2020 was the year when online-shopping really boomed. The growth we experienced last year is MUCH HIGHER than the preceding years. However, more than 30% of all online purchases end up as returns. And, more than half of all retailers say that dealing with returns has a negative impact on the day-to-day business operations.
Another metric suggests that consumers focus on details regarding the return process. Like free returns. Almost half of all online shoppers will move on to another retailer if charged for making a return.
We have identified some trends to keep an eye on in 2021.
1. The Power of Free Returns
47% of online shoppers say they will look to make a purchase elsewhere if they have to pay to make a return. Forty-seven percent. That is almost half of all of your potential customers.
Of course, this number varies depending on industry and product as with most things within retail.
But, if we focus on sales numbers, rather than the cost of a return, a study published in the Journal of Marketing shows that online stores that offer free returns see customers spend up to 457% more than they did initiate the return. Four hundred and fifty-seven percent increase.
However, you need to look at the value your customers bring in, and compare it to the cost of a return.
There are many solutions to this problem, a few examples could be:
- Do not charge for any returned items
- or, charge for returns, but make exchanges free of charge
- or, only charge if the return’s monetary value is less than … (your choice)
Note! You can always set different rules for different markets, segments, or product groups.
2. Friction-Free Social Commerce
Social commerce is when you sell products directly on social media. From first touchpoint and product discovery to research and eventually a purchase.
One of the main advantages of social commerce is that the customer never has to leave the social platform, speeds up the entire sales process by skipping a bunch of steps along the way, and making the purchase friction-free. In addition, it also socializes the purchasing process – allowing customers to share their experiences with friends and family and interact with the brands they love.
Although social commerce may not have a direct correlation to returns management, it will ultimately impact your returns. The customer will expect the returns process to be simple if the purchasing process is simple.
Today, you can utilize Facebook, Instagram, Pinterest (and Snapchat) for social commerce. But surely, other platforms will follow their lead shortly.
Sustainability is on everyone’s lips. And something we really need to talk more about.
Of course, there are things you can do to improve the return rate. Like, optimize your product description and size guide. Even add environmentally friendly shipment options. BUT. We need to be aware that sometimes it is cheaper to let the customer keep a defective product for a full or partial refund, or have it sent back, restored, and resold at a discounted price.
Packaging and refurbishment are two things that are up and coming. Let me explain why.
Packaging and the environment go hand-in-hand. But there are two things that you need to keep in mind: materials and sizing.
In terms of material, we need to move away from plastics, cardboard, and other materials that are not the most environmentally friendly. I do not think I need to discuss plastic any further as it takes 100+ years for the material itself to decompose… so, we do not want more of that spread out in our environment. Instead, there are ‘plastics’ made from natural materials. It may be a little more costly, not necessarily though, but it will resonate well with customers.
The good thing about ‘plastics’ is that it is easy for customers to return items using the same packaging. A cardboard box is a bit more tricky. Let’s say a customer orders a pair of earrings and a jacket. The products arrive in a box. The customer then wishes to return the earrings and is advised to reuse the same packaging. This means that the package will hold a lot of unnecessary air. Air that takes up space that could have been used to ship other products.
Rethink your packaging. Sometimes making the slightest change makes a huge difference.
Refurbishment and Repurposing
Refurbishment and re-purposing are becoming increasingly trendy. And not only is it trending, but it is also a much better choice than buying new items in terms of environmental and sustainability aspects.
Let’s take jeans as an example. To make one pair of jeans, the water consumption adds up to about 7,600 liters (2,000 gallons) of water. And even by using recycled water, this is A LOT of water. And a lot of work. Now, denim is one thing that actually gets better with time, wear, and tear. Would you not agree?
But, there are options that will cost less than manufacturing new products. More sustainable options that have a less environmental impact: refurbishment and repurposing.
By re-using fibers, parts, and materials that are already produced, we skip parts of the process in making new products for customers to purchase. Or why not repurpose a pair of jeans into a jacket?
At Returnado, we are determined to be part of the change and are working closely with our customers to solve this particular challenge. Stay tuned for more information later this year!
4. Artificial Intelligence (AI)
Artificial Intelligence (AI) is something we see more and more retailers pick up as something they would like to use. However, many retailers are still discovering technology that can reshape their returns management processes and are not ready for AI at this point in time.
But, AI and automation can help retailers regain control of their returns – while paying it less effort and time. AI does just that. It helps decrease touches on returns and positively impact their bottom line.
To get started, you can set up your ‘smart business rules’ in your returns management system, and let the system do the work for you, while you focus on the activities that drive revenue instead.
5. In-Store Returns
One way to minimize the cost of returns is to allow in-store returns. Not only is it easier for customers, but also to reconvert the return into a new purchase.
Let me explain what I mean by ‘easier’. Offering in-store returns for online purchases meets the need for speed, tracking, flexibility, and automation of alerts to your customer. When customers can return something in-store, you are putting the customer in charge. In control. Empowering them of sorts. The responsibility is then shifted to the company in terms of shipping items back to distribution centers or allocating items to the store’s inventory.
6. Quick Refunds
When making a purchase, a customer is asked to select a payment method before finishing the purchase. The customer is required to pay you when the purchase is made (or sometimes select an invoice option), while a refund can take weeks or (in the worst cases) even months for customers to receive.
By automating the refund process, you can have refunds paid shortly after an item is handed over to the carrier, when arriving at the warehouse, or approved by customer service. Whatever you choose as your trigger.
You can also choose returnless returns. This means, for example, paying a partial refund for your customer to use to take an item to the tailor. Either way, just like with everything else in our lives, people’s patience is getting shorter, and as customers, we expect quick returns and refunds.
7. A Digital Returns Process
I can imagine you are tired of handwritten return slips that are completely unreadable? What if I say there is a way to remove them from your returns process? In fact, what if I can promise that all you need to do is scan a barcode, open the package to control the item, click ‘approve’ and move on to the next package?
No, I am not joking. Returns management systems have actually been around the past decade, but many retailers have been focusing on the return as a source of new income and therefore missed the opportunity to reconvert returns to new purchases. Returns have been referred to as a necessary pain for e-commerce.
By using a system, you let the customer register the return/claim digitally. Here, you have the opportunity to offer your customers to exchange the return for a new product, or request a refund. In fact, based on our own data, more than 30% of all returns are reconverted to new purchases at this stage. New revenue for your business that would have been lost.
In addition, your returns management and customer service teams will save huge amounts of time, as time spent on returns will decrease by a lot. Your customers? You may wonder. Do not worry! They are kept updated about the status through automated notifications throughout the entire process.
READ MORE: 5 reasons why you should digitise your warehouse returns process →
To summarize the returns management trends for 2021
The goal for 2021 will be building customer loyalty, and for that, the returns process plays a big role. Therefore, your focus needs to be to reduce the return rate while increasing the reconversion rate by applying some of the tools that we have discussed in this post.
The trends we have covered are the power of free returns, friction-free social commerce and sustainability, artificial intelligence, quicker refunds, and digitizing the returns process. Find the balance that fits your business the best.
Curious to get started with a returns management system?
Contact us today to learn more about Returnado, and have one of our experts find the perfect setup for your business. We are looking forward to hearing from you!