Managing the Returns Process

by | Jan 19, 2022

Ecommerce and consumer demands have been steadily increasing over the years. The onset of the pandemic launched the supply chain into rapid advancement and put this into the forefront of thinking for many retailers. Despite the pandemic, many retailers often experienced high returns seasonally. However, while they have scaled their ecommerce business, many retailers often forget about equally scaling their returns process. A good shipping process is key to deal with high volumes of customer demand, but an inconvenient and tedious returns process has also gained visibility as businesses continue to scale. An adequate return process is becoming increasingly important due to the volume increase of orders and only continues to trend upward.

Returns have often been overlooked as a true cost until high volume levels forced companies to look at their cost ratios. For most companies, they are paying more to have goods returned than they are often worth. Roughly 8% of what is ordered in the United States in 2020 was returned, which is often higher with online purchases which soar upwards to nearly 30% according to the National Retail Federation. This is only expected to increase as ecommerce and increasing consumer demand is driving more convenience.

So why the hyper focus on returns? One of the most critical features to getting and retaining customers is ensuring the customer experience is seamless and convenient. Many consumers will avoid purchasing a product online if they have difficulty with the return policy or if the process is tedious and inconvenient. Customers experiencing a negative buying and return experience are less likely to purchase online from that specific retailer in the future. Therefore, having a positive returns experience generates happy customers who are more likely to return for future purchases.

What if your company already has a great returns process? Even with a highly advanced return process, many retailers will likely face a flood of returns around peak holiday seasons. With many stores being limited to cleaning during the pandemic, customers have traded in person brick and mortar stores where they would normally try on apparel and other items and have started to purchase several sizes online and return the items they no longer need. Labor shortage, material shortages such as steel and computer chips, and associated costs are making it difficult for companies to process higher return volumes. While there are options for automation, those supply shortages make automation difficult for equipment vendors to deploy these strategies because they too are backlogged in available resources. When it comes to automation, companies need to focus on the current state of their business process and where they would like to grow and improve. Thinking of different ways to improve efficiency and make their process more intelligent for the future is key to evolving consumer demands.

Many companies are shifting their focus to cross train employees to maintain processes and efficiency in the interim. Those skilled in picking, packing, and shipping, are utilized in returned goods. Proper training of employees on the complexity of a company’s returns process is also key as some goods may require more testing as they are returned than others. An electronic device may need to be tested for functionality, whereas a winter coat may be returned to inventory with a simple inspection. Many companies have a returned merchandise authorization mechanism built into their returns process that configures SKUs through software applications to ensure the process is kept clean and efficient. Technology solutions and improvements can offer greater visibility across all inventories and greatly impact the returns process overall. Greater flexibility in returns, on an app, in store, and via mail offer different convenient ways to return goods often leading to a more positive customer experience.

As companies continue to digitally transform their business, greater flexibility in returns and a more positive customer experience will grow as a result. Organizations often need to revisit their returns process to ensure it is easily accessible and clearly defined and communicated to their customers.