Turning the Hassle of Retail Returns Into Opportunity

Narvar’s latest research report looks at the current returns landscape and addresses how to turn around the issue of the rising rate of product returns and its burden on retailers. According to this research, 20 percent of retail purchases made this year will be made online — making the e-commerce market now worth more than $6 trillion.

Returns cost retailers “on average $33 to process between postage, packaging, product value depreciation, missed sales windows and labor.” As previously reported by WWD, 60 percent of people who participate in online shopping exploit loopholes when it comes to returns.

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However, the report’s authors found that incentivization can become a key factor in the improvement of consumers making an exchange instead. The survey, polling more than 2,000 people across the U.S., found that 90 percent of consumers feel they could be persuaded to make an exchange.

“People will exchange if the offers right, so determining what makes sense for your business from a financial standpoint is critical,” the authors of the report said. Sixty-five percent of people noted they could be convinced to make an exchange if they received monetary offers such as cashback, future discounts or gift cards. Sixteen percent of respondents said immediately receiving a replacement item upon return initiation could attract them to make an exchange.

To improve the exchange rate, Navar suggests retailers offer incentives to those already flexible in making exchanges in the first place — for example, people looking to return for sizing or fitting issues. Furthermore, 21 percent of people polled said they would seek an exchange if the product ordered arrived damaged.

Product damage has increasingly become a problem as the rate of e-commerce shopping rises. Common causes of damage include exposure to the natural environment, cheaper packaging materials, too much empty space and improper handling.

Navar advises flagging these quality control issues with fulfillment centers to reduce the exchange requests and protect the overall bottom-line revenue. Some ways to avoid these issues is to use better packaging materials such as peel-and-seal bags, zip-lock bags and stackable inserts.

But it’s important to note certain mistakes customers cannot look over to be incentivized to make an exchange, including failure to arrive on time or not adhering to the description provided on the product details page.

“As online shoppers increase their demands on retailers, the post-purchase experience will play a more significant role,” the authors of the report said. “With revenue retention as a focal point for retailers heading into 2024, keeping customers happy in a cost-efficient way is paramount.”

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