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Reducing your returns and their cost

Reducing your returns and their cost

 

Product returns are expensive and disruptive. Making sure you’re prepared to handle returns effectively will save you lot’s of money down the road. 

Returns are sometimes referred to as reverse logistics. It is the process by which an end-user returns an item for any number of reasons. Once the item has been returned, depending on the product and the situation, you must decide whether to repair or refurbish it, resell it at a discount rate, or destroy it. You must also decide what type of action to take with your customers, such as offering a refund or exchange, a store credit, or product repair. 

Lastly, you need to know why it happened and what was the cause of it. Here are some tips to help you reduce your product returns and manage them if they do occur.

Understand the problem

Returns will cost you money and possibly even your customers, so it’s important to understand why your products are being returned. Just over 10% of total sales will be returned. Returns are the new normal and central to customer experience. But they don’t have to be a plague.

Some of the returns could likely be reduced or completely eliminated through better processes. Here are some tips to reduce them;

  • Inspect the products before the delivery
  • Inspect the packaging of the product to ensure safe delivery
  • Make sure the labeling of your products is accurate and clear
  • Ensure your customers are at home for the delivery, to avoid re-scheduling
  • Train your delivery team to spot defects on products during the loading
  • Hold accountable your delivery team for any damage during delivery

 

Then, there are the returns that you can’t control. For example, when a buyer purchases a product but then has a change of heart through.

For these returns, there isn’t much you can do, but you could reduce the window of time a customer has to return the item. Some studies show that the longer a customer has a product, the more of an attachment they form with it—meaning they’ll be less likely to return it. This is called the endowment effect.

 

Understand the cost of returns

Returns are extremely costly in terms of the bottom line but also for your customer loyalty. Maintaining customer satisfaction with a good return policy is important, and customers love when a business offers free returns.

 

 

Why is it so costly?

From the time spent dealing and understanding the situation with the customer, to the time and money spent managing the refurbishment or repair of the product, to the cost incurred by the delivery team going back a second time to your customer to return the product and then go back again to deliver the new/repaired product, to the discount/store credits offered to your customers. The costs keeps on pilling up!

Studies show that a majority of customers won’t purchase from your store if you charge them return shipping fees, so a store credit or a discount could be a better solution considering all the cost involved in returning a product. However, if you choose to make customers pay for the shipping back, you will get fewer returns as a lot of people don’t want to deal with it. This may deter some customers from becoming repeat buyers, but will also save you a lot of money.

 

Create Your Return Policy

A clear and transparent return policy is a key component of delivering a great customer experience. We often see companies add returns as an afterthought, but it should be thought right from the start. You need a return policy that’s clearly communicated in your marketing and on your website. It should address things like shipping, damaged products, replacement costs, etc.

 

 

It should also be included on any partner sites you sell on or with your delivery partners. You could also enclose a hard copy with the product when shipping. Allowing the customer to see how long they have to return items helps avoid aggravation in the future by allowing them to understand our return policies.

 

Broken or Damaged Items

This is inevitable, as it will happen. Hopefully, you have a good supplier of products and a good shipping partner who delivers your products quickly without any damage to your customers.

When customers contact you to say they received a damaged item, I recommend that you ask them to send a picture of it as well as the packaging to figure out the problem. The problem could be that the product was damaged during the shipment between your supplier and your store or it could have been damaged by your delivery team during the customer’s delivery.

If you want to learn more on how to deal with damaged items and how to avoid those mistakes, we’ve covered in-depth these topics in our article Can you trust your third-party delivery partner?

 

How tech can help you reduce your cost

As you’re trying to keep returns under control as you grow, make sure you’re organized.

Before I say anything else, make sure you find product returns management software. With the right software, it’ll be easy to track your returns and reduce them over time. Gomove is not only a delivery management software, but it can also manage your returns.

 

 

For those just starting out, a product returns management software contains all the customers’ information and for each return, it will create a unique reference number allowing to keep track of everything. 

Gomove is not only designed for the delivery process but also manages returns effectively. Each week, our software generates a report informing you on the number of returns, their estimated costs, the main reasons for the returns, and most importantly which products are causing these returns.

Transparency in the delivery process should also be afforded to the returns management process. If customers want to know the status of their return or exchange, make sure that your chosen software provides them visibility by providing tracking information. You can also set up automatic and customizable alerts via our text messaging to keep them informed during their return journey.

Returns are the new norm

If you ever find yourself dealing with returns and exchanges, remember that this isn’t something exclusive to your company. It’s a bummer, but we’ve all been there. Make sure to allow a little time and sketch out your policies and processes.

In the event that one of your products becomes a hit and you receive a deluge of orders, you’ll be thankful you planned ahead. Let us know your pain points when it comes to dealing with returns by reaching out to our experts!

Our software suite is more than complete because, not long ago, we were in your situation and decided to act on our pain points! We decided to build a business around this.