Managing Ecommerce Returns

MANAGING ECOMMERCE RETURNS

Publication brought to you by Modern Retail in association with BITO Storage Systems

Introduction Returns are, of course, a growing issue for the ecommerce industry. As the size of the industry grows, so too does the number of returns.

But the consumer attitude to returning goods has shifted too. Shoppers unquestionably expect to return unwanted items for whatever reason.

Not only that, but the whole returns experience is expected to be convenient, speedy and, often, free.

However, they can and should be seen as an opportunity for retailers to do things better than the competition. Managing returns efficiently will save time and cost for the retailer. It will also positively affect customer sentiment towards the brand.

This ebook, written in partnership with BITO Storage Systems, gives practical advice on how retailers can manage the returns process efficiently - saving money and improving customer loyalty…

Meanwhile, returns are a thorn in the side for retailers - an inconvenient truth, biting into profit margins.

Credits

Thanks

Managing Editor Rob Gamage - rob@modernhospitality.co.uk Content Editor Holly Worthington - holly@modernhospitality.co.uk Business Development Manager Emma Mjekiqi - emma@modernhospitality.co.uk

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Modern Hospitality is published by Considered Digital Ltd (Registered Company Number 12684643).

Registered office address: 39 The Metro Centre, Tolpits Lane, Watford, Hertfordshire, United Kingdom, WD18 9SB.

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Many thanks to Edward Hutchison and Duncan Grime at BITO, and Ross Matthews at AMA PR for their help in putting together this publication.

We hope it is a useful and informative guide!

Please send any comments or suggestions to rob@modernretail.co.uk

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RETURNS ARE A FACT OF RETAIL “Retailers need to maintain efficient returns systems in their warehouses to retain customers, maximise margins and remain competitive” Says Edward Hutchison, Managing Director of BITO Storage Systems.

Returning goods has become as established a part of shopping as buying them, since being accelerated during the era of growth in online shopping, where goods are purchased without being tried. The free returns promise carried over to all retail channels, including the high street, and has created a situation in this ultra-competitive sector where the unconditional invitation of free return of goods has become enshrined.

Returns being limited only to occasions when a retailer failed to match customer expectations has become a distant memory.

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almost a third of purchases returned (32%). Shoes come next (15%). All other categories follow some way behind, being evenly distributed between 3% and 8% – though 51% said they didn’t send anything back.

This has led to an evolution in shopping habits where consumers, taking free returns for granted, purchase multiple sizes or varieties in the knowledge that they can be returned at no cost. This practice is felt acutely in fashion retail, where shoppers are now accustomed to buying clothing and shoes in a variety of sizes in the knowledge that they will send back any unwanted items.

However, there is of course a cost to processing a return and this is leading some retailers to question the economics of free returns and to consider invoking a charge for customers. Such thoughts may not go down well with consumers, some 89% of who identify ease of returns as their top priority when purchasing online, according to data from delivery experience platform Sorted.

Research from market researcher Appinio found that 71% of UK consumers would avoid shopping online if they were required to pay to return the items. It will be interesting to see what happens. But irrespective of whether a charge is imposed or not returns still need to be processed with maximum efficiency.

This can be clearly seen in the returns of online purchases by category in the UK in 2022, as shown by the Statista Global Consumer Survey published in May of this year. It asked: ‘Which of these kinds of articles have you sent back after an online order in the past 12 months? Clothing topped the list of items people shop for by far, with

Indeed, dealing with a return correctly provides the retailer with an opportunity for positive customer sentiment, potentially increasing customer loyalty and gaining customer advocacy. Having a low-cost, simple yet effective and above all efficient returns processing pathway, will allow returned goods to be placed back on sale as quickly as possible.

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The logistics sector has developed solutions to help returned goods be processed as quickly as possible to gain the maximum value through reintroducing the goods back into stock.

For many retailers now, returns are a large and important element of their inventory.

This makes the selection of an appropriate shelving system, container transport, picking methods, as well as complete internal warehouse processes, a vital factor for an efficient returns system.

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BITO provides many products and solutions that contribute to this aim. For example, pallet racking can be configured with a single pallet bay level and shelving above to provide locations for unpalletised ‘returned to stock’ items.

When using BITO’s galvanised shelving for returned items, dividers can be placed on a shelf to help organise stock simply. They can be easily moved to change the size of compartments and can clearly identify new products, for example, at a glance or separate product lines or returns.

To speed the movement of returned goods back to stock, a driverless container transporter, such as the LEO Locative from BITO, makes a smart addition to a warehouse. It helps to reduce travel times for returns as well as other tasks.

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Proactive action to reduce returns can be instigated by retailers handling large numbers of items. Deploying orderpicking systems with minimal error rates will reduce picking errors in ecommerce.

This will not only result in higher customer service levels but will also help to eliminate incorrect orders in fulfilment as a cause of returns.

Contributor: Edward Hutchison, Managing Director, BITO Storage Systems

A sophisticated and highly efficient returns processing system is critical to success in many sectors and can be decisive for a business’ profitability. BITO distribution systems massively optimise order and returns logistics, improving online retailers’ competitiveness. They meet the ecommerce sector’s current demands for flexibility, speed and maximum accuracy. As a result, logistics specialists can optimise goods flow and organise returns logistics so that returned products promptly show back up in the system.

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MAXIMISING ECOMMERCE RETURNS EFFICIENCY Returns have become one of the major challenges that ecommerce retailers face, with data suggesting that 20% of items bought online are returned, compared to just 9% bought in person.

While ecommerce returns are inevitable, the key to success for retailers lies in minimising the number of returns and boosting the efficiency of the returns

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process. By doing this, it is possible to streamline processes and maintain profit margins.

showcasing the importance of returns processes working for customers and businesses alike.

The impact of a well-designed returns process goes far beyond saving time and money. It also plays a key role in maintaining loyalty. In fact, 84% of customers would not return to a retailer following a bad returns experience,

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Minimising the impact of ecommerce returns.

Some retail categories are known for having higher return rates, with auto parts having a return rate of 19.4%, followed by apparel at 12.2%, home improvement/housewares at 11.5% and footwear being returned 9.1% of the time.

Being able to provide accurate product information is essential in reducing the number of initial returns, ensuring consumers know what to expect when they place an order. For example, consumer preference-based returns such as size, fit and style, drive around 72% of all returns in fashion product categories. By sharing as much information as possible pre-purchase, you can reduce the likelihood of returns in the first place.

It is also vital to design an error-free fulfilment process so the correct items are shipped, preventing wastage.

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How to maximise ecommerce returns efficiency Once you have streamlined your operations to inform consumers and reduce returns in the first place, the next step is to maximise your ecommerce returns efficiency.

1. Determine your returns policy

3. Deliver a smooth returns process

5. Adjust as required

Decide your returns policy, making sure it will meet consumer expectations while being realistic for your own business.

Use any returns data that you have from previous sales, or from your industry, to determine whether you would like to offer free returns, a set number of free returns, or charge customers to send items back.

Once you’ve communicated your returns process, it’s time to deliver on your promises. Make the returns process as simple as possible, offering a range of accessible returns methods wherever possible. This is also the perfect time to collect data that could reduce future returns, for example, by asking for the reason the item is being returned.

Remember, convenience is key, so only ask for important information.

To provide an industry-leading service, you must reassess and adjust as required. If you find you are regularly facing the same challenge, the returns process should be tailored to meet your customers’ requirements and your own needs, making sure it is as efficient as possible.

2. Communicate your returns process The next step is to make sure your returns process is clearly communicated, saving unnecessary customer service queries. Making this as hassle-free as possible is likely to give confidence to potential customers while supporting a positive return experience and saving you time and money. Consider the best places to share this information, whether it’s on your website, in email confirmations, on packaging, on social media, or in an FAQ section.

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4. Organise logistics To make your returns process as efficient as possible, logistics must be carefully organised. The last thing retailers want is dead stock that is clogging up warehouse space, causing confusion and unable to be sold. Focus on creating processes that keep stock organised and have them ready for shipping to the next customer as soon as possible.

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The benefits of maximising ecommerce returns efficiency: •

Saving time and money

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Simplified logistics

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Loyal, returning customers

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Greater stock visibility

Contributor: Holly Worthington Modern Retail

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