What’s the trick to handling online returns?
According to National Retail Federation, about 13 percent of holiday purchases are returned, but the process has become exceedingly complicated with the arrival of online selling as well as BORIS (buy online, return in-store).
Kurt Salmon has estimated that up to a third of online orders are returned.
A study from Alix Partners analyzes the merits of the three ways retailers are returning merchandise:
- Return to store: The first choice of consumers, 60 percent of online shoppers were found to prefer returning items to a store. For retailers, store returns are the least expensive and the quickest option to return products to selling floors. On the downside, a store return “eats up a lot of resources and prevents sales associates from actually selling,” and returned items often head straight to clearance.
- Return to DC: This option, while slower, is less taxing on store operations and a better way to sort goods for resale. Returns of this kind, however, are more expensive and take the DC away from delivering new merchandise.
- Return to a third party: While the least distracting to store and DC operations and the ideal way to sort goods for resale, this method is the slowest and most expensive option.
Alix Partners recommends considering offering free shipping for online returns and other perks since a hassle-free returns policy makes consumers more likely to buy. Since shoppers often pick up other items when they make returns, stores should be well-staffed and trained, and a special discount or perk could even be used to incentivize store returns. Third-party solution providers rather than DCs for online returns was recommended for the hectic holiday period.
A study released last October by Forrester Research and Happy Returns found 73 percent of shoppers selected “returns” as the least favorite part of shopping online, and 28 percent indicated that they shop less online than they would otherwise because they don’t want to deal with the hassle of returns. The most requested features for online shoppers in the return process were: free returns, immediate refunds, pre-printed return labels, the ability to drop returns to a store and allowing returns without a receipt.
- Many happy returns for retailers – Alix Partners
- Organized Retail Crime On The Rise – National Retail Federation
- Majority of Online Shoppers Are “Much More Likely” to Buy from Retailers That Offer Free, In-Person Returns – Happy Returns/Forrester Research
- Online Retailers Are Desperate to Stem a Surging Tide of Returns – Bloomberg
DISCUSSION QUESTIONS: What do you see as the best strategies to handle online returns? Should retailers incentivize in-store returns? What are your thoughts on incorporating returns to the DC or third-party solution providers?