gestione resi logistica MBK Fincom ProduceShop

Returns Management: Logistical best practices for cost efficiency6 min read

At a time when the world of online commerce is evolving at an ever-increasing pace, the risks for retailers themselves are growing by the day; among the various difficulties that the successful operation of an eCommerce business poses, the management of returns is definitely on the podium. Avoiding waste, reducing costs and giving goods a new lease of life are among the main objectives; let’s see what the best practices are for getting there.

No matter how much any online retailer wants to, there will always be several cases of returning a product. The reasons for doing so, from the user‘s point of view, are various; either because, not having seen the product ‘live‘, the first impact did not meet expectations, or because while waiting for the product itself the need for it faded, or because you are faced with a serial returner (a category of buyers who, for reasons still difficult to understand, buy only to return). Either way, managing all these returns takes time and resources.

There are, however, specific moves and tactics to amortize the problem; MBK, studying both the general trend and the situation of its ProduceShop platform, has identified some of them. Let’s start by analysing the issue.

Some data on the returns situation

Among the various services offered by an eCommerce store, that of returns (often free of charge for the customer) is one of the most used and abused. The convenience of being able to buy almost “sight unseen, and then send the product back in case of dissatisfaction, is indeed one of the main systems that drives (undecided) people to buy online.

Currently, considering different product sectors, the European average of returns from eCommerce purchases is about 44.85%; this means that, out of 10 buyers, almost half return the purchased goods.

Although this figure may not seem exaggerated, the implications are unfortunately very insidious; for a company, it is not just a question of seeing 40% of its turnover go back, but of considering in this loss all the costs that a return entails. These include shipping costs (for the companies that bear them), the loss of the product from stock (in the event of damage or problems), the possible costs of reinsertion, not to mention the waste of time and, last but not least, the environmental impact that a return can have.

In the end, we are talking about almost double the cost of a single delivery; not an insignificant figure on the total budget.

Main causes

More than half of the time (we are talking about 60% of the incidences) the product is returned because of its condition. Defects or damage are not necessarily the fault of the company; we are talking about a package that often passes through two or three different carriers, which invest a different level of control and attention. Not to mention that, in general, the transport of products (especially the most fragile ones) can involve unforeseen events.

Around 45% of customers change their mind; from the various surveys we have carried out, we have learned that this is usually an impulse purchase, or without first comparing prices. More rarely it is a double purchase, or a product received as a gift, or one already owned.

Studying user behaviour helps prevent returns
Studying user behaviour helps prevent returns

While around 30% of those surveyed admit to having found discrepancies between the product sheet and the result, many spoke of the most diverse reasons; from looking for an easy refund, to a digital error, to a sentimental break-up that no longer required a gift.

In the category of so-called ‘serial returners‘, we can place different purchasing behaviours; from those who buy more than they want to keep (between 30 and 40%), to those who take more than one variant of a product to try it out (almost 20%).

Any one of these causes, or a combination of several, leads almost 25% of classic retailers not to want to sell online; it goes without saying that returns, from this perspective, represent a major obstacle for e-commerce.

Proper logistics management, but not only

In order to optimize the entire returns management and thus achieve considerable savings, there are several initiatives that an e-commerce (but not only) can take.

Based on current online trends, but also on some of ProduceShop’s best practices, we have identified several solutions:

  • Implementation of new technologies: many returns could be avoided just by working on CX. Taking into consideration, for example, users who return a product because it does not match the data sheet, or because it differs from expectations, you could implement your catalogue/site with a test or display tool (very popular for fashion or furniture). Outfit, ambience and menu creation services using AI are other popular solutions;
  • Focus on Conversational eCommerce: in this case we have two different directions to move in, and always with a view to preventing returns
    • implement customer support, to ensure better responses to any kind of situation or criticality;
    • equip your site with a well-designed and constantly updated chatbot, to anticipate customer queries;
Implementation of logistics and returns system
  • Identify serial returners: with a correct and thorough Data Analysis, try to identify serial returners. The actions to be taken afterwards can be different: ideally, customize the sales conditions offered, involving customers more practically in the sales experience and avoiding, again, early returns;
  • Logistics automation: implementing your entire logistics chain, distribution and returns, is certainly the most practical long-term solution. In this way, you not only prevent any critical situations, but you are sure to optimise your entire order exit and return process. Working with tailor-made softwares, inserting the help of innovative machinery, practising a constant and scheduled control of plants and operations are just the basic steps to guarantee (and ensure) a return service that can limit losses and waste as much as possible.

In conclusion

Working on marketing often helps too; if a hashtag like #keeporreturn has led to almost 45 million users discussing the issue, limiting waste for many companies, there is a reason.

Starting with an infrastructure, both managerial and operational, that is up to the task is still the most effective way to get back into a return policy that does not penalize the company and its turnover.

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