Product Returns Done Right Isn’t Costly

Posted on July 6, 2015 by

returns_imageThere is a significant amount of news coverage about the high cost of product returns, especially for e-commerce companies. In the fashion industry the return rate can range from 20% to 40%. This “bad news” creates challenges for any business and can have a dramatic impact on your fulfillment team or partner. We believe there is another way to think about returns and leverage these returns to provide a unique differentiator for your organization.

We sit down with our clients and discuss their current plan for returns when we on-board them into PMA. We always suggest these rules below so that our fulfillment and warehouse shipping services optimize their customer’s experience.

  • Rule 1. Have a clearly documented, visible and easy to understand policy. As a third-party provider, we need to understand and execute this policy every day. However, this is more important for your customer to understand and to set their expectations. If it is easy to understand, it will assure your client you are a good partner to work, if they have an issue.
  • Rule 2. Use the return process to enhance the client’s relationship with you. Buying online creates a higher risk for the buyer than buying in a retail store. The willingness to quickly process the return will provide the buyer incentive to order again and to remember your willingness to work with them. It is important to note that many online sellers report that making the return process simple and painless correlates to creating their highest value customers. More returns can mean more sales.
  • Rule 3. Understand the potential higher costs and build those into your margins. While your return costs may be a higher for online buyers, you are likely saving costs in other areas for selling the product. Think of this holistically and manage to the overall margin.

Many of our clients are looking for ways to improve their service levels and the product return area is one that is extremely important. Companies like Zappos and Amazon create a very high bar for buyer expectations in this area. Follow our basic rules and you are likely to create a culture of serving your customer and managing your profits from a position of growing sales, not from just reducing individual return costs.

Other resources: Challenges of Integrating E-commerce and Fulfillment