Returns Can Be a Successful Part of Your Business if You Use Them Properly

For many retailers, returns equals a huge profit loss, an expensive transaction that can often cost more money than the actual item is worth. Driven by the pandemic, consumers took to online shopping, contributing to a record high of $855 billion in online sales in 2021. The National Retail Federation (NRF) and Appriss Retail reported that the average return rate in 2021 jumped to 16.6 percent, a total of $761 billion in merchandise. This is a 6 percent increase from the previous year, and it’s expected that 2022 will sustain this momentum as consumers settle into the "new shopping norm" we’ve witnessed evolve over the last two years. That said, while returns are a growing and expensive problem for brands, they’re an inevitable and often difficult-to-control part of e-commerce. What brands may not realize is the returns process can be a positive way to re-engage with customers, and in turn increase customer loyalty. Here’s how:

A Personalized Approach

A recent study that dives into the delivery and returns processes of 200 of the largest U.S. retailers identified that 75 percent chose not to include personalization in customer touchpoints during fulfillment, shipping, delivery and returns. Further research has shown that transactional email communications have some of the highest open rates — 148 percent to be exact. Touchpoints such as tracking, updates on refunds and more are all opportunities for retailers to capitalize on, as they have their customer’s attention. That said, it’s evident that they’re either not investing in the right resources or are pushing this invaluable information to the wayside.

By leveraging integrated technologies and harnessing returns, retailers have an opportunity to re-engage by sharing branded materials, messaging around loyalty programs, returns tracking, sustainability practices, and even suggesting new items based on feedback provided during the returns checkout process. Returns are an opportunity to make the next sale and keep the customer coming back.

Tap Into Consumers' Emotions

Fifty-three percent of consumers say that the post-purchase experience is the most emotional part of their shopping journey. This is important knowledge for retailers, as it helps them better understand the areas of their business they should be investing in and, in turn, implement the proper resources to tailor the customer experience.

While this rings true across e-commerce, certain industry categories should be paying extra attention. Of the 57 percent of consumers who reported feeling emotionally connected to their shopping experiences, 47 percent reported the highest emotional response to fashion/apparel purchases, 38 percent for food and beverage, and 34 percent in home goods. Retailers that provide goods in these categories should be capitalizing on this new intel. Consumers have a strong connection to these areas, which means delivering an extremely positive customer journey could result in increased loyalty. As the final touchpoint, returns are a huge part of this equation.

Conclusion

With customer acquisition being five times as expensive as retaining an existing customer, it's critical brands start prioritizing retention in addition to acquisition. It's 60 percent easier to sell to an existing customer, so taking the time to evaluate your current returns processes and strategies to find the gaps that are missing can only create opportunity for greater success.

Tobias Buxhoidt is the CEO and founder of parcelLab, an operations experience management platform.