Supply chain · 8 December 2015

After the peak trading of Black Friday and Cyber Monday, comes the much less fashionable Returns Saturday”

Returns can represent more of a headache than fulfilling customer orders in the first place
Returns can represent more of a headache than fulfilling customer orders in the first place
Ok, I admit it, Returns Saturday? isnt a defined day just yet but parcel collection services up and down the country recently braced for the inevitable wave of requests to return recent deliveries.

For online retailers, this can represent more of a headache than fulfilling customer orders in the first place with margins that have already been slashed damaged further by the cost of the returns. Having an easy, efficient and convenient returns service which is able to bend to customer demand is crucial to establishing and maintaining customer loyalty.

So how important is a customer returns process?

In addition to the statutory rights which generally allow buyers more flexibility and time to return products bought online than purchases made in physical stores, it’s clear that internet consumers are paying increased attention to the returns procedures when shopping online.

Some 36 per cent of respondents in a recent Comscore poll identify an easy and convenient returns process as a key way of differentiating between online retailers. And 89 per cent of respondents to the same survey would purchase online from the same retailer again following a positive experience sending something back.

How do I know the optimal rate of product returns for my business?

Identifying an appropriate level of customer returns for an individual business is fairly complex, as it relies on a variety of factors such as: business strategy, customer demographic, online industry and product range.

A fast growing fashion startup which achieves a product return rate of sales of around 20 per cent would be seen as having a good rate of return especially if the returns primarily came from new and existing customers purchasing new product lines (i.e. a loyal customer, who usually buys t- shirts, purchasing shoes).

But a well-established electrical retailer with a return rate of sales of 20 per cent would be considered to have a high returns rate, and would need to quickly understand why the products delivered appeared to not meet customer’s expectations.

Is there anything I can do to reduce my sales rate of return?

There are a wide range of strategies which can be employed at each stage of the supply chain, including: clearer product imagery and descriptions, improved fulfilment processes to prevent errors and offering a wider variety of delivery options.

An emerging area of focus is identifying and limiting deliberate return purchases? when a customer purchases at least one additional item to qualify for a promotional discount or free delivery. In a high proportion of cases these products are returned with product seals intact, as they were purchased without the intention of ever keeping the additional items.

Detailed analysis of customer behaviour can shed light on when and why certain customers opt for such purchases, and if a business is using the appropriate combination of delivery services and pricing required by its customers.


 
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ABOUT THE EXPERT

Simon Dixon is the managing director of supply chain and logistics advisors Hatmill. He has worked in supply chain management for the past 19 years, both in industry and in consultancy. Simon's client experience includes the top four UK supermarkets and over 50 other clients spanning sectors such as construction and ecommerce.

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