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The importance of efficient e-commerce returns management

Growth Secrets|21.08.2017

The average e-commerce returns rate is estimated at 30%, in comparison to bricks-and-mortar shops with 8.8%, highlighting the need for brands to create a watertight, fluid and transparent returns process for their customers.

Every e-commerce transaction is a trust exercise between consumer and supplier. The ability to view, hold, try on, examine, test your products is withheld until delivery, and accidents or mistakes happen. The item isn’t how the customer imagined; the colour, material or the fit are off; the item is faulty or the consumer simply doesn't like the product once they view it in the light of day. 

Your returns policy will act as a go to for your customer service team and your customers, so it must be black and white about time frames, costs, conditions and any caveats that may negate a full refund. When writing your policy, imagine every conceivable, and some of the inconceivable, reasons for a return, and how your team and brand should react in every instance.

8 key elements of a great return policy:

  1. Keep your language simple, to the point and free of legal jargon.
  2. Include any product lifetime guarantee associated with your products.
  3. Observe the legal time and conditions per country, as they will differ per territory.
  4. Make sure you give your customers fair time to return items post purchase to qualify for a full refund.
  5. Any additional charges such as return delivery costs and terms that qualify for a free return if applicable, such as damaged goods.
  6. How late returns may impact the refund process, for example, if an item is returned later than 14 days, customers will receive a credit note.
  7. Expected conditions of returned items, including packaging and labels.
  8. Any items that can not be returned, such as underwear or consumables.

Returned items - who should foot the bill? 

Barclaycard surveyed online retailers and revealed that 6 out of 10 brands are negatively impacted due a growing number of returns. Many small bricks-and-mortar stores shy away from selling goods online due to delivery and return expenditure, whilst many online stores increase prices to ingest some of the cost involved with returns management.

“E-commerce has made it easy for consumers to be indecisive without financial consequence.” states MarketWatch. From shoppers ordering multiple sizes or colours to unwanted gifts, the returns process is far more complex than simply returning an item to a shelf, ready to be repurchased. There are staff costs to consider who will perform admin tasks and check and repackage products, spoiled or damaged goods or even items lost in transit.

Customers simply are not willing to pay for a returns service, with 47% of consumers refusing to order from brands that charge return postage. With e-commerce giants such as ASOS able to offset the cost of delivery and returns using delivery subscriptions (plus the volume of orders and markups), small businesses must make lean decisions when planning delivery strategy. It may be simply unobtainable to offer both free postage and returns and there is no one size fits all when it comes to what works for small businesses. Whichever solution fits best for your business, clarity with your customers is key and honesty can go a long way. 

The understated importance of efficient ERP. 

Regardless of how slick your front end is, poorly executed ERP (enterprise resource planning) can simply sink your business. Simply, ERP is the automation between your front end store, accounting and warehousing, but can grow to encompass all elements of a business's day to day. 

Now for a small brand, this currently may be an employee or a set team. As you get bigger you may decide on a custom connection between your accounting software and warehouse or an out the box automation solution such as Brightpearl. Regardless of the origins, fast growth will be dictated by this workflow being robust and uncompromisable. 

The worst case scenario? After a record breaking flash sale, slowly but steadily the returns and exchanges start to mount. As will staff and postage costs. Your customers will only see the small picture, a delay in refund or replacement, or a breakdown in communication. Your customer service team will be overwhelmed, trying to locate returns and link up the correct refunds, especially with more complex cases. Slowly the complaints will start to surface online, and your social media channels will start to see impact, with negative comments and complaints surfacing when customers feel their voices and concerns aren’t being heard.

What started as a record breaking win quickly can descend into a potentially brand damaging event. All from poor returns management. 

Simply, a robust ERP solution should automate a significant amount of this process. From inventory levels to automatic refunding, each solution has pluses and minuses, and ERP in its own right is a complex topic, as it rightly should be, as it essentially encompasses your entire back office. 

The simplest advice is to start with growth in mind. If spreadsheets and manual documentation are already taking too much time, invest in a scalable solution ready for when your brand hits big time. Already in a steep stage of growth? Whilst a period of change might be painful, the cost and time saving alone can be offset any initial investment.

Shopify Plus is able to integrate with virtually any ERP solution through the RESTful API, so if you are already working successfully with a supplier, their solution can be migrated to Shopify Plus.

RMA solutions such as Return Magic or Returns Manager by Bold can automate processes without the investment into an all encompassing ERP solution, connected through the Shopify admin panel.From creating a returns portal for your customers and printing prepaid labels to tracking packages on their way back to the warehouse, returns management solutions can free up valuable time and provide essential data when trying to prevent future returns.

And ultimately, this data can be used to save your business money in the future. By highlighting commonly returned items for a commonly returned reason, you will be able to identify potential faults. If one jumper is continuously returned with a poor fit reason code, the size guide or product description may be inaccurate. If a product is repeatedly returned due to fault or quality, there may be an issue with the production line or materials. By identifying problematic trends, brands can minimise revenue loss during the returns process.

With the holidays looming, and an average e-commerce returns rate of 30%, brands must create an efficient returns management process. Regardless if you choose to purchase a full ERP solution or a simpler bolt on, investment in your back office will allow you to spend time on what you love; growing your brand.

 

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