Take it back

Rob Shaw, SVP Global Sales at Fluent Commerce Explains why making returns easier increases margins

Last year, as customers tightened their belts in response to the cost of living crisis, UK retail returns hit record levels. New research shows that despite online retail purchases falling by 11.5%, returns were 26% higher than 2021. For online retailers, over a third (35%) of their goods were returned, up from a quarter (25%) than the year before.

With the volume of returns showing no sign of slowing down, it is more important than ever for retailers to try and curb this trend. Over the past year, we’ve witnessed retailers such as Zara, Boohoo and Uniqlo start charging for online returns, while some brands like Shein have let customers keep low-price items they want to return if the transit cost eliminates any profit.

Clearly, the way retailers and brands manage returns is becoming a more important part of the customer journey. A survey by Loop in 2021 found that when customers were able to return a product for a refund, those companies saw a 17.8% increase in repeat purchases compared to those customers who didn’t engage in any type of return event. Exchanges were found to provide an even larger lift, increasing the repeat purchase rate by almost 34%.

So how can retailers make returns easier for customers and maximise profits?

Making returns easier

Making returns easier for customers might seem counterintuitive to increasing margins and maximising profits, but the reality is that if you’re easier to shop with, customers will buy more from you. Here are four best practices for retailers looking to reduce returns:

1)         Make your returns policy clear

It is vital that returns policies are clearly stated and posted visibly online, including in shipped packages and in-store. Offering customers a variety of options to return items on their own with minimal effort and clearly defining policies that address several types of return situations, is key.

In store, retailers should have a sign at checkout detailing the returns policy, and could also print this on customer receipts for added clarity. In some cases, employees should also be instructed to verbally communicate the returns policy. For example, if the retailer doesn’t accept sale items for return, then it's good practice to remind customers who are about to purchase an item from the clearance rack. Clear communication will help prevent any potential frustration further down the line.

2)         Provide a great customer experience across all platforms

The line between bricks-and-mortar stores and your online storefront should be unnoticeable to customers. Ensuring consistency across the customer journey, whether customers are visiting your store, website or mobile app is critical. It will build a frictionless experience and easy interaction for your customers.

For retailers that don’t have physical locations available in every area of the country it is important to provide easy-to-find return labels and policies around postage. They can include a paid return envelope in the package, an easy to use link for ‘request returns package here’ and use third party locations like newsagents or lockers. This way, customers who do not wish to visit a physical store are provided with a pain-free way to return their products.

In a recent survey of global retailers, over half said they would increase the number of return locations. This should be emphasised to customers as it is often a cheaper, more convenient and more sustainable option. With popular products that frequently sell out, ship-to-store options can also keep customers coming back. The knowledge that any product is available, no matter its current location, will drive in-store visits and maintain customer satisfaction.

3)         Grab the opportunity for conversion and upselling

In stores, staff can entice customers by reminding them of what great products or gift cards they can get in exchange for the item they’re returning. This may entice them to explore the shop. If a customer has bought a shirt online that doesn’t fit properly and has come into the store to return it, employees can use the opportunity to offer a different size or brand that might suit their requirements better.

“Returns are an opportunity to provide exceptional service by solving the problem for the customer,” explains Kiran Flynn, SEO & Digital Performance Manager at retailer Taking Shape. “Whether it be to simply provide a no-fuss return experience that gives customers the confidence to shop with the brand again, or an opportunity to start the service experience all over again with the customer, to solve the original wardrobe dilemma. Exceptional returns experiences create greater brand loyalty and trust, and further enhances your connection with your customer. It is important to empower your team to make the returns process a positive one for both the customer and the brand.”

4)         Use returns to gather insights

Returns also offer retailers insights about their products, customers, and marketing strategy. Retailers should make a point to gather feedback every time a return or exchange is processed is key, asking why a customer is returning the product. Did they find a better alternative somewhere else? Was the item damaged? Quality not as expected? Or did it not fit?

Good retail software should inform retailers which products get returned, how quickly, and via which routes. This way they can assess the cost of returns in terms of time and profit and correct any negative trends early. It may be an issue with a product or with the marketing.

5)         Making returns easier 

Retailers could also extend their return period from one month to 100 days or even a year. This can lead to better margins as customers are more likely to buy products knowing that the retailer has confidence in the quality of them.

Retailers may also consider having a different returns policy or process in place for high value customers, or those who tend to buy items at full price. Cotswold Outdoor, for example, has a 100 returns day policy for Explore More members. These members are also not required to retain their store receipt for returns made in-store, as all purchases are tracked on their membership card.

Taking care of customers in these categories makes more business sense long-term. Maintaining their loyalty is key.