How to process ecommerce returns

This article is an excerpt from our guide for ecommerce retailers: eCommerce Returns 101. The guide goes through every stage of the return process from policy to process, as well as covering customer experience and return rate reduction. Download your copy for free here.

Processing returns can be a complicated and costly operation, and the challenges of capturing data and efficiently getting items back on sale or into the right waste process are numerous. To get returns processing right, retailers need to map out a clear and positive direction of travel for the customer that is also fast and cost efficient to process.

Customers are largely familiar with the use of digital labels like QR codes or barcodes. That means you can reasonably expect them to be able to use those tools in a digital returns process – or leave them to just slap a label onto their parcel. By giving customers the digital option, you’re getting data that tells you why the return is being made in a little bit more detail. In turn, that means you can process it accordingly – why pay express rates to receive a faulty item, for example?

It means you also know exactly when to expect the item back and how quickly it can be ready for re-sale. On the customers’ side, booking their return with a digital platform means they have a clear understanding of when they’ll receive their refund and it allows your customer communications to truly tie into their habits. Every digital interaction you have with your customers adds another new detail to their marketing profile – even returns. Perhaps especially returns!

Some believe that having to contact customer support for a returns authorisation is an effective way to limit return rates, but we would beg to differ. Our research revealed that 36% of customers specifically identified this as a frustration that would lead them to reconsider purchasing from the brand in future. Can you afford to lose that much business?

By setting out the steps in a digital journey, retailers can avoid the need for customers to call customer support for authorisation as well as keep their returns policy in their control. Out-of-policy items won’t even be selectable to return – no customer support contact and authorisation denial required.  Further down the line, the customer won’t need to make more calls to find out the status of refunds – the information is clearly surfaced in the digital returns portal. One thing is certain – the customer support team will absolutely thank you, as they can then get down to the important business of looking after customers, answering their queries and making sales – all the good stuff. Instead, returns will enter into a really efficient automated process based on what you’ve already set out in your returns policy.

Maybe you’ve gone for the Amazon approach and decided that customers can have free return shipping for faulty or late arriving goods only. You may not like the idea of footing the cost of customers changing their mind, or because the item is unsuitable. Like we’ve said before, as long as you’re clear at every stage and the numbers stack up, the decision is ultimately yours.

Let’s talk about shipping, where unexpected detours and bumps in the road can happen. And if there are a few of you deciding together how this is going to work for your e-commerce business, you may disagree. But never fear, we are here to give you the pros and cons of all the ways and means that your customers might get a return back to you. Ready?

Step 1: Preparing a return

You can see that as we go down the list, the customer does less, but you, the retailer, get more. Now let’s take a look at what the customer does once they’ve got the package re-wrapped and ready to go.

Step 2: Handing it over

In a nutshell, it’s easy to overlook the hidden of costs of leaving returns in the hands of the customer. Prepaid labels seem like the simplest solution, but over the long-term they stack up to be surprisingly costly. The key takeaway here is that customers want to make returns without hassle, so it’s important to offer them both simplicity and plenty of options. Focusing on a customer journey that is essentially a minute or two to generate a return code, followed by multiple options for locations to drop off their item (or arranging collection for large or luxury items) offers you:

This bit is kind of dependent on how big your operation is, but we’re going to assume that you will be working with a sizeable warehouse that ships your products and receives returns. As time goes on, you may need to scale this up and have your returns ship to an entirely different and dedicated location. However, the principles are largely the same, even if the square metres aren’t.

Segmentation

When goods come back to the warehouse, they need to be immediately separated into ‘re-saleable’, ‘broken’ and ‘faulty’, so you have immediate access to products that can be resold.

Traffic

By integrating your digital returns into your internal systems, you are already aware of what’s coming back to your warehouse, so you’ll be able to take receipt of re-saleable items, quickly separate them from the others, and repackage them for the next shipping. Hopefully the item will then head back out to the next shopper quickly and seamlessly. The remaining items then receive their own treatment, as set out below.

Update

As goods come in, your inventory management system needs to be updated, either by manual data entry or code scanning. That lets your system know what’s in stock and what condition all of your stock is in. This can also be used to trigger the process of refunding your customer.

The other thing that might need to be updated is your website. With a paper slip and a sticky label, it’s really hard to immediately identify issues of presentation, customer perception, fit, colour and more. When your customer books a digital return, they can give a little more detail about their reasons and you might discover some difficult but helpful truths about your site that may reduce your overall returns rate.

Dispose

Irreparably damaged goods need to be addressed in the least wasteful and most sustainable way possible. As a responsible retailer, landfill or incineration are the last resorts for products that can demonstrably be recycled. Perhaps you have an arrangement with a fabric recycling organisation? Or can partner with a business that can introduce your products into the circular economy? Either way, you’ll be looking to ship these out quickly and cheaply.

Investigate

The fact your items have been sent via a digital returns portal also means you can also quickly spot what hasn’t arrived – meaning you can investigate and make claims for any losses.

Digital returns make it easier to look into problems with faulty goods too, as it can flag recurring issues. A consistent problem may mean that this product requires removing from inventory. If it’s key to your ranges, then you can start to understand how to change its design, if you own the product IP, or work with the manufacturer to fix it.

Stay connected

You’ll notice that there’s a lot of emphasis here on the information that your customer can share with you, that can ultimately improve the way you operate. This is no accident. Staying connected with the customer, learning from them and making sure they are well-informed are absolutely key to maintaining their loyalty. Let’s move on to the communications around returns.

Download the full copy of eCommerce Returns 101 here.