Global ecommerce rose from 15% of all retail sales in 2019 to 19% in 2021, with a full one-third of all products expected to be purchased online by 2026. As this number increases, the amount of returned products is surging as welI. In fact, in 2021 16.6% of all retail sales resulted in product returns, accounting for over $761 billion in returned merchandise, a 6% increase over the previous year.
Retailers are struggling to manage the high volume of returns, in part due to the outdated returns management processes. Consequently, not only are goods taking longer until they’re available for resale, but poor return experiences are also discouraging existing customers from reordering from the same brand.
A more effective returns management process, therefore, can actually help brands by creating competitive differentiation and ensuring repeat customers. In order to achieve this, retailers have to find ways to bring their returns management strategy and processes in line with today’s customer and business expectations.
How We Got Here
Returns management refers to the process of managing returned products. It begins when a customer wishes to return one or more items and ends when a product is put back into stock and is ready for resale.
According to the latest trends, the practice of bracketing – where consumers purposely buy multiple product versions with the intention of returning most of them, is only getting worse. It’s believed to now be considered a legitimate way to shop online.
Bad return policies and experiences reduce customer retention and become a contributing factor to increased cart abandonment rates. Today’s customers have high expectations and will no longer stay loyal to brands after just a couple of bad experiences.
3 Key Elements of Returns Management
In order to understand the challenges retailers face while managing returns, it’s important to look at these three key elements:
- Speed – Retailers need to retrieve returned items and get them back on the shelf as quickly as possible, so they don’t lose out on resale opportunities. Likewise, consumers want to return products and have them replaced in the minimal possible timeframe.
- Visibility – Knowing where returned items are at all times is critical to getting them back to a point of distribution and informing multiple online and offline systems that these products are in stock and can be sold online.
- Control – The process of returned goods is complex, and can involve drivers, warehouses, stores and multiple online systems. Retailers need to have full control over where, when and how they move their goods regardless of whether the product is in transit or in storage.
- Digitize and automate returns management
- Unify delivery and fulfillment operations
- Utilize cross-channel returns options
- Partner with other retailers
- Provide customer-centric returns processes