Returns are one of online retailers' least favorite things. However, they are inevitable, especially in the world of e-commerce, when customers can't try on a new pair of shoes before purchase and the computer screen doesn't really reflect what color that jacket will actually be.
According to Endicia, an electronic postage solutions company, damaged or defective items are a common cause of returns. As many retailers know, this is why it is important to package products correctly before shipping. But there are many additional reasons products might be returned, such as an item being smaller or larger than anticipated, dissatisfaction with the purchase or a customer changing his or her mind.
In fact, more than half of consumers answered in a survey by Voxware that the most common reason they have returned an item is because they either didn't like it as much as they thought they would, or the delivered item was the wrong size or color. One-quarter of customers said they had returned items that were not the item they had ordered. In these instances, it's likely the product will be in sellable condition.
It's for this reason that MultiChannel Merchant explained reusable packaging is highly advantageous for online retailers. Most stores will make sure the protective packaging used to ship items is durable enough for the long haul to the consumers' doorsteps. But, if it isn't strong enough to survive the trip back to the warehouse, the item could arrive worse for the wear and unable to be resold.
Reselling items on the secondary market can make up some of the lost profits. Unwanted gifts can result in lost profits for companies. Ensuring they can be resold can make up some of the loss.
Difficulty in reselling
It's not easy to resell an item once it's been returned, even if it's in perfect condition. Sometimes the product has been discontinued, or become less popular. Even items that are still sought-after and completely unused can't always be sold as new again, Wired magazine reported.
"You don't know where the product went after it left your store, so you can't put it back on your shelf," explained Michael Ringelsten, owner of Shorewood Liquidators Inc., which sells returned items at a lower cost.
An item without damage will still hold interest among shoppers, though. Many times, instead of losing the profit, companies will work with either third-party logistics providers or find liquidators to sell the items at a lower cost.
According to Inbound Logistics, returned items take away about 8 percent of a company's profits. Selling them for a discount elsewhere will give a portion of that amount back to the company. However, this can only happen if they items are returned to your company, safely and soundly. Having a return policy that brings your merchandise back in a sellable condition is important to avoid inventory shrink and lost profits.
Making safe returns easy
When customers receive a package they decide to return, it is up to them how this will be done. The item's fate is in the hands of the sender, so it's important that the process is as easy as possible to ensure the product will return safely.
"The best return policies are the simplest ones."
The best return policies are the simplest ones; customers like easy returns. A Comscore study found that difficult return policies were the top reason customers decide not to buy from an online retailer, Entrepreneur reported. While clearly stating the return policy on your website and having an understandable process is a good start, retailers can go the extra mile to make returning an item even easier.
Providing a return label in every shipment is a great strategy, because it doesn't require the customer to go through the hassle of printing one out. Giving them the return label also allows them to reuse the box the products arrived in, eliminating the step of finding a container. Wrapping the items with durable protective packaging also increases the chances they will be returned in sellable condition, reducing loss many companies endure through returns.
