This is a guest post written by Anthony Thrasher. As an expert in retail fulfillment, Tony offers a unique viewpoint on using the latest retail technologies, including the SPS Commerce Retail Network, RFID and more to drive innovation and growth. At SPS, he is responsible for using graph-based architecture to drive meaningful insights and expand the value of the SPS Commerce Platform to customers and partners.
Sometimes it can be hard to plan for something that goes against your mission. Returns in the retail sector, is one example – retailers don’t want to issue refunds, so return policies and the returns process can often be an afterthought. Worse, some retailers and e-commerce sellers make it hard to return items, which can actually work against them.
Even when the policy is good, sometimes the process for refunds and putting the inventory back into circulation can be clunky and inefficient. That can make returns more expensive than they have to be.
Reasonable returns policies (and preferably generous ones) are important for customer satisfaction, while good reverse logistics processes are vital for managing costs associated with returns. Read more to find out how technology solutions can be helpful for keeping customers happy and keeping the reverse supply chain efficient.
Returns policies for consumer trust
Research has shown that Amazon has had a huge impact on what online shoppers expect from the e-commerce and omnichannel experience with a retailer or brand. One place where retailers are still trying to catch up is Amazon’s A-to-Z Guarantee for returns and refunds. Not everyone can absorb the costs that Amazon can, but that doesn’t mean retailers and sellers don’t have any recourse.
It’s the return experience that counts the most. Great returns experiences encourage repeat customers, even if the person wasn’t happy with their first order. If you make it easy to make a return and get a refund, they’re more likely to make a second purchase because they know that if it doesn’t work out, you’ve got their back.
Defining a returns policy
The first step towards gaining consumer trust is to clearly define the return policy internally, trying to balance costs and generosity to the customer. Different fulfillment models may require different approaches for returns. Being able to return the product to a store has been shown to be the least expensive option and it’s a favorite for consumers, but it’s not always an option.
Here are some questions to ask yourself about returns (depending on your business, there may be more questions to consider):
- How long after purchase are returns allowed?
- Are there exceptions to what can be returned?
- Are there any special handling needs for items that you carry?
- What are the available options for consumers to make returns?
- For drop shipped orders, do the items need to be shipped back to the vendor or distributor?
- Can all returns, regardless of fulfillment process, be brought to a brick-and-mortar store or a third party?
After you’ve combed through the options, clearly state your return policy to your customers in all of the appropriate places. This includes on the website, in the stores and on any other channels where sales are being made. Print the return policy on the receipts. Include the returns policy information and return shipping labels in every e-commerce order. It should be extremely easy to find the policy, and as easy as possible for shoppers to make the return.
When return or refund policies are changed, it’s important to make sure that they’re updated everywhere. If there is a mismatch somewhere along the line and the customer finds it, you may be liable to offer a refund that otherwise would have been disqualified by the new policy.
After the policies are laid out, it’s up to you to prevent as many returns as possible. When refunds are required, it’s also your responsibility to make sure that the smooth return policy and process are carried out. We’ve got some tips for those, too.
Prevention starts with accuracy. That is, accurate item data, product information, pricing, inventory availability and more, so consumers know what to expect when they make a purchase. That’s true for brick-and-mortar sales, but is particularly important for online and e-commerce sales. Consumers look at the item data and product information to make sure they’re getting something that fits their needs. If they know the item will fit their needs, pricing is also important – even if you don’t have the lowest price, though, a clear and reasonable return policy could help you clinch the sale.
Automating as many processes as possible can help with ensuring item data accuracy, as well as order fulfillment needs. Manual processes or data entry needs can result in costly errors or delays. An EDI automation solution, for example, can ensure that the appropriate item data and information is passed along for each product, so your e-commerce product pages contain thorough, correct information for a consumer’s consideration.
Once the item is ordered by a customer, EDI automation can ensure that the order accurately and quickly makes it through the order management process, from the website, to billing, to the appropriate fulfillment method, to delivery. EDI integrated with the ERP, accounting software, WMS, carrier management software and other systems breaks down communication and data silos that often result in lost orders, billing mistakes, fulfillment errors and shipping delays. Any one error in the order management process can result in a customer return.
One of the biggest reasons for returns, especially during the dreaded “post-holiday returns season,” is late and lost shipments. If the delivery comes later than the customer expected and needs it, they’ll send it right back, often without even opening it. Delays within the order management process are entirely under your control, and automation of processes can keep orders going through the system appropriately. Elimination of manual data entry can reduce lost shipments due to miskeyed shipping address information.
Package tracking can be helpful for preventing returns and canceled orders. If a consumer can see where the order is and have updates as it moves along from handoff to handoff, it can assure the customer that the package is on its way. Carrier integration via EDI into your e-commerce platform could help with populating the information needed to let customers know when they can expect delivery.
Canceled orders due to backorders and inventory issues can also be a problem. Backorders as a result of inaccurate inventory information could be solved relatively easily, in particular with Inventory Inquiry/Advice communications via EDI. Simply remove items from the website that are on backorder and re-add them once new inventory is available, whether the items are shipped through your DC or a third-party drop ship vendor.
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These are a few ideas for preventing returns. Beyond this, you may want to drill down through your data and key performance indicators (KPIs) to see if there are recurring reasons for returns that haven’t been solved by the remedies listed above – then see what steps can be taken to prevent more returns in the future.
Accommodating returns efficiently
Even with all the prevention tactics in the world, there are still likely to be returns. Increasing efficiency in reverse logistics can reduce the costs associated with returns. \
Starting with the consumer side, we’ve already said that providing return policy information up front is first and foremost. Beyond that, it’s doing what you can to encourage the customer to take the right actions to get the item returned efficiently. Being able to bring the item to the store is least expensive for both the consumer and for you.
When it can’t be brought to a store, return instructions should be included inside the package when it’s shipped, along with a shipping label. With the complete delivery information and label provided, it’s extremely easy for the customer to simply repackage the item, seal it and slap on the label. It’s best if you make return shipping
free for your customers, but it’s not the end of the world if your company isn’t in the financial position yet to do this.
With the return label automatically generated, your reverse logistics plan should be calibrated to handle returns automatically. Reverse logistics is the process by which returned and recalled products make it back to where they need to be. It should be made as easy as possible to receive the item at the appropriate distribution center or warehouse, review it for damage, return it to the appropriate location within the fulfillment center and update the inventory availability. Many companies are investing in a number of systems to make that process more streamlined, including barcodes, RFID chips and scanners.
Preparing employees for returns
Having the plan, processes and technology in place are only part of the equation. People are a very important part of the success of a returns and refunds program.
Customer facing employees must be thoroughly trained on return policies so they don’t give customers bad information. When return policies are updated or changed, employees should be retrained. It doesn’t hurt to have regular reviews of returns policies to keep the knowledge fresh.
Employees on the fulfillment side need to be trained on their part of the returns process. People in the shipping department may be receiving individual parcels returned from consumers, or entire pallets full of returned products from retailers and third-party returns processing services – they’ll need to know what to do with them. There may be one team in charge of bringing the items back to the appropriate shelves and bins, while another team is responsible for updating inventory, while yet another team makes sure the customer receives the refund.
There must also be training around what to do with damaged, defective or recalled products. Recalled or defective products may need to keep going along the supply chain right back to the manufacturer (in which case there may be some refunds in it for your company, provided the items make it back to where they need to go). Some damaged items may need to have special disposal requirements, such as refrigerators and items that contain battery power sources. Others products may be refurbished or recycled, so the appropriate processes to make sure the value in these items aren’t lost.
If a customer has to return something, they’re already disappointed or angry. They aren’t necessarily lost as a customer, though. A sound returns policy and an uncomplicated return process can be reassuring to them. With an easy experience, they gain confidence that it would be safe to make a purchase from you in the future should they find something they like. The next time they buy, they could get just the perfect thing they were looking for, and between the two experiences, you may have landed a customer for life.
This is by no means a comprehensive list of how technology can improve the returns process for maximizing potential of happy repeat customers. There are a variety of systems and processes out there to help streamline, automate and cut costs for returns and reverse logistics. There are plenty of ideas to get you started thinking about ways to make your returns process more customer-friendly and business-friendly.