While there are great customer service implication around handling returns, actually managing that process is complex and potentially costly, so it has to be done expediently, efficiently and above all cost effectively so as to not over-burden you with what is essentially a cost.
It is estimated that between 4 and 6% of all sales are returned, costing the retail industry $40billion in the US alone.
For this reason, many logistics and delivery companies have developed returns services and policies that are part of their delivery contracts to help retailers handle this ‘backward’ part of their business cost effectively.
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So what do you need in place to run an efficient returns policy?
Customer touchpoints
The first port of call for making reverse logistics work is making it simple for the customer to see you returns policy and to then actively sort out returning goods to you. Clearly stating what their rights are and how to return goods is essential.
It has to be simple, work on every channel and be easy for them to then manage and track. It doesn’t have to be anything more sophisticated than a page on your site, an email address and a returns address, as exemplified by our friends at Distinctive Wash.
Or it can be a full multi-channel, all singing all dancing returns policy as per John Lewis Online that offers a variety of ways to return.
And it needs to be optimized for different devices, even if it’s a form that needs printing out that offers all the details and postal sticker, as shown here by Debenhams.
No matter how complicated or not your return process is, however, it needs to be clear and multi-channel. It also needs to be easily found through Google et al. Consumers need to be able to simply put “
Remember, if they are returning it, the chances are they are unhappy – don’t p**s them off further by making returns hard to find.
Reverse shipping
The next step is managing the actual physical return of the goods to your company. This can be done in several ways:
• Return in person to store (even if bought online) – If you run a physical store then it is simple to offer to accept returns in person. The challenges here are in how to manage this from a stock inventory process and how to run it through the til.
This method is further complicated by goods that are bought online – particularly as this can geographically preclude return in person. For this reason, physical return must not be your only return option.
• Return by post – using the Royal Mail to allow consumers to post goods back to you is a relatively straightforward option in theory, however you need to make sure that the customer has the right address for you (so clearly mark that on your site) and that they understand any cost implications with doing this.
There is also the risk that the goods, if not sent my registered post, may get lost, causing potential loss of money to you or the customer.
The post is also limited by the fact that, even if the goods are sent in some registered way, you need to be there to receive and sign for them. Consider how to use the post wisely.
• Courier pick up – in many ways getting a courier/shipping company to handle returns offers the best possible service to you and the customer.
The cost can be charged to you, the retailer, it can be delivered to you at a time of your choosing and it can be collected from the customer at a time of their choosing. The downside is the cost: this is the most expensive option.
There is also the issue that the consumer has to pack the goods appropriately. And then you have to manage the return against your inventory, accounts and CRM.
Each of these have their challenges and you also need to work out – and then very clearly state on your returns policy online – if you will cover the cost of the return or not. While returns are potentially costly, charging for them can in theory cost you more in loss of business.
According to eBay advice to its sellers, 98% of buyers base part of their purchase decision on how good the returns policy of respective retailers is.
Managing the return of goods
Actually managing returns can be a real headache – matching the returned goods to the right customer and refunding them or issuing replacement is an ever growing problem as your business grows.
One of the key things that SMEs can do to help handle this once it gets to a critical mass is to turn to a third party returns management company.
In the US, Genco handles returns for up to 10,000 small retailers, handling regional returns and returns to vendor. This can save a lot of time and headaches over where your goods are.
You can also look at how to turn returns to a profit centre. At Estee Lauder, a cosmetics manufacturer, returns now represent its third most-profitable product line. When boxes of returned merchandise arrive, each item has its barcode scanned to determine its expiration date.
Depending on the condition and/or expiration date of the returned merchandise, it is either scrapped or sorted for resale to seconds stores or to retailers in less developed countries.
The software the company developed is now available to other manufacturers and gives operators a straightforward choice at each stage of the process.
Notification to customers
When dealing remotely with customer returns transparency is key: the customer must be kept informed at all stages as to what is happening from how to return goods – and what is eligible for return – to when it may be collected (if you offer that) to receipt and any action through to dispatch of replacement or the payment of a refund.
This needs to also be done through the channel of the consumers choosing: ideally email and/or text. This can be gleaned by simply asking them when they order or register with you in the first place.
One thing to bear in mind is that making these messages more than just perfunctory can turn this somewhat negative experience into a positive.
For example, returns from some independent clothes retailers garner a text saying “we are sorry you didn’t like the
This is a sort of subtle upsell and a nice personal touch that keeps the brand in mind. So use these notifications of refunds as a chance to keep engaging with the customer so that they come back. Hopefully.
Crediting and refunding
And of course the final part is issuing credit or a refund for the consumer. This involves looking into how to stick money back into a bank account, back onto a credit card, issuing a credit note or even, in rare cases, loyalty points.
In the case of refunding cards and accounts that were used to make the purchase, it is a simple matter of retracing your steps. The tricky part is making sure that you have credited the right person with the right amount in the right account.
It can be further complicated by the customer buying several items and only wanting a refund on one of them. This then becomes an issue of looking through your order management system and refunding the right one. And you have to get it right or your books won’t balance.
Many order management and accounts systems that are used by SMEs require this to be done manually as its is treated as an exception. If you use an acquirer like WorldPay or even just use PayPal, these companies can often help you do this.
You must also keep the customer informed about timescale as, if not using the Faster Payments protocol (which is slowly starting to be used across all UK banks) it may take many days to be refunded. You must tell the customer the refund has been made and that it may take up to 5 working days to clear.
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