How Returns Can Help Multichannel Retailers Beat the Competition

For retailers that relied heavily on online sales for holiday business, this time of year brings up an issue many prefer to avoid: online returns. If you haven’t given much thought to your company’s returns policy, you may be missing a golden opportunity.

A recent UPS-commissioned Forrester Consulting study on online returns found that returns' policies affect online buying decisions more than most realize. Businesses that make returns easier and less expensive gain a competitive advantage — and, in the long term, increases in sales, customer loyalty and incremental revenue.

The report also revealed that some retailers treat returns as a natural byproduct of the online sales process, since consumers can’t inspect items before purchasing, and realize a generous returns policy can be a competitive advantage. Yet most guard against returns at all costs because they believe returns reduce margins and involve interactions with unhappy customers.

But to the contrary, Forrester found that consumers most likely to return items tend to be the most active online buyers, i.e., your best customers. Consider the following statistics gleaned from the report:

• 81 percent agreed that they're more likely to buy from a retailer if that retailer makes it easier to return a product.
• More than 80 percent said they're more loyal to retailers that have generous return policies (e.g., free return shipping, ability to return any time for any reason).
• 73 percent said they're less likely to buy in the future from an online retailer where the returns process is a hassle.

Inverness, Fla.-based Smartphone Experts, an online retailer of smartphone accessories, says a fast and convenient returns policy helped it maintain several clients. The company e-mails its customers UPS return labes they can print and attach to the packages, and then easily track their progress online.

“Just knowing that it’s easy to return something makes customers feel good about ordering from us,” says Diana Kingree, director of commerce at Smartphone Experts.

Match your policy to your business, Forrester advises. Compare the electronics industry to someone selling home soft goods, for example. With larger electronics, there’s a higher cost to accept returns but a much lower risk of customers receiving something unexpected. Returns are much more likely to result from items being damaged en route or shipped in error.

Consider warranty programs at checkout to provide peace of mind. Also, insure your shipments to protect against damages. If you have brick-and-mortar locations, offer in-store pickup programs. And if you have a sophisticated customer database, consider offering more generous returns’ policies to your best customers. Finally, whatever your program, communicate it clearly.

Karl Ryder is vice president of strategic accounts, retail and consumer goods at UPS. He can be reached at kryder@ups.com.