Mistakes Retail Companies Make with Returns

Returns are an inevitable part of the retail industry. And 2021 saw them increase to a record breaking $761 billion, up 78% from the previous year! 

And with ecommerce only continuing to climb year after year, it stands to reason that having a good system in place to handle the continued influx can only benefit retailers in the long run.

Plus, a bad return experience can ultimately spoil the relationship between customers and retailers. 

And the only thing worse than losing money on returns is losing customers for good. 

Creating Friction with Returns

If you’ve ever had to jump through multiple hoops when making a return, the experience likely left a bad taste in your mouth. 

And a desire never to deal with that brand again.

“Reverse logistics returns are a place where there [can] be so much friction for customers,” explains Brandon Rael, BusinessTransformation Leader at Capgemini Invent, referring to the multitude of touch points products go through on their way from the consumer back to the retailer. 

When compared to forward logistics, items making their way through the reverse supply chain have to go through:

  • Transport
  • Receiving
  • Inspection
  • Sorting
  • Reselling/Recycling/Scrap

A seamless return experience is what keeps customers coming back. Optoro found that 89% of customers are less likely to shop at a retailer or brand after a bad returns experience, but 97% are more likely to buy again if their experience was positive. 

“Often, the most loyal customers are the ones who return the most,” says Meagan Knowlton, Director of Sustainability at Optoro

To avoid creating bad experiences, retailers shouldn’t shy away from the return process, but rather embrace solutions to ease the strain on their customers. 

Knowlton continues, “Savvy retailers [should] work to make returns as easy as possible so that consumers aren’t afraid to buy and try.”

Failure to Implement Cost-Effective RLS

When it comes time for actually processing the returns, having an ineffective system in place will only cost retailers more.

This is a huge reason why no-return refunds were utilized with big-name retailers like Amazon and Target. 

“To process returns costs so much money,” states Liza Amlani, founder of The Merchant Life and Principal at Retail Strategy Group. “There’s a lot of negativity around returns and the bottom line. This is why some retailers are saying ‘just keep the product!’ They’re saying ‘It’s not worth it to us, we’re losing not only margin but manpower.’”

Integrating a proper reverse logistics system can cut costs with shipping, stemming financial losses, minimizing waste, and reducing necessary labor.

So how can companies create a more profitable system to avoid huge losses? There are several options to look into:

  1. Using Reverse Logistics Companies – Companies like Optoro offer data-backed solutions for retailers and brands for a more efficient return process. “Using technology that can automate returns processing enables retailers to reduce processing costs and quickly send items back to stock or to resale channels, allowing them to recoup the revenue that would have been lost.” (Knowlton)  
  2. BOPIS – Buy Online, Pickup In Store (BOPIS) can cut some of the shipping costs from returns as customers must make their way to a brick and mortar location to complete the transaction. But returns to stores can also give retailers direct feedback on items and, if common problems are arising with a specific product, retailers have the means to fix the issue and create fewer returns. “BOPIS gives the store a chance to understand why the customer is returning the product.” (Amlani)
  3. QR Codes QR code use during the pandemic offered touchless interactions between retailers and customers. Now the data from each scan is like an industry cheat code on customers and their buying habits, and they’re being utilized both online and at physical stores to give customers more incentive to shop and explore. “QR codes are an easy way to identify customers and the product.” (Rael)

Not Centering The Experience Around the Customer

This shouldn’t come as a surprise.

It’s crucial for retailers and brands to know their customer base because understanding who they are and what they want leads to selling better products and experiences. 

But even in the face of returns, it’s important to be honest about the process. Leaving customers guessing how to send items back or making the process more complicated than necessary leads to bad experiences and customers abandoning brands. 

Even with returns, they’re still part of the equation. 

“Retailers should be transparent and clear about their return policies and make the customer experience as seamless as possible,” explains Rael. 

Remember that they’re looking to make a connection with a store or brand. 

Building and renewing that confidence through efficient return channels, interactive and personal buying technology, is the key to a successful business.

Liza Amlani 

Founder of The Merchant Life

Brandon Rael

Business Transformation Leader at Capgemini Invent

Meagan Knowlton

Director of Sustainability at Optoro