How can online returns be minimized?

Discussion
Photo: Getty Images
Jun 13, 2016
Tom Ryan

Retailers are grappling with ways to reduce the burden of providing their customers with the free and easy returns that many have grown to expect.

According to a recent survey of 308 retailers in the U.K. from Barclayscard, 60 percent claim to be negatively affected by consumers increasingly returning unwanted items while 31 percent found managing returns are having a negative impact profit margins.

A complementary consumer survey found 58 percent indicating a retailer’s returns policy influences their decision to make a purchase online, while 47 percent would not order an item if they had to pay to return it.

A small group of “serial returners” compounds the problem. Thirty percent deliberately over-buy and subsequently return unwanted items. Past studies have shown that about a third of online buys are returned.

In response, a third of the retailers in the Barclayscard survey that offer free returns offset the costs by charging for the original delivery, while one in five increase the price of items to cover the cost of returns.

The study finds that standardizing sizing and offering virtual dressing rooms may help reduce returns. Almost half of shoppers said standardizing apparel and shoe sizes would save them from having to order multiple items.

Another solution that has been offered to reduce the likelihood of wrong buys is providing ready access to live chat to handle questions.

More accurate product descriptions and enhanced online photography can cut down on surprises. Another recent U.K. study commissioned by Royal Mail found 12 percent returned an online purchase because the merchandise looked different than the online images while 20 percent returned an item because the quality was worse than expected.

In a column for Forbes, Peter Sobotta, CEO of Return Logic, said asking customers for feedback on products can help other shoppers make informed choices while creating “valuable data for retailers to use to modify descriptions and fine-tune future product specs with vendor partners.”

On the back end, retailers could partner more closely with carriers to reduce delivery rates and work to reduce delivery mishaps that lead to returns. Returns to store can also be encouraged.

DISCUSSION QUESTIONS: What are some of obvious and less obvious ways retailers can reduce the impact of online returns? Can retailers at least break even on the online returns process?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"... It's important to take the long view about customer value maximization instead of just trying to minimize short-run costs."
"It’s a matter of framing the analysis with how can you (the customer), help me (the retailer) help you. It’s in the data."
"Think of a return as a gift. Handled well, it gives you the opportunity to prove why the customer made the right decision to do business with you."

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17 Comments on "How can online returns be minimized?"


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Cathy Hotka
BrainTrust

One way to minimize returns is to give consumers an idea of how a given apparel item will fit. The industry doesn’t want standardized sizing or linear sizing for women, so customers are forced to guess what “medium” or “size 4” means. Make reviews available, or provide a size guide the way Lands’ End does.

Peter Fader
BrainTrust

That’s the wrong question! The right one is “under what circumstances should returns be minimized?” For the “serial returners,” it’s a no-brainer, but that’s a tiny portion of the customer base. There’s are, in many cases, more customers for whom returns can be seen as a *good* thing — a sign of ongoing engagement and an indication of higher lifetime value. Proper analysis of transaction log data can sort out these issues in a clean, granular manner.

By the way, it’s exactly the same issue about loyalty program redemptions: do you really want to minimize them, or leverage them to create greater future value?

For both of these issues (and countless others), it’s important to take the long view about customer value maximization instead of just trying to minimize short-run costs.

Paula Rosenblum
BrainTrust

Having been involved in the catalog and other direct-to-consumer retail operations for some time, I think retailers will have to face the fact that returns are a part of life.

The best ways to manage the worst offenders (who wear it once and then return it, in the case of apparel) is to follow the catalogers’ lead: put a tag on it which, if removed, disallows returns.

For big ticket items that don’t travel well, it’s pretty imperative to have a return charge. There’s an old story of a catalog furniture retailer which would offer free returns on sofas. The customer would order two, ask the driver to wait, and then pick the one that looked better in the room. The other sofa would be returned. Disaster.

For other categories, the only way to really break even on returns is to have a very intelligent returns management systems at the distribution center. Again, none of this is new — it is what catalogers have been doing for decades.

Kim Garretson
BrainTrust
2 years 8 months ago

Customer reviews of course are great for giving shoppers better information about how they will like items so as not to return them. A problem, however, is that when there are too many reviews, shoppers tend to scan just a few and therefore do not get the full story. But retailers and review providers are beginning to solve this problem with machine-learning, auto content-creation technologies. This software can “read” all the reviews and generate summaries like: “The top ten reasons why this item fits a particular interest or trend” and “Why this item might not be the best option if you [add reasons].”

Shep Hyken
BrainTrust

Returns are a cost of business, and some of the most successful online retailers have recognized that an easy return policy increases sales. So, just like shrinkage, factor it into the cost of business. It’s that simple.

How to reduce online returns? Better descriptions are a start. Most of the time descriptions are fine, but there are some items that fall short.

Analyze what is being returned and how often. Then look at those items and work to find ways to mitigate the returns.

Think of a return as a gift. Handled well, it gives you the opportunity to prove why the customer made the right decision to do business with you.

Tom Redd
Guest

1. Charge the serial returners — I know at least 10 of them. They order the same outfit, vary the color and size, keep one and the rest are returned.

2. Visit Revzilla.com and see how their online shoppers leave comments with mainly SIZE and FIT advice. Promote this with customers. Offer deals for sharing feedback on how things fit.

3. Cut totally free shipping on returns … get a few bucks out of them. Even a little helps.

Ralph Jacobson
BrainTrust

In the apparel category, as opposed to some others, the shopper journey includes a lot of “soft” decision process steps. Shoppers aren’t often convinced they actually like the product before they click the “buy” button. Regardless of more tactical elements of the online shopping process, including highlighting reviews that talk about the garment fit and feel, etc., I believe that returns are not necessarily a bad thing, as the retailer develops shopper relationships. If the consumer feels they can easily try and return items without hassle and too much cost, they will build loyalty for the brand. In other words, shoppers like to try on in their own homes and return that which is not just right. If the process is painless, they’ll keep shopping with the merchant and buy far more items that will cover the returns costs ultimately.

Peter Charness
BrainTrust

If you are going to sell apparel, then expect people to “shop at home” trying on a few different sizes and colors, keeping one an returning the others. It’s all part of the shopping trip, so to speak. A better question might be how to keep the cost of returns lower. For lower-value product and serial returners perhaps it’s possible to set a free return allowance of “x items” per month, to keep the customer a little more thoughtful on ordering up a lot of product just to see what it looks like. .

David Slavick
Guest

The customer is always right. Hassle-free returns plus free shipping is what has fueled e-commerce’s exponential growth. Create different rules or a different class of transaction profile which governs returns and risk losing the customer. Abusers who are skewing the loss need to be studied through in-depth analytics, customer journey and research. What are the dominant variables? What can be solved for? What is endemic to the channel never to be overcome but perhaps can be mitigated? For a serial returner it can’t hurt to cut the communication and promotion, don’t you think? Most operators won’t do it because they won’t make their sales objective. There needs to be change from within and sometimes have to fire your customer.

Ken Cassar
BrainTrust
Ken Cassar
Vice President, Principal Analyst, Rakuten Intelligence
2 years 8 months ago

Zappos’ practice of explicitly asking customer reviewers to rank the fit of each shoe they review on length, width and support is a best practice that I often cite. Despite this, Zappos’ return rates are reportedly 45 percent. Another practice that is interesting is Jet.com’s offer to discount products that consumers buy if they pass on the option to return the item. Returns are certainly one of the two biggest challenges that online retailers, particularly in the apparel category, have to deal with (the other, of course, is shipping and handling).

Joan Treistman
BrainTrust

I agree with Shep Hyken’s comments. For retailers going forward, an aggregation of what can be learned from the past can truly help planning for the future.

If profitability shrinks because of online returns while customers continue to be motivated to buy over and over with the same retailers because of that option, customers shouldn’t be punished. In this regard it’s a matter of framing the analysis with how can you (the customer), help me (the retailer) help you. It’s in the data.

Marge Laney
BrainTrust
2 years 8 months ago

Customers need to try on their selections in order to make their final buying decision. Of the 30 to 50% of apparel purchased online, 70% get returned due to fit issues.

Restricting customers from returning items and labeling them as serial returners when they buy more than one size of something and return the rest is ridiculous. They do that hoping to find something that fits! Standardized sizing and virtual dressing rooms can help, but they will never replace actually trying something on for fit, feel, and look.

Online returns, especially for apparel, are never going to go away. Ever.

Nicola Kinsella
Guest
2 years 8 months ago
Push back on the manufacturers whose products generate the most returns, and encourage them to develop more standardized and obvious fit indicators. A classic example is shoes. I’ve always loved Merrell shoes. They fit me really well … at least some of them do. I didn’t realize how much their footbeds varied until I tried purchasing online. Disaster. The shoes I purchased felt terrible and I had to return them. Further research revealed they make different lasts, but you can’t tell online. Why can’t they have some sort of indicator on the type of last — flat, more arch support, etc. Also, help your customers find other purchasers just like themselves so that reviews are meaningful. For example: If I live in the northeast, a winter coat review from someone in Florida isn’t relevant. I want to see a review from someone in my area, or colder, like Toronto. If I swim for exercise in my local chlorinated pool 5 times a week (which is harsh on lycra), the swimsuit review on fabric quality from… Read more »
James Tenser
BrainTrust

I’ve always believed that online returns are primarily an issue for the softlines business — much less for grocery and other fast-turning products, and a non-issue for digital media.

Instead of puzzling over the best policy for accepting returns, it seems to me that affected retailers should focus on why returns happen. In apparel it’s about fit, feel ore color. Better guidance on all three could alleviate a significant amount of returns.

I think an opportunity remains for a third party sizing app to match a shopper’s personal “shape profile” with garment measurements provided by the e-retail site. Much better than interpreting shopper comments on the web site.

For jeans, dresses and shoes in particular, a truly practical “match my fit” tool could improve shopper confidence and satisfaction, and result in fewer returned garments. This would trim a cost center for the retailer and increase net sales, allowing it to maintain liberal return policies for those who honestly need them.

Ken Morris
BrainTrust

Online returns and the high costs associated with returns are, for the most part, an inevitable cost of e-commerce sales. However, there are actions retailers can take to help minimize the high cost of returns. The biggest key is to leverage your physical stores.

Encourage webrooming and showrooming. The key to reducing returns is to help customers make better buying decisions by trying or testing before they buy. Most returns are due to products (clothing) not fitting and the best fix for this problem is to drive customers into your store before they buy (showrooming) or to encourage web browsers to the store to try items on before they buy (webrooming). In addition to reducing returns, webrooming also has the added benefit of incremental impulse purchases while they are in the store.

Another way to reduce return costs is to encourage customers to return or exchange the products purchased online at their local store. This has two benefits: eliminates shipping costs on returns and it encourages more exchanges than returns.

Adrien Nussenbaum
Guest
Adrien Nussenbaum
U.S. CEO and co-founder, Mirakl
2 years 8 months ago
The return of items is inevitable and it can be frustrating. For the 39%+ of online sales (source: Ecommerce News) that now go through marketplaces (where 3rd party sellers offer goods on a retailer’s site), the returns process is especially critical because there are multiple parties involved in ensuring a satisfactory experience. One tactical way of minimizing it is making sure product information meets certain quality standards so that consumers understand what they are buying. A good marketplace platform will integrate the catalogs of many sellers and ensure that the product information is robust enough to meet quality standards. While returns can be frustrating, they do represent another interaction with the customer, which means another potential purchasing opportunity. A smooth returns process adds to the overall customer experience, which increases the customer lifetime value. We see many customers using marketplaces as a way to improve the customer experience across all channels (both physical and digital) by extending choice. For example, department stores use marketplaces and allow customers to click & collect (buy online and return… Read more »
Peter Sobotta
Guest
Product return policies have much more power over consumers’ perceptions, and even more important, their future purchase likelihood, than many retailers realize. Consider the following: 67% of customers check an online retailer’s return policy before making a purchase. Almost half would shop more with, and recommend, a retailer with a lenient returns policy. 59% of customers are attracted to a retailer by a good returns policy. But that’s not all. Customers return products for very specific reasons, most of which go far beyond the handful of generic reason codes most retailers use to collect returns data. Returns can highlight problems with merchandising, quality issues with vendors, errors in warehouse operations, and so forth. The key to minimizing returns is understanding why they are happening and taking proactive actions to fix the defects in the supply chain that cause returns. This is only possible with data collection and detailed analysis. Unfortunately most retailers are not equipped to handle this process and hence fall into a reactionary position where acceptance of the problem becomes the norm and… Read more »
wpDiscuz
Braintrust
"... It's important to take the long view about customer value maximization instead of just trying to minimize short-run costs."
"It’s a matter of framing the analysis with how can you (the customer), help me (the retailer) help you. It’s in the data."
"Think of a return as a gift. Handled well, it gives you the opportunity to prove why the customer made the right decision to do business with you."

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