Point of no return? – Returns are at the expense of earnings, customer satisfaction and the environment – no longer acceptable for retailers. So it’s high time to reduce returns. And both resellers and customers alike must play their part in this.
The increasing volume of returns is increasingly becoming a cost trap for online retailers. According to estimates by the University of Bamberg, there are at least 286 million returns in online retail every year. However, returns are not only time-consuming for customers, they are also expensive for retailers. On average, all processes involved for a return cost 7.93 euros, as the university calculates. The loss in value of the goods is not even included. This calculation shows impressively how important returns management has become. Retailers have a great need to process returns as efficiently as possible.
Indispensable: process optimization in returns management
Optimized returns management enables retailers to cut costs for the associated processes. Thus, in the long term, improved processing of returns becomes a competitive advantage. A pleasant side effect: The optimization also has a positive effect on customer satisfaction. In addition, lean returns processes are an important factor for sustainability in e-commerce.
Green commerce is increasingly becoming an important topic in online retail, in which customers are also interested: They demand sustainable online shop concepts from retailers and see retailers as having a duty to act transparently.
However, sustainability in e-commerce must be manageable and economically viable, especially for online shop operators. Both sides – buyers and resellers – have to do their part.
Customers, for example, have to be more aware of returns. Best of all, of course: they don’t occur in the first place. In order for this to succeed, retailers can and should sensitize consumers along the customer journey. There are usually returns for a reason. But online retailers first have to find out why products are being returned in the first place. Various tools, systems and technologies such as data sourcing help with this.
If retailers use the data procurement, they automatically receive comprehensive information on the reasons for returns. The details are important because every second return is due to unfulfilled expectations. Retailers should therefore give customers detailed options for stating reasons for returns. If they automate their evaluation, retailers can then adapt their online shop in a targeted manner.
Product presentation and ecological impact
Unfulfilled product expectations often result from insufficient information. With a well thought-out product presentation in the online shop, retailers and customers can jointly reduce returns. 49 percent of customers in a Box Inc./YouGov survey agree. Above all, new technologies such as augmented reality (AR) and virtual reality (VR) enable customers to have a new “online product experience”. In addition to descriptions, meaningful, high-resolution product images and, if possible, product videos are also included. Last but not least, it is important to make customers aware of the ecological impact of a shipment while still in the shop.
Automation and data-based logistics
Process optimization in logistics and in the warehouse also plays an important role in e-commerce – and not just in returns management. The keyword is automation. Sensor technology, driverless transport systems (DTS), AI-supported software: Logistics 4.0 offers many solutions. But the most important thing is to use the tools and systems. Online retailers not only benefit from cost savings, but also from greater customer satisfaction. Automated warehouse processes reduce errors in order and returns processing. Customers receive their goods faster. Refunds or item replacements will be made more expeditiously. This has a positive effect on the customer experience and customer loyalty. Digitized and automated processes also increase efficiency and thus sustainability. Data-based repeat orders save resources. The same also applies to the loading of delivery vehicles: If this is done on the basis of data and retailers optimally adjust the size of the consignment to the content of the consignment, they reduce empty trips. This saves transport costs and is good for the environment.
Returns management: Create understanding and remain economical
However, the best sustainability concept is of little use if the shop and logistics team is not behind it. Therefore, retailers should not optimize processes from the top down, but tackle the whole thing together with their team. Creating understanding is essential. Also important to reduce worries in the team. Many employees fear job cuts as soon as digitization progresses. Rather, it is a support. This is exactly what retailers should focus on. With the right approaches, online retailers can significantly improve returns management and sustainability while remaining economical. By rethinking processes, relying on digital tools and further sensitizing the team and customers. It is high time to tackle the issue hand in hand.
Also read: Online trading – 10 measures that lead to success.
The author Micha Augstein is the founder and managing director of Parcel.One, the logistics service provider for cross-border online trade. Since 2006 he has been investing in various logistics solutions and building up companies. Previously he worked in wholesale for various fashion brands.