The Problems & Opportunities of E-Commerce Returns

When you run an e-commerce website, along with managing the inventory, packaging, and delivery of products, return management can become hectic and only add to the chaos. Customers like to shop with stores that have an easy and seamless return management procedure in place. 66% of customers tend to check the returns policy before they shop with a website for the first time, making it even more imperative to have robust returns management in place for your online business. This is vital for both stand-alone online businesses and brands that sell on marketplaces ( https://www.yourretailcoach.ae/online-marketplace/ ) like Amazon. However, with the rapid change in customer behaviour and demands, the online return rates are predicted to keep climbing. Although return policies largely favour customers, the burden of returns falls most likely with the retailers having to ensure whatever value they can retain or refract from the returned inventory. Since the beginning of e-commerce, online retailers have been abating with the challenge of returns both due to their volume compared to normal stores and because of the cost of processing returns.

Online e-Commerce has flourished on the foundation of convenience it offers, but it comes at the cost of not being able to 'try before you buy for customers. This is also the same reason why online returns are so much more popular than traditional brick-and-mortar stores. In e-commerce, customers' closets are transformed into fitting rooms, and just like in traditional fitting rooms in regular stores, products tend to end up back on the shelves. As per a study, while customers tend to return 10% of what they purchase in stores, they tend to return 50% of what they purchase online. With returns policies originally favouring customers, shoppers are deliberately found to over-purchase and return unwanted items. When a product is returned or exchanged, it leads to an incremental increase in supply chain costs for the retailer. It also causes the product’s devaluation due to damage, wear/tear with time – obstructing the product from being sold at its original price.

Challenges associated with Returns

Cost of Returns – Returns are factually lost sales; hence the retailers bear the brunt of processing costs of returns and reverse logistics, which is on an average of 30% of the purchase price. In addition, reverse logistics can be complicated and can result in returned stock not being available for purchase for some time, often leading to out-of-stocks in the webshop.

Interrupted warehouse efficiency – Return operations can interfere with day to day running of warehouse operations and inventory management ( https://www.yourretailcoach.ae/warehouse-distribution-centre ). Pre-process handling costs can increase, along with resale challenges that can harm the overall business operations.

Handling Product Damage – Once returned products have arrived at the warehouse, they must be prepared for re-sale. Most of the e-commerce websites seek reasons as to why the product was returned. However, the reason "the product was damaged" is a far-reaching one. It takes a lot of time and money to arrive at what and how the product was damaged in the first place.

Loss of liquidation: Consistent returns from a particular category of the product may necessitate you to initiate a liquidation on the entire product line, especially if they were associated with the previous seasons or outdated versions of electronics etc. This might lead to a sale at fall-off prices far below their original selling prices.

The Changing Nature of Returns Management

Retailers are looking at ways to minimise the costs of managing and administering the costs of product returns. However, managed and administered properly, product returns can turn into a profitability margin centre. To turn a product of returns into a profitability centre, it would require the company to increase the recovery value of returns and, if possible, obtain revenues from the reverse logistics activities carried out to process returns. Much of the product returns process is manual, especially in the processing of credits and evaluation of return product for disposition, hence elimination of labour inefficiency or improvement of labour productivity can significantly reap profits.

Some other companies are now using artificial intelligence to examine the costs associated with a return and to decide whether processing the return would make any sense. For example, if the item being returned is inexpensive yet large or bulky items, the shipping costs would be too expensive for the processing of the return to reap any benefits. In such cases, the retailers usually tell the customer to keep the item and initiate a refund of the original purchase if the reason for return was considered genuine.

Strategies for Effective Ecommerce Returns Management

Return Management or reverse logistics is the process of overseeing the product any time it is sent to a destination but needs to be returned for any number of reasons. Reverse logistics also deals with how products are reused, restored, disposed of, or recycled once they return to their source. An effective returns management will ensure the organisation delivers better customer service by processing the returns quickly and the replacements delivered promptly. Here we put few key elements that rive an effective return management strategy:

Workflow Automation – Refers to automating the manual workflow using eCommerce returns management software or robotics technology ( https://www.yourretailcoach.ae/services/e-commerce-online-stores/ ). For example, returns management software can make use of AI to predict product returns in e-commerce during a season, component materials in a returned product, cost of repair for a return, etc. With the help of such data, back-office operations are streamlined, and RMA (Return merchandise authorisation) can be generated.

Integrating barcode identifiers – With barcode identifiers, return managers can get more visibility into the shipment data and thereby allow them to prepare staff and suppliers accordingly. By scanning the product barcode, the staff would be able to retrieve information about the condition, raw materials, and current stock levels. With such data on hand, packaging and delivery efficiency can be improved. It can also aid decisions regarding product restocking.

Create a balanced return policy – A flexible and balanced return policy will help you retain customers. You can ease out the return process by adding discount coupons for damaged products, or schedule follow-up calls to see if the customer is satisfied with the replaced product.

Managing returns comes with high-level operational challenges, including customer expectations, reverse logistics, data limitations, and process ownership. However, expert retail management consultants ( https://www.yourretailcoach.ae/ ) can step in to manage the impact of returns in a consumer-friendly manner by bringing about key operational and structural changes to enable the retail business.

How YRC can help you with the Returns management in eCommerce:

In this ever-fluctuating world of omnichannel shopping, the financial impact of returns could serve as a severe blow to many retailers in the Middle East region. YRC (Your Retail Coach) can help improve your capabilities to manage returns, improve customer experience and add more value to your bottom line. Our retail experts will help ensure a smooth and seamless buy, fulfil and return anywhere experience for your customer by providing stellar visibility for the customer for real-time visibility into every order and returns across all channels. We strive to continually improve omnichannel profitability, balance fulfilment capacity, and help reduce total cost-to-serve for all our retail clients.
Get advise for E-commerce retail business : http://www.yourretailcoach.ae/contact-us/

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YRC is a Management Consulting Firm with its presence across India & Dubai.
We help our clients build robust management systems which shall help to reduce their involvement in daily operations. We act as "Growth Partners" to our clients and help our clients grow in an organised manner. We have served more than 100 brands till date and are associated with 85% of them.

This release was published on openPR.