E-Commerce | 26. August 2021

Five tips for optimizing return shipments and improving customer loyalty

In today's rapidly growing online market, it's not only important to attract new customers, but also to keep them. This can be achieved by optimizing the return process. by

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Most people are familiar with this situation: The package arrives, and the bicycle pump doesn’t fit on the tire valve. Or the T-shirt doesn’t look as nice as in the photo. Send it back? The package is too bulky. You don’t have time. And it may even cost money.

When it comes to retaining customers, online merchants need to offer the best possible returns solution. Satisfied customers are more likely to come back for more online shopping – and this is a real competitive advantage, especially in cross-border trade.

Five tips for lowering the return rate

The Returns Management Research Group at the University of Bamberg investigated the impact of the pandemic on returns behavior. In the course of this study, they estimated the number of returned purchases in German e-commerce to be at least 315 million in 2020. How can online retailers minimize the number of returns?

1. Optimize product texts and photos

Success Factor: Shipping, a study conducted by the ibi Research Institute at the University of Regensburg named mismatched items as the most common reason for returns. Why?

It all starts with meaningful product photos and texts. What good is it to a bicycle store customer if the pump he ordered is described as “universal” but doesn’t fit the valves on his bike tires? Online shop operators should ensure that the information they provide is as detailed and accurate as possible. This is especially important for clothing, where very precise measurements are required.

2. Simplify return shipments

The ibi study mentioned above showed that uncomplicated returns processing (95%) and free shipping (83%) are the most important factors for customers when making a purchase decision.

One advantage is a package that can be easily reclosed instead of having to be torn apart when it is opened. An ideal solution is a self-adhesive return label in the package that can be scanned when the package is dropped off (for example, at the post office or parcel station). Customers should at least receive a PDF label by e-mail so that they can print it out to make the return shipment as convenient as possible.

3. Never break the chain of information!

Let’s assume the customer goes to the post office, mail-order store or parcel station and sends off the return package. And they don’t hear anything about their return shipment for days or weeks. They don’t know whether their money will be refunded, or if they will have to wait until the merchandise is received by the retailer.

It’s always better to send real-time information by email and tracking on the retailer’s website or via push message to the customer’s smartphone. Many retailers fail to provide details in real time – especially for returns. But this info is important because it helps ensure customer satisfaction – even if they have to wait a little longer

Online retailers should set up their systems so that they receive a message about the return shipment as soon as it’s scanned by the parcel service or at the post office. This way, the customer can be informed immediately that the refund is being processed. It is also helpful to send real-time information to the customer about the status of the return and their account balance.

4. Take country-specific preferences into account

Customers in the UK prefer doorstep delivery and pickup. In other European countries, pick-up or drop-off options like Amazon locker stations, which are gaining popularity in Germany, are more acceptable. It’s best for retailers to choose a logistics company that meets customer preferences.

5. Lower costs despite returns

The legal situation in Europe is clear: customers have a right to return purchased items. But do they also want to bear the costs? A survey on shipping and returns management in online retailing conducted by the Erfurt Chamber of Industry and Commerce found that around 44% of all customers expect return shipments to be free of charge.

Nearly 40% of online retailers do not know the costs of their returns. According to an ibi Institute study: Making the Most of Returns Management in Online Retail, 80% do not record the returns based on payment method. Retailers who evaluate this factor have a better overview of their costs.

Suggestion for cross-border traders: Once a return shipment has been scanned in, the packages can be collected for the destination country. This lowers costs – and how quickly goods are returned to the merchant does not play such an important role.

Conclusion

Merchants should evaluate whether a customer’s repeat purchases outweigh the costs incurred from return shipments. An online shop’s reputation, brand image and anticipated ratings should all be taken into account. The customer journey should also be set up for optimal processing of returns, which should ideally be free of charge. Last but not least, optimized logistics reduce the costs of return shipments.

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