Reverse Logistics: How to make returns work for your company

In today's eCommerce world, a returns strategy is a must

Returns are an inevitable part of any retail business, managing these returns efficiently is crucial to a successful business. Just like a shipping strategy, a returns strategy is a must.

Return policy features can make or break a sale, so it's important to be aware of what to cover for greatest customer satisfaction.

Successful returns strategies include transparency about the process before the purchase takes place. This will build trust with old and new customers who want to understand what options exist in case they need to return an item.

Your return policy should cover things like the types of items that are able to be refunded, the type of recourse your customer may receive (refund, replacement, or repair), how does one return an item, and who covers the cost of delivery or postage for returning the items. Upfront visibility about your returns policy is also critical to avoid significant cart abandonment.

The top 6 reasons for returns include:

1. The customer ordered incorrect product or size
2. The customer decided the product was not needed or wanted
3. No reason for return given
4. The product did not match the description on the website
5. The product did not fit the customer's expectations
6. The company shipped the incorrect product or size

As expected, the fashion industry sees the highest levels of returns. This is due to customer indecisiveness, bulk ordering to check size or colour and descriptions and pictures being inaccurate on a retailer's website.

In one IMRG survey, 41 well-known retailers were asked to judge the impact of returns on their business; nearly 50% of them stated that reducing returns was a top priority (27% voted ‘very high’ concern, and 22% said ‘high. In many traditional business models, the focus is often put on increasing sales, however reducing returns is equally important in creating and retaining revenue.

In some fast-fashion scenarios, managing returns can be more important than sales. Consider for a moment, the costs, logistics and emissions of their deliveries and returns combined. Many fast-fashion returns end up in landfill because it often costs more to put them back into circulation.

 

Implement Sustainable Returns Initiatives

Sustainability can be built into a returns ecosystem by encouraging customers to drop off packages rather than scheduling pick-ups. Implementing a returns portal also gives you more control over sustainability. Offer the customers environmentally-friendly ways to initiate returns. Carriers using electric vehicles and more sustainable fuel can help reduce the overall carbon footprint of your return operation significantly.

Another major area to examine is packaging. Switching from plastic to cardboard is already a great step as it decomposes more quickly, but a step further is to begin using reusable boxes and pallets. Despite the myth that sustainability comes at an additional cost, there are many instances where implementing sustainable initiatives can be cheaper than their less sustainable alternatives.

One example of returns-gone-awry is the phenomena taking place in American big retail stores, where brick-and-mortar retail stores become returns drop-off points, in the hopes that it would be a return win-win. Easier returns would mean happier customers while bringing more foot traffic into ailing retail locations. Unfortunately, store employees quickly encountered daily long lines of customers who showed up with hundreds of return packages, turning the store associates’ jobs into a retail horror story. The drop-off points became congested, did not increase store revenue, wasted staff time, created long lines, frayed tempers, and resulted in piles of boxes and plastic waste.

Different industries naturally will shape how one should build out smart returns strategies. As discussed, the clothing product category generates the highest return rates. Meanwhile, groceries, computers, appliances and home & garden online sales reveal a very low return rate for various reasons.

The operational challenges of return strategies include:

• High volumes of returns
• Tracking returns
• Unexpected spikes and peaks
• Reverse logistics efficiencies are difficult to achieve
• Logistical costs
• Damage to products
• Sustainability issues

 

Smart Return Solutions

Generally, industries handle returns with similar basic structures:

1. The customer provides the reason for return on the provided documentation and mails it back to the warehouse store.
2. Once it arrives at the warehouse / store, staff inspect the item for damage, review the reason for return, and scans it back into your WMS inventory.
3. If the item is not damaged or expired, it is returned to the shelf to be picked for another order.

Finessing return structure features to suit your industry needs, is the key to making returns work for you – not against you.

1. Offer a customer-friendly overall returns process
2. Use a branded customer portal to create continuity with the brand.
3. Use portal to create visibility around returns policy (before checkout)
4. Offer return options through SmartFreight
5. Add a return label with outbound orders - or email link to print a return label

Implementing any of the solutions above will positively impact your business. Returning customers are more likely to return to a retailer who has a customer-friendly returns process. A visible and straightforward returns policy encourages new customers and sharply decreases cart abandonment.

 

SmartFreight Returns Portal

2023 saw the launch of our new SmartFreight client returns portal. Our customisable portal helps our clients smoothly manage the returns process for their customers. SmartFreight clients can easily capture the data they require as part of the returns process by tailoring their portal fields. In addition, they can configure the look and feel of the portal to match their branding. The SmartFreight portal can also determine the most appropriate carrier to use for each return.

SmartFreight has you covered whether you want to send a return label with every outbound parcel, or have the customer contact you to request a return label link.

For more details and a SmartFreight portal demonstration, reach out to us and take the first step to providing a consistent, customer friendly experience which will keep your clients coming back with renewed trust and loyalty.