4 simple strategies to save money on returns
According to a June 2019 Internet Retailer/Bizrate Insights survey, free shipping on returns is one of the top three features that consumers consider essential to a superior retail experience. Thanks to customer-friendly return policies made popular by large retailers like Amazon, shoppers have come to expect that they shouldn’t have to pay to send back items they no longer want.
Unfortunately, these policies come at a heavy price. Returns cost retailers a third of their revenue annually, according to an article in Vogue Business. The problem is also a growing one – Payments Journal reported in February that ecommerce returns have increased by 95% over the past five years.
With the holiday season well underway and return deliveries estimated to cost upwards of $550 billion by 2020, it may be time to give your return policy another look. Here are three strategies to keep your customers happy while ensuring returns don’t eat through your revenue.
Shorten your return window
L.L. Bean was famous for offering a lifetime guarantee on its products. But last year, they changed their policy in response to customers treating the guarantee as a “lifetime product replacement program.”
Long return windows can entice consumers, but they’re easy to take advantage of. Want to keep your generous return policy but lower its financial impact? Include it as a perk in your loyalty program to encourage customers to join and engage with your brand.
Liquidate some items instead of restocking
Restocking returned items is an expensive and time-consuming process. Time, money and people are required to process the item into inventory, clean, repackage and re-shelve it – and there’s always the chance that the next buyer will return it and repeat the process. Eventually, the cost of restocking outweighs any potential profit.
That’s why many retailers choose to liquidate returned inventory instead of restocking it. This ensures the item won’t go to waste and passes on the costs of restocking to a third party.
Focus on sustainability
Shoppers love the convenience of flexible returns, but many don’t consider the hidden cost. A report from Fast Company explored the environmental impact of free return policies, ranging from the air pollution caused by additional delivery trucks to the waste created by returned clothes that can’t be restocked.
People appreciate convenient returns, but they also appreciate brands that act on their values. Creating a “green” shipping policy that focuses on minimizing harm to the environment will win loyalty from like-minded consumers.
Know your customers
The simplest and most effective way to save money on returns is to have fewer of them. To have fewer of them you need more satisfied customers. But there are many factors that contribute to increased customer satisfaction and an optimal customer experience.
A Voice of Customer solution can help you learn more about what your customers want from your brand, the products you sell and the overall shopping experience. By uncovering the key issues that are affecting shoppers you’ll understand what issues will lead to greater loyalty – and less buyers’ remorse.