Whether you ordered the wrong size or it’s the wrong product entirely, the inability for us to examine physical products, before purchasing them online, as we shop digitally more than ever, is causing more frequent returns; in fact, over the past year the total return rate increased from 10.6% to 16.6% for total retail sales.
Now, consider beginning the returns process and the retailer asking you to donate the item instead, full refund in tow. It’s a surprising experience but one that is happening more often as retailers reimagine reverse logistics and the cost of returns.
If you can remember the occasions you have had to print out a shipping label, tape it on a box and transport it to the post office, just to make a return, you can appreciate the simplicity that comes with avoiding all that hassle.
The uptick of returns is bound to continue as consumers shift digitally
The fact is: customers want the ability to return products as easily as they purchase them, preferring not to deal with packaging items and printing out labels.
And while there is a lot to think about when it comes to reverse logistics, customer satisfaction is paramount if you want to ensure repeat business.
Some retailers have been making investments to slow down the cost of returned items
Due to the associated costs with returning goods, retailers are coming up with creative solutions to avoid the logistics of taking products back. For example, Target and Amazon will sometimes ask customers to keep products rather than deal with the expensive and complex system of returning items that may be worth less than the processing costs involved.
Other retailers, like Walmart, are investing in a virtual fitting rooms, hoping to curb the number of items customers return. And while those types of tech investments produce an impact, the reality is that there is no way to avoid returns; this begs the question: so how do you ensure customers are having the best experience when they need it?
Find success by optimizing returns through stores
Stores are one of the three conduits to enable same-day services, like BOPIS and curbside pickup. Locations close to customers that offer digital order fulfillment also provide faster service times, which create a better shopping experience.
But what if these systems could also be applied when thinking of returns?
With 62% of shoppers more likely to shop a brand that offers returns at a physical location, the increased rate of returns is an opportunity for you to optimize your stores for BORIS (Buy Online Return In Store). For example, DICK’s Sporting Goods has introduced curbside returns at their retail locations, providing a seamless and contactless experience for their customers.
Nordstrom provides another example of how retailers are finding innovative ways to increase the number of physical locations through their introduction of “Nordstrom Local”: stores with smaller footprints that bring the brand closer to customers while acting as service hubs for order pickups and returns.
We’ve also seen online retailers, like Amazon, capitalize on the need for increased customer convenience by partnering with Kohl’s—resulting in a win-win situation for both retailers. Amazon shoppers get the ease of returning products to a physical location while Kohl’s receives an influx of new customers. This model was so successful that Amazon now flows returns through their Whole Foods stores as well.
Third-party providers have also reaped the advantages of having physical spaces for customers to return products. Companies, like Happy Returns, work with retailers with limited locations—or DTC brands—to accept returns at “return bars” set up in local businesses. This creates opportunities for local businesses to market to potential new customers while limited-location retailers have returns aggregated, thus reducing shipping costs. It’s a localized version of the Amazon returns model.
Returns are bound to grow, are you prepared?
Providing the option for customers to easily return products to physical locations only addresses the piece of the returns process targeted at customer satisfaction. The remainder of the process has room for improvement as well; and as more consumers shift online, with digital sales estimated to reach 35% of total retail sales in 2025 compared to 24% in 2020, a clear strategy that seeks to reduce the costs of reverse logistics will need to be in place to address the returns that will grow alongside those sales.
Since we all know satisfied customers become repeat customers, how are you delighting your customers, when they make returns, to ensure they keep shopping your brand?
