[MUSIC PLAYING] LAURA BEHRENS: Every year e-commerce retailers spend thousands of dollars and hours optimizing their purchasing and unboxing experience. While streamlining the buying experience is very important, e-commerce businesses often sideline what happens if the product just did not fit the customer's needs. In this lesson, we will take a look at different approaches on setting up returns that minimize your costs and make them as customer friendly as possible.
Like it or not returns are simply the cost of doing business. According to the National Retail Federation, 30% of all products that are ordered online are being returned. Building a streamlined process around returns is a great opportunity for e-commerce brands to gain a competitive advantage over the competition. While returns are unavoidable, businesses can take steps to minimize the operational headaches and the impact on the bottom line while at the same time also improving customer experience.
The key is to build a returns process that works for your company and your brand. You want to build the returns experience to satisfy your core and profitable customers and discourage abuse of the process. Before we dive into the gritty details of returns, it's important to make sure you're attracting the full customer lifecycle, from the marketing source of your incoming orders through returns. You can actually gauge the health of the marketing and the acquisition funnel based on returns.
You can be seeing amazing customer acquisition from certain channels but if you're not tracking the customer through the returns process you may be incentivizing the wrong type of people to purchase who then end up returning your products. One of the key metrics to track to get a sense of this is the returns by order source. Once you know the source of your returns, the next piece of data that's important to understand is the why behind the returns.
There are many reasons for returning products. Understanding why customers are returning items can go a long way in helping companies identify ways to avoid returns altogether. Some top reasons for returning a product include incorrect product or size ordered, the product did not match the description, the product was poor quality, the product is no longer being needed, or the company shipped an incorrect product or maybe it was simply fraud.
It might sound obvious, but take the time to track the feedback that comes back with the return products. It may reveal that you need more accurate descriptions on your product page. For example, you may want to mention dimensions, materials that are being used, whether or not assembly is being required. Maybe the photos didn't show the items clearly from all different angles. You don't want unclear or inaccurate product pages to be the reason why your customer needs to return an item.
As you track the returned items, take a look at the returns as a percentage of sales of each individual item. If any item returns rises above the average, consider what you want to do with that item. It may be that the item itself has an issue, in which case you may not want to continue selling it. When it comes to the actual returns process, the first thing you want to make sure of is that you have a return policy in place that is simple and written in plain English and that it has the best interests of your customers and your company in mind.
Here are four foolproof ways on creating a return policy and procedure that will satisfy your customers without breaking the bank. When it comes to the actual returns procedure include the specifics for your customers. Set expectations by making it clear who needs to ship what and by when, who pays for shipping, Is it you or is it your customer? Should your customers use your packaging or their own?
Be fair, if you ship the wrong item or packaged it incorrectly, attempt to make it right regardless of your official policy. Furthermore if you decide to change your return policy make sure you honor the previous policy if an order was placed before the change. Make sure the entire team understands your return policy and procedures that way employees can help customers navigate the returns process quickly and effectively especially during the busy post holiday or return season.
It is also important that you plan for exceptions, for example international customers. Remember to outline what you want to happen if you sell internationally. Create a separate policy for international customers. While not as customer friendly, you might consider limiting which items can be returned and who pays for shipping due to the extra shipping costs involved in international shipping. So what should be your return policy.
Let's put this all together. The first thing you need to decide is whether you want to have an RMA. RMA is short for Merchandise Return Authorization process. On the positive side, it allows you to interact with the customer while making the process harder to abuse. RMAs also prevent random items arriving at your warehouse and having to figure out which customer is expecting a refund. On the other hand, you need to have the staff and the resources to deal with the return requests.
Depending on your brand it may seem out of touch with your audience to require a contact before return. There is no right or wrong answer in deciding whether you want an RMA may process. It depends on your brand, products, and audience. According to a Shipwell survey, 54% of consumers say that free return shipping is important to them and is a large decision factor when comparing different merchants. Furthermore, up to 34% of consumers will only purchase items if they know that they can ship it back for free.
However, when surveying merchants only 14% offer free return shipping and 60% of retailers make absolutely no effort to help consumers ship their returns back. This is a giant opportunity for you to stand out from the crowd and to offer a competitive shipping. According to a UPS study, 40% of customers want to see a return label right in the box.
Using scan based return labels allows you to include a label that you do not pay for unless a customer ships the item back. Making it simple to include a return label on every single package that you ship out without incurring any extra costs. Much like tracking notifications are sent to the customer after a package is shipped from the warehouse, you can adopt a similar system for returns. After return packages are shipped back to your company's facility, you can update anxious customers waiting for their credit, keeping them informed by every step along the way.
You can notify them when you see that the item is in transit, you can notify them when it arrives at your warehouse, and then you can notify them what it has been processed and when to expect the refund. Lastly you can notify them when the refund has been issued. Implementing a flow that allows your customers to follow the items in transit by notifying them with updates via email will go a long way in helping the typical where is my refund calls and emails.
If the cost of the item that's being returned is low enough, consider issuing a refund even while it's still in transit. Utilize returns to gain a full lifecycle view into your business and remember the goal of the return process is to figure out how to create a better experience for the most valuable buyers while minimizing your own operational headaches and gaining a competitive advantage through shipping. Make sure you continue on to the next lesson to learn how to streamline warehouse operations.