The way that industry is treating and viewing the return of orders is changing.
“Reverse Logistics” is the industry term for how these returns are handled by fulfilment houses and how these returns are handled is changing and is now a critical part of a good fulfilment operation. Gone are the days when returns were seen as embarrassing or a sign of failure, in modern times retailers are seeing a return as an opportunity for a new sale and even a whole new revenue stream.
I was reading the October 2010 issue of Logistics Manager magazine and there was a very intersting article on this subject written by Nick Allen.
Here are some of the statistics he quotes:
- High Street Retailers expect an average return rate of just 10%, however, online shoppers return on average 22% of all items bought.
- A staggering 58% of online shoppers would not shop again at a website where they had received a bad returns experience.
These figures should make alarming reading for e commerce operators and highlight how important having a solid returns procedure for your customers is.
Obviously, the best way to keep your customers happy is to reduce the instances of returns. Greater product detail on your website, accurate size information, etc, all help the online shopper make the correct decision, but you will still get the shopper who wants to order three items, try them all on and send back the two that don’t fit or suit. Hence, it is nigh on impossible to eradicate all returns so it is imperative that these returns are dealt with efficiently because as the above statistic shows, if this area of e commerce is not slick and effective, customer loyalty suffers.
I recently saw a new innovation in the returns area and at first I struggled to see how it would be cost effective, but having seen the statistics above, I fully understand it.
One well known online fashion retailer is offering optional Pre-Paid Returns at just £1.
Previously the onus and cost for returning an item was down to the customer. With pre-paid returns, the customer pays just £1 and then if they want to make a return they simply use the pre-paid return slip and take the item along to their local Collect+ store, that’s it.
My initial thoughts were, surely it would cost more than £1 to process, so the retailer will lose money? But then i looked at the above statistic. 22% of people return their orders, so for every 100 people (£100) who buy a pre-paid return, only 22 will actually use it. That allows, £4.55 approx to pay out per return, and with the great carrier deals they will possess, this will be more than enough.
So not only are they more than covering their costs, they are providing a superb, low cost, efficient returns service for their customers, ensuring that customers keep coming back. Everyones a winner! Even if they were losing a small amount of money on this activity, the perception of the customer is of an excellent service and money alone cannot buy that.
I would love to have been a fly on the wall in that meeting where the executive suggested returns for £1!! I bet he got laughed at until he showed them the figures!! I think it is safe to say, they will be reaping the rewards through customer loyalty, and what price would you pay for that?
Of course, here at UK Fulfilment, we are fully aware of this critical aspect of the home shopping industry and we have developed an efficient way of handling your returns.
We leave the policy decisions to our clients, but of course will offer our advise. We have the ability to send out Freepost reply slips to customers so there is no cost to them for returning the items, or we can arrange collections at suitable times.
But of course the operation does not stop when the items leave the customer, once they get back to our warehouse, we have efficient procedures for handling these returns to ensure that replacement items or refunds are processed quickly and accurately to maintain a good customer experience.
