How to Reduce Returns Over the Festive Period & Beyond

By Barley Laing, UK Managing Director at Melissa

The eCommerce industry today is booming, with no signs of slowing down, especially seeing the following effects of COVID in most cases diverting consumers, in means to being their only channel of purchasing from their favourite brands.

As this proves to be a convenient way forward for consumers, it comes with drawbacks. Firstly, missing the ‘Try before you buy’ or physical touch degree, which can submit the fear of the unknown. When the item arrives, it may not fit, look as it did online or could be damaged. Retail logic states that many retailers are able to pick up the initial front-end costs as part of their return policy as it gives confidence to consumers being able to return unwanted items hassle-free and paid for.

But what about the costs involved in this? Let us take a look at the main 5 below;

Cost of a refund: Due to unsatisfied/unhappy or poor customer experience

Shipping & handling costs: When retailers offer free shipping and free returns to entice purchasing, this is an investment of transportation which is lost when products are sent back to the retailer.

Logistics: One that is quite overlooked by a lot of retailers but deems to now have high expectations is delivery wait times. Same day to express shipping and delivery is always better than standard, but remember to uphold that expectation, as customers will look for alternatives if expected times are prolonged and refunds requests will be made.

Fraudulent Purchases: Another factor that is overlooked with big potential for headaches is fake purchases from stolen contact details and payment methods which result in most cases, the retailer having to accumulate the return costs from this.

Cost of Product Dispositions: always consider that when items are returned they need to be inspected for resale, which takes up time and staff resources, another point to consider is when retailers are offering lengthy return periods this can cause particular products to not be in fashion by the time they are returned making it harder to sell or even not being applicable for resale. This results in product liquidation which are sold for much less than their perceived value.

Future Proof Your Returns Strategy

The above seems like a lot of can go wrong and how easy it is for one the common problems mentioned to occur, but retailers must adapt to the competitive landscape which is all about the customer convenience factor.

The return process makes up a large chunk of this. We found that 82% of customers do not return to make another purchase if an online store has an overly complicated or difficult return process and 72% of consumers saying they will spend more with a site that DOES make returns easy.

We as consumers know it’s a hassle to return an unwanted item but for the retailer, there is even more work and cost involved, which is why eCommerce stores must implement all the necessary tools to avoid the future mishaps that can easily cause big and underlying problems throughout a whole organisation.

The festive season just in our mirrors proves to be the busiest period for retailers, which follows with a barrage of returns just after. Digital commerce states that returns have increased in January year to year by 26%.

Although we are confident that most online stores do have some sort of management solutions in place already, as eCommerce continues to grow, it will prove that more tools & practices will need to be implemented to keep up with increasing expectations.
 

Future Proof Your Brand

Customer Data is Key

Data quality, an element that seems to be overlooked and retailers not taking advantage of the potential success it can bring to their business can be put to great use when future-proofing your return strategy.

The first recommendation is an address auto complete and look up tool. This functionally enables accurate address data to be collected at checkout. This is quite versatile, especially when dealing with global customers entering international addresses which will automatically suggest a verified postal address standardised and formatted to their county location.  

All retailers know that cart abandonment is a major floor in the final purchase stage, so being able to reduce keystrokes by up to 70%, mistakes from entering addresses and speed up the overall check out process is another benefit this tool can bring.

Accurate address data is one thing but as we see expectation rising towards the next day and time slot delivery options, which bring us to our second recommendation of implementing a geocoding & location intelligence tool. Much like the giant Amazon, being able to go further in logistics will give you that edge over your competition.

Geocoding can add rooftop latitude and longitude coordinates to a customer’s verified address giving real-time calculations of the shoppers’ distance from warehouses and distribution points. This enables a retailer to reduce shipping costs and present several delivery options determined by price, while still sustaining delivery to the right address, at the right time, the first time around.

The third recommendation is achieving a single customer view (SCV) on all your customer records, or in other words, golden records. That one record that presents a full 360 view on a customer. The main reason for this is being able to use segmentation to build customer profiles based on channel activity, engagement and feedback which can alienate ‘high-risk customers’ which in other means they are likely to return.

Matching and deduplicating your database will assure more efficiency between departments and clear up any clustered or partial bits of customer information scattered throughout departments caused by different channels of customer engagement. This can greatly increase efficiency between departments like sales being able to quickly offer a 20% off voucher to a customer if the logistics team see that their order has been delayed and then marketing being able to maintain that post-purchase engagement after the logistics team see that their item has been delivered which deems crucial.

The final recommendation is the KYC factor, (Know Your Customer) something that should not be ignored, especially when fraudulent activity is becoming more and more common as we adapt to the digital age.

Being able to confirm that a person is who they say they are will shield your eCommerce store from the above and should be done by a trusted data partner that can access trusted reference data such as credit agencies, electoral rolls and other particular watch lists that may be useable to what you are selling, and can be used to cross-validate a consumer’s data for proof of address.

Additionally, having active data quality tools to achieve real-time verified contact data will standout like email & phone verification to check the validity, the liveness of a customer’s number or email to protect the merchant from spam traps as well as global IP location for geotargeting, clarity of where your visitors are coming from and if a person who says that they live in London who wants to make a high valued purchase but their IP address is located in another country.  

Yield Minimal Returns

Product returns are a hassle for both the consumer and retailer but not taking action to further reduce your volume as eCommerce starts to become more common, ultimately increases the chance of losing out on those loyal customers every brand hopes for, and the repeat profit they bring. This tends to bring retailers to the primary realisation of how important their customer data and metrics can be and by applying data-driven practices at an organisational level, retailers can fine-tune their returns process that will yield minimal returns. 

By Barley Laing, UK Managing Director at Melissa

Published 26/11/2020

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