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The New Paradigm in Retail Returns: Exceeding Expectations

The New Paradigm in Retail Returns: Exceeding Expectations

by Michael McComb, Vice President of Sales and Business Development, Newgistics

Reverse Logistics Magazine, Edition 80

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The returns process is an area of online retail that has been overlooked for too long. It’s an aspect that must be more closely integrated into the overall brand experience in order to meet retailers’ long-term business objectives.

According to research from the National Retail Federation, about 30 percent of all ecommerce orders during the holiday season are returned. With nearly one-third of orders being sent back, it’s evident that returns aren’t going away any time soon, so online retailers need to ensure that the process for returning items is just as seamless as initially purchasing them. While most retailers are starting to understand the importance of enhancing the post-purchase customer experience, it wasn’t always such a hassle-free process.

At the inception of e-commerce in the 1990s, there were a number of hurdles the industry needed to overcome in order to convince people to try shopping online. Prior to the internet and personal computers, most purchases were made by going to a physical store, picking out items, and paying for them. Clicking a buy button on your computer – probably from a retailer you had never shopped with before – took a leap of faith.

As online retailers set out to disrupt the retail industry, they had to earn the trust of their customers and meet expectations of what the shopping experience was supposed to entail. Shoppers wanted to add items to their shopping cart as easily as they could pluck them off the shelves at stores, so retailers and technology companies placed a great deal of emphasis on making the purchasing experience as smooth as possible – and they’ve done an excellent job. Today’s e-commerce sites are full of convenient features, from personalization engines to one-click checkouts, and they continue to get better.

Once the purchasing process had been perfected, retailers began to place that same thoughtful emphasis on the forgotten aspect of e-commerce – the post purchase experience. Improving deliveries was the first area of focus and after a few market leaders set expectations for free and fast shipping, most of the industry followed suit.

Last but not least, efforts turned to improving returns.

The old process for returning an item bought online was problematic and inconvenient. Returns just hadn’t yet been given the same thought and consideration that was applied to the rest of the online shopping lifecycle. In order to return an item purchased online, customers had to obtain an RMA, print a return form, fill it out with reasons, repackage the item, and pay for the return shipping. The timely process was more troublesome than returning an item to a physical retail store, and customer expectations were not being met.

To better accommodate shoppers, retailers began focusing efforts on making the returns process easier for customers. For example, Deckers Brands, a global leader in designing, marketing and distributing innovative footwear, apparel and accessories, recognized there had to be a better way that would improve its overall brand experience. According to Senior Manager of eCommerce Operations, Jesse Carstens, “the process put too much responsibility on the customer, which was at odds with the hassle-free shopping experience we strive to deliver to our customers.”

As free shipping had become the norm for e-commerce deliveries, the expectation carried over to returns as well. But free shipping is really only free for the customer and retailers have to find ways to absorb the costs – usually out of their operations or marketing budgets. By working smarter with its shipping partners, Deckers was able to implement a strategy that offset the costs of free returns while also improving the overall experience for its customers.

The core of this strategy was a technology for automatically embedding customer order and shipping information within barcodes which could easily be printed, affixed to packages and scanned at multiple touchpoint.

The barcode technology eliminated the need for customers to fill out inconvenient forms to return an item. It also removed the potential for hand-written errors that could contribute to processing delays that would frustrate customers and increase operations costs. With the barcode technology, customers simply need to print out a return label, place it on the box the item came in, and put it back in their mailbox or drop it off at a local post office.

Once the package leaves a customer’s hands, the barcodes enable packages to be easily tracked every step of the way, so Deckers and its customers always have the latest information. Customers now receive email confirmations when their returns are in transit, which has reduced call center volume. When customers do call, operators can provide fast and accurate answers based on real-time tracking information. The visibility into what is being returned and when it will arrive at the company’s returns department has improved operational efficiency, enabling Deckers to better manage staffing schedules.

In addition to the gains in customer experience and operational efficiency, Deckers also confirmed that its decision to offer free shipping helps to improve top-line revenue and lifetime customer value. The retailer performed A/B testing where it clearly conveyed to half of the customers visiting its site that returns shipping would be free – while providing no such offer to the other half. The result? Customers clearly expect and appreciate free returns shipping because those who were told up-front that returns would be free were more likely to make a purchase.

Now that many retailers have implemented the infrastructure needed to meet customer expectations when it comes to free and easy returns, the next step is finding ways to use that foundational technology to exceed expectations. With a new mindset towards the entire customer lifecycle, retailers can provide enhanced features that allow them to build even deeper relationships with their customers by keeping a few important guiding principles in mind.

• Convenience – Customers value their time and anything that can make the returns process easier will improve their affinity towards a brand.
• Transparency – Whether its updating a customer on the status of their return credit, or having the returns policy clearly outlined on a website, customers want to know exactly what to expect during the returns process.
• Brand Interaction – By increasing communication with a customer after they click the “buy” button, a brand can differentiate themselves from competition and establish themselves as thoughtful – winning customers over in the process.

Convenience, transparency and brand interaction are expected by online shoppers, and there’s a real opportunity now to exceed these expectations in new and innovative ways that fit into a shopper’s lifestyle. In an industry where the next online store is only a click away, retailers need to find ways to enhance the customer experience post-purchase, in order to maximize brand affinity and customer retention. And now, customers view a seamless returns experience as being just as important as every other step in the shopper lifecycle.
Michael McComb is the Vice President of Sales and Business Development at Newgistics, Inc. Newgistics provides e-commerce services to retailers, offering end-to-end e-commerce solutions that integrate every step in the order life cycle from digital commerce, development, integration, and support, through fulfillment, delivery and returns.
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