Retailers of every size know the pleasure of making a sale, and the letdown that inevitably comes when a product is returned. Rather than lamenting the loss, companies should dig deep and implement tactics to help them understand the reason for the return. With that knowledge, they can learn how to turn a return into a sale. Read on for a three-step process to do just that.
1 Ask why the item is being returned.
Before you can offer a solution, it’s important to understand the root cause of the return. Empathize with the customer and actively listen to their needs. Implement a protocol, in-store, online and at home. If a customer returns a product in-store, have your employees ask questions about why the product is being returned. If a customer is returning an item through the mail, include a survey in the packaging that asks the same questions, or create a microsite online as part of the returns process, where customers can answer questions as well.
Tip: Set up a Return Merchandise Authorization
Return Merchandise Authorization is a reverse logistics process that requires a customer to contact you before making a return, whether on your website, through email or by phone. This communication allows you to catch the customer in the midst of a return and propose another solution, preventing you from losing a sale.
2 Suggest an alternative.
Once you know the reason for your customer’s return, offer them another, more appropriate product for purchase. Base your recommendation on their answers. If a color or fit was off, show them products better suited to their specific needs in-store and across multiple channels. If you can’t find a replacement product, be sure to let them know of any special promotions going on or try to cross-sell them products from other departments.
Tip: Monitor the products your customers are returning. That way, if you find an item consistently being sent back, you can use return data to understand why it’s defective, if it’s overpriced or just not matching up to its advertising. This will allow you to address the issue and prevent returns in the future.
3 Suggest a gift card or store credit.
If the customer is intent on returning their merchandise without making a purchase, propose in-store credit or a gift card instead of a full refund in cash or on their credit cards. You could also enforce a policy that requires returns to be redeemed as store credit only. That way, the value of the sale can still be used exclusively in store or online.
A healthy returns process is the cornerstone of a successful retail and e-tail business. By studying your customers’ return habits and implementing a system to track the reasons for their returns, you can find multiple avenues to convert their dissatisfaction into another purchase.
With the increasing competition in ecommerce, retailers that offer free shipping, dependable deliveries, accuracy, and free return shipping are potentially more likely to attract customers than those that don’t. While free shipping is an obvious perk, a recent survey discovered that the majority of respondents also consider free returns an important factor in their ecommerce purchase decision.1
53 percent of respondents said they would pick one store over another if the store offer free returns.2
34 percent of respondents revealed they would only purchase from a store if they knew they could return or exchange for free.3
Why Do Customers Love Free Return Shipping?
Aside from the obvious cost-savings, free returns can provide customers with a sense of security. A study found that in 2015 Americans returned more than $260 billion in goods.4 When customers know they don’t have to pay for return shipping, it allows them to be more indecisive, which is particularly useful when shopping online for clothes, shoes and accessories where there are multiple options, sizes, etc.
Companies That Offer Free Returns Boost Customer Satisfaction
By offering free returns, brands convey that their customers’ interests are top of mind, which can help brand loyalty and lead to repeat business. Given the potentially high costs associated with acquiring new customers versus keeping existing customers, companies are smart to consider free return shipping as one way help to increase sales.
Shipping and Returns Can Be Costly for Retailers
However, offering free shipping and returns can be a significant financial undertaking for businesses. Retailers not only have to cover shipping costs, they also need to staff people to inspect returned packages, and if items are damaged, the company will need to pay money to repair or write them off. Additionally, return delays could affect inventory.5 All of these costs add up, which is perhaps why among the Internet Retailer 2017 Top 500, only 13.2 percent of companies offer free returns.6
How to Incorporate Free Return Shipping on a Budget
Free return shipping isn’t a deal breaker. Here are a few strategies that companies can employ to meet their customers’ needs while being mindful of costs:
Be strategic on when you offer free return shipping. Since nearly a quarter of returns occur over the holidays, consider offering free return shipping during windows with lower return volumes.7
If you choose to offer free return shipping, be economical by selecting the most cost effective return option. Of note, it’s unlikely that customers will be concerned about speedy shipping when returning an item unlike when they are receiving an item.8
Use free return shipping as a marketing tool to gain repeat customers.9 This especially works well with retailers selling clothing, shoes and accessories. When customers know they don’t have to pay for returns, they might order multiple items as options and end up keeping more than one.
Remember that free return shipping isn’t the only way to keep customers happy. If your business builds a trustworthy reputation through reliable delivery, your business can still be competitive without undertaking the costs associated with free return shipping.
While offering free return shipping may contribute to building brand loyalty and a competitive advantage, it’s important to evaluate if it makes sense for your business. There are multiple routes to achieving customer satisfaction without breaking the bank. To ensure long-standing success, always think strategically and economically, while keeping customer needs top of mind.
When it comes to the holidays, retail businesses must keep a laser focus on the busiest season of the year. The final months of the year are filled with peak shopping days and peak return days. To help capitalize on profits, we’ve made sure to note 2016’s highest grossing billion-dollar shopping days. Get an early start making decisions about stock replenishment, holiday marketing and return communications—all by using the calendar below. Print it, bookmark it or download it for easy access in the busy season ahead.
Returns are a critical part of the customer experience. A poorly run system can have a major impact on your business. With shopping behaviors changing—from seasonal to on-demand—customers are expecting products to always be available so they can shop whenever they want to. Many companies have had to modify their operations to keep their customers happy. Terry Bicycles, an apparel and bike parts distributor from Vermont, is one of those companies. We spoke to Liz Robert, the company’s CEO, to learn just how Terry Bicycles altered its return strategy to find a better solution for their customers and their business.
How have your customers’ shopping behaviors changed in the last 15 years?
Today’s customers are typically ordering online shortly before an event. Maybe they’re going on a group ride for the weekend. The closer that they order to the date they need the product, the more critical it is that we’re able to respond if the product isn’t satisfactory. The on-demand nature of our consumer has inspired us to be on-demand reactionary.
How has the on-demand shopping model affected the apparel industry?
We have a lot of sizing issues, obviously; it’s technical athletic wear. It’s difficult to get things to fit properly, particularly with a new customer who isn’t familiar with our size charts. We have to be much more responsive in being able to get the product back and replacing it in the correct size or something more suitable for their needs. So it’s not just that the consumer is behaving in a more on-demand fashion with their purchases. Their expectations around getting it right are much higher and require a much quicker turnaround.
How has the on-demand shopping model changed your return strategy?
What’s been impacted is the flow and the fact that we need to respond quickly. I’ve been giving you the consumer’s perspective, and obviously customer satisfaction is very important to us. There is also a benefit to us, as a manufacturer and as a brand, to be able to get that product back as soon as possible, particularly when it’s on demand and particularly as we get deeper and deeper into the season.
Because our products are fashion-oriented, they are very seasonal. So the prints that we create for Spring 2016 are different than the ones that we create for Spring 2017. It’s important to us to sell returned product again at full-price and in the same season.
What challenges do you face in this environment?
Mondays and Tuesdays are our largest return days. They’re also our largest selling days. We can’t afford to have the staff on the phone and in returns to meet that volume on those two days and then have them sitting around and twiddling their thumbs for the last three days of the week. In order to keep our work force flexible, we cross-train individuals in the warehouse. Obviously, our process isn’t perfect, but we try to keep the flow under control and as even as can be without having to hire more people certain days of the week.
How does your warehouse process change to fit this new demand model?
I think the biggest impact that it has on the warehouse process is the need to be able to be flexible by day of the week. We do a lot to cross-train our workforce in the warehouse, so if the phone’s not ringing, we can have people in the calling center help with certain aspects of returns. Vice versa, there are certain people who are involved in pick, pack and ship who can be involved in the returns process—specifically the opportunity to put the product back into inventory.
What tactics do you implement in order to be more responsive?
In the past, up until three or four years ago, we sent out returns information on the packing slip or invoice. It listed the returns department and our address. We posted it on our website, catalog and customer service notes. Now we send out a return label, so customers don’t have to go to the website and find out the return address or take it to the Post Office. They can simply take the label that’s in the package and use it on the same packaging let’s say a pair of shorts arrived in. They’ll put the shorts back in the package with the packing list and send it back. From the consumer’s perspective, it takes many steps out of the processing of the return.
What effect does including a return label in your shipments have on your customers?
Honestly, they prefer it. I would say the majority of our consumers use the pre-printed label, even though it costs them perhaps a few dollars more. We include a small handling fee for arranging and processing, which is why the price is higher. Because of the convenience and again because of the speed at which they’ll be credited for the return, they choose to use the label provided. It’s all about convenience and expediency. We also allow them the option of making the return themselves. This way, if the customer wants to handle the return at the Post Office and not pay the handling fee, they can. It takes the pressure off and that, I think, is very important to them.
What is one thing that surprised you about this new process?
The biggest skepticism I had in doing this was whether or not people would pay more for the convenience of the label. We were extremely surprised that most of our customers now use that label to return the product. It taught us a lesson on the value of convenient service. People will pay for it. That to me was a big breakthrough.
Take a page out of Liz Robert’s book. Even though every company has its own pain points, it must adapt to shopping behaviors. By offering multiple return options, tweaking your warehouse processes and cross-training employees, you too can meet your customer’s ever-growing demands.
A weak returns process can cause chaos. Warehouses get flooded with products waiting to be sorted. Packages sit in limbo whether intact, damaged or expired all together. All the while, customers grow frustrated waiting for their returns to be processed and accounts to be credited.
An inefficient system not only slows operations, it can also cost a company money, by allowing products to depreciate, or perish, in the case of food products. Building a robust reverse logistics flow takes time, but with a few simple steps, any retailer can introduce efficiency into their operations. Here we outline five ways to optimize your returns.
Include a merchandise return label with your shipments.
Make your return experience more convenient by adding a return label to every outgoing package. This can help boost customer satisfaction without breaking the bank, as many return labels do not incur shipping costs until they are used.
Dedicate a space for returns in your warehouse and implement a three-bin system.
Return to supplier. Restock. Discard. By using these three sorting bins for returned merchandise, your warehouse can begin routing the packages in the right direction.
Integrate items from the “Restock” bin back into the stocking process.
Merchandise that can be sold again should enter your forward-moving flow as quickly as possible. Check your bins frequently to ensure that items ready to be restocked are scanned back into the system and made available for purchase.
Keep high-priority and fast-selling items in a buffer zone.
Designate a space for high-priority return items. That way, you won’t spend time moving them to their original storage location, allowing them to be picked for resale more quickly.
Ensure your packaging is sturdy enough to travel back safely.
Poor packaging leads to damage and even loss of merchandise. If you intend for your customers to use the original packaging when returning their purchase, make sure it can handle the wear. Invest in thicker cardboard boxes and tear-proof poly mailers to prevent issues down the line.
Every returns process presents opportunities for improvement. By keeping an eye on your processes’ pain points and introducing new strategies for efficiency, your company can streamline its operations and improve its outbound flow.
More and more customers expect an omni-channel experience. They want the freedom to shop on any channel they choose. They also want the products they love to always be available. To answer these demands, companies have invested in a new fulfillment strategy: Ship from Store. Read on to learn more about today’s consumer mindset and the power of Ship from Store.
After a decades-long career in shipping, including eight years at USPS, Ashok Parasuram knows a thing or two about global expansion. Parasuram, the Manager of International Products and Global Accounts at USPS, has established trade lanes between the United States and Asia, managed freight forwarding at private companies, worked in cargo, the airline industry and more. He’s seen businesses develop global exporting strategies in countries around the world. So we sat down with the industry vet to tap into his experience and learn more about international expansion—from customs to costs.
Some business owners looking to ship internationally wrongly believe that they need exporting licenses. What are some other big exporting misconceptions?
Depending on the nature and value of the commodities being exported, an exporter may or may not require a license. There are several misconceptions about exporting and they usually center on the complexities associated with international trade: specifically, the documentation involved, customs, language, culture, etc. While exporting does require knowledge of a foreign market and the cultural nuances of that country, there are plenty of free or low cost resources that are available to exporters of all sizes. USPS has resources and an international sales team that can assist new and existing exporters with competitive and easy to implement shipping solutions. In addition, the US Department of Commerce (export.gov) and US Census Department (trade.gov) websites contain a lot of important and useful information to assist exporters with any concerns they may have with doing business in a particular country.
How do companies decide which countries to export to? How do customs and taxes fit into that decision?
In many cases, US companies who are new to exporting will typically target English speaking countries. Canada is usually the first country that most companies target as the language, culture and close proximity to the US make that country attractive.
Customs and duty thresholds play a part in the decision making as well. Depending on the country being exported to, the duty free threshold (aka de minimus), the value and nature of the product can impact an exporter’s decision on which country to target. For example, Australia has a duty threshold of $1000 Australian dollars, so almost all ecommerce shipments enter that country duty free. Duty thresholds vary by country so it is important to do one’s research up front.
Is it necessary for these smaller companies to have a large team handling customs?
In my experience, generally not, however, depending on the volume of exports, the company’s international customer base and the nature of the products being shipped, they may need more than one person dedicated to customs. Many of the small and medium-sized companies that I have come across have had one or two people responsible for that aspect of the business. Most of these companies started out small, and eventually grew the size of their export departments in line with the growth of their international business. Depending on volume of exports, the nature of the commodities being shipped, and regulatory environment, some companies hire outside consultants to deal with customs compliance.
Looking to zero in on the biggest issues in global expansion, we tailored the rest of our conversation to the international apparel industry. This area of business boasts success stories from companies small and large. Pulling from his career experience, Parasuram was able to shed light on many facets of global expansion—all through the lens of the apparel industry.
On the Global E-Commerce Apparel Market
First, Parasuram gave a bird’s-eye view of the e-commerce apparel industry, noting the strength of the dollar, and how U.S. exporters function in this economic arena.
Can you describe the current state of the e-commerce apparel market?
Brand name apparel exports to Asia and other emerging areas continue to grow despite the strong dollar. There is a trend among consumers living in countries impacted by the strong dollar to source from countries like China due to the low cost of goods. It’s interesting to note that many apparel importers, who source products offshore, export their products back to the same country where they were manufactured due to the trust that their customers have in US brands. Aside from trust, consumers in some instances purchase from US websites for status reasons.
What types of commodities are sold on the international market?
Depending of course on the country, brand name apparel, home textiles, small electronics, books/media and home furnishings are the types of commodities being exported by companies of all sizes. In general, apparel is the primary product that is being exported.
Where do small and medium-sized apparel businesses export to?
Canada is typically the first market that small and medium-sized businesses target once they enter the international arena. In addition, the EU countries, Japan, Korea, China, Mexico and other emerging markets are common places to export to.
How has the strong dollar affected global apparel exporting?
That depends on the geography and how much the local currency is impacted by the dollar. In the case of Europe, Western Europe with the exception of the UK has been impacted negatively. To combat the weakening of local currencies, consumers in South America and Europe have been purchasing directly from China. Despite that, there is plenty of opportunity for US based apparel exporters.
On International Returns
Understanding the challenges of shipping returns across borders, Parasuram zeroed in on the biggest pain points exporters face.
Let’s take a more granular look at global shipping. When it comes to international returns, do small apparel businesses offer them and, if so, do they charge for them?
It really depends on the commodity and value of the product. In certain parts of the world like Latin America, returns aren’t as big a factor because consumers prefer to resell their online purchase locally. There are markets like Europe where it is very important to offer returns. In that region, not offering a return service can negatively impact an exporter’s business. The cost of returns can vary and vary by retailer as well. In many cases, high-end retailers offer free or low-cost returns options.
What are the greatest operational challenges that apparel companies face when it comes to returns?
In my experience, customs can be challenging, however, if a commodity is exported to a particular country through a shipping company, the return should preferably be handled by that same shipping company to facilitate easy customs clearance.
The cost of returns can be a challenge for many online sellers. Depending on where the return is being exported from, the shipping cost can sometimes outweigh the cost of the product. The USPS is in the process of developing returns solutions that will address the needs of the e-commerce marketplace. For undeliverable and incorrectly addressed mail and parcels, shipments made through Priority Mail Express International® service (PMEI) are returned free of charge.
On Shipping Costs & Expansion Strategies
Finally, Parasuram spoke to the price of shipping and how companies, both small and large, have doubled their exports in the last five years.
Let’s transition the conversation over to another important subject – shipping costs. How do apparel companies deal with the high cost of shipping internationally?
Dealing with shipping costs is not industry specific, but a universal concern. Unlike many shipping companies, USPS does not levy surcharges, so shippers are better equipped to predict and manage their shipping costs. This predictability enables companies to keep the price of their products consistent and more attractive to prospective customers.
Have you seen apparel companies fold the cost of shipping into the price of the product?
In my experience, depending on the value of a brand and product, companies may include the cost of shipping into the product price. This is very typical among high end apparel brands.
Do you think limiting the types of products an apparel company sells internationally can help ease the expansion process?
In my experience, companies who are new to the international market place will test their products and depending on demand, will either reduce or expand the number of lines offered online.