into a supply chain or end up in landfill. 

 

With the volume of returns showing no sign of slowing down, it is more important than ever for retailers to offer the best returns experience possible to turn a potential negative shopping experience into a good one.

 

Over the past year, we’ve witnessed retailers such as Zara, Boohoo and Uniqlo start charging for online returns, while some brands like Shein have let customers keep low-price items they want to return if the transit cost eliminates any profit. 

 

Best practices for a better returns experience

The way retailers and brands manage returns is becoming a more important part of the customer journey. A recent study found that 92% of consumers said that they will buy again if the product return process is easy.

 

With that in mind, here are five best practices for retailers looking to make the returns process smoother, simpler for the customer and less costly for the retailer.

 

1. Make your returns policy simple 

Returns policies should be clearly stated and posted visibly online, including in shipped packages and in-store. Retailers should offer customers a variety of options to return items on their own with minimum effort. The reverse logistics workflow will start to become more efficient in 2024. We should expect to see more drop-off points where consumers can hand products back, making the returns process easier.

 

Clearly defining policies that address several types of return situations is key. In store, retailers should have a sign at checkout detailing the returns policy, and could also print this on customer receipts for added clarity.

 

In some cases, employees should also be instructed to verbally communicate the returns policy. For example, if the retailer doesn’t accept sale items for return, then it’s good practice to remind customers who are about to purchase an item from the clearance rack. This will help prevent any potential frustration further down the line. 

 

2. Provide a frictionless experience across platforms

Ensuring consistency across the customer journey, whether customers are visiting your store, website or mobile app is critical. Make it easy for your customers.

 

Retailers should provide easy-to-find return labels and policies around postage. They can include a paid return envelope in the package, an easy to use link for ‘request returns package here’ and third party locations like newsagents or lockers. This way, customers who do not wish to visit a physical store are provided with a pain-free way to return their products. 

  

3. Find opportunities for conversion and upselling 

In stores, staff can entice customers by reminding them of what great products or gift cards they can get in exchange for the item they’re returning. This may entice them to explore the shop. If a customer has bought a shirt online that doesn’t fit properly and has come into the store to return it, employees can use the opportunity to offer a different size or brand that might suit their requirements better.  

  

In order to effectively convert a return into an exchange or upsell, store staff need to have a view of all inventory, not just what’s in their store. If a sales assistant can take a returned item and say "I can get this to you in the correct size in two days if you like" then that’s a lot more powerful than providing a refund and hoping the customer buys again.

 

4. Use data-driven insights

Returns offer retailers insights about their products, customers, and marketing strategy. Retailers should make a point to gather feedback every time a return or exchange is processed is key, asking why a customer is returning the product. Did they find a better alternative somewhere else? Was the item damaged? Quality not as expected? Or did it not fit?

 

Good retail software should inform retailers which products get returned, how quickly, and via which routes. This way they can assess the cost of returns in terms of time and profit and correct any negative trends early. It may be an issue with a product or with the marketing.

 

Over the coming year, technology will become increasingly valuable in analysing returns patterns, allowing retailers to identify key perpetrators and loyal customers and act accordingly.

 

5. Make returns easier

Retailers could also extend their return period from one month to 100 days or even a year. This can lead to better margins as customers are more likely to buy products knowing they have plenty of time to return items, providing them with more safety.

 

Retailers may also consider having a different returns policy or process in place for high value customers, or those who tend to buy items at full price. Cotswold Outdoor, for example, has a 100 returns day policy for Explore More members. These members are also not required to retain their store receipt for returns made in-store, as all purchases are tracked on their membership card.

 

Customer loyalty is the foundation of successful retail, especially as the cost of living continues to bite, so it’s worth retailers keeping this front of mind when reviewing their policy. 

 

---

 

Rob Shaw is SVP and MD EMEA at Fluent Commerce 

 

Main image courtesy of iStockPhoto.com