Product returns will always be an important key process for ecommerce and retail operations. Product returns are a retail term used to describe when a customer returns a product they purchased. Product returns are part of the order fulfillment. If you don’t have a system in place for product returns, it can be a big black eye for your business. The most widely used in-store product return process usually has 5 steps, those include;
- Verifying a product return request
- Creating a return request
- Processing the payment and complete return
- Completing your in-store product return or ecommerce return
- Return product to inventory
How your business handles product returns is important.
So, why do customers return products?
At times, the why is clear and at other times, not so much. Understanding consumer behavior can help you with this matter.
While many people feel that product returns are just a part of “doing business,” the bottom line is that product returns are unavoidable. No matter how prepared your business is, returns are going to be a part of the process.
When you understand why consumers behave in this way, it can help you detect patterns later on. Also, this gives you time to create prevention and detection strategies for product returns.
Understanding consumer behavior can help you mitigate returns and chargebacks too. Returned merchandise can be a big problem for your business, it’s still better than a chargeback.
Returns Versus Chargebacks
Consumers returning products impacts the seller. The process looks as follows;
- Seller refunds the customer’s money, usually including shipping cost.
- Restock returned product, if possible
- Product may be sold for less
This is not a good scenario for the seller. You lose the sale. You pay restocking fees and, worse yet, the returned product sells for less. If this becomes routine in your business, there’s no question product returns can hit your bottom line hard.
Now, what happens to the seller if there’s a chargeback?
- The seller loses the sale.
- The seller also loses the delivered product.
- Each chargeback includes a fee, usually around $18-$20.
- Chargeback-to-transition ratio becomes high, causing a lot of problems.
With product returns, the seller has an opportunity to get their revenue back. Usually, with a chargeback, you’ll lose money or worse.
This is why it’s important to understand why product returns happen, so you can better protect your business with the appropriate systems and processes.
Let’s look at the top reasons consumers return merchandise.
Customer Buys The Wrong Product
This is a consistent problem we see with a lot of ecommerce businesses. You have to remember, ecommerce buyers are not physically touching your product, this is why we see higher product returns in ecommerce.
As an example, someone may buy a large shirt but it doesn’t fit like a typical large shirt they’re use to. You can prevent this.
Let’s use this same scenario. Since customers can’t touch the product, this is where images, videos and detailed product descriptions can help a lot. For this customer, it would of been helpful for us to mention you should buy a size larger than you normally wear. Q&A sections provide valuable ordering information.
Give your customers as much information as you can. You can reduce product returns in the future.
The Product Was Damaged
You sent a damaged product. The customer is going to be angry. And, rightfully so. There’s a few things we can do to prevent this in the future.
- Quality Control: Make sure products are double-checked for damage.
- Only use shipping partners you trust.
- Handle and package products with care
- Add shipping insurance to build trust.
A Product Is No Longer Needed
In this scenario, customers buy a product but realize later they have no need for it. Sure, you can call it impulse shopping but it happens.
Again, a lot of businesses just feel it’s a part of the process that will just happen, you can’t avoid them. Yes, you can, and we can show you how.
Make sure you highlight the features and benefits of your products. Make sure your product descriptions are accurate but detailed.
Shipped The Wrong Product
Product returns happen because sellers ship the wrong product to a customer. The wrong product was sent. Your customer is going to be angry. And they should be. Unlike a damaged product that happens during shipping, this was a mistake in your order fulfillment process.
Moreover, sending the wrong product causes a lot of problems, like chargebacks, negative reviews, lost sales.
This is where Quality Control can help your business.
In closing, there’s nothing wrong with double-checking your fulfillment processes. Even if you’re outsourcing fulfillment, you still have to worry about product returns.
Even if a 3PL fulfillment center is doing your returns management, you still have to account for it.
How Can You Avoid Product Returns
You can have the best product return processes, guidelines and policies in the world, it’s not going to completely stop customers from returning products.
The good news, you can reduce returns, here’s a few tips to help you.
(1) Make Sure You’re Writing Clear Return Policies
How would you feel if you returned a product in-store only to find out that the policy on the website is outdated and your request is not accepted? Yikes!
This is why you want to make sure your product returns policy is clear and easy-to-understand, this is the best method to prevent returns.
If the return is necessary, you want the process to be fast and easy. Make sure your return policy is shared across all your teams so everyone is on the same page.
(2) Use Store Credit And Gift Cards To Replace Cash
Store credit and gift cards are a great idea to have in general, but they can also serve as excellent reminders of your brand and encourage customers to return for additional purchases. It’s also a good alternative to cash if a customer doesn’t have a receipt.
Store credit and gift cards are very useful for your regular customers. Instead of the hassle of sending money from one bank to another, they get the amount added to their store account or a new gift card. More store credits makes it convenient for them in their next purchase. Gift cards also have another benefit, what they were attened for, giving a gift to another. This can help your company get new customers in the door.
(3) Make Sure You Have A Product Returns Backup
Consumer rights laws may dictate cases where customers can return products without a receipt or past your specific date range. Things happen, customers can get bust and not pay attention to their receipts. Due to this, accepting returns without receipts can make for a much higher customer experience and encourage them to stay with your brand.
Make sure you can process product returns without receipts by making it easier to find an order within your retail system. You can collect customer email and phone number to search their order history. There’s also the option to track serial number for each product.
If the cashier cannot find the original order, it’s up to the store manager to make the call on whether to accept the return.
Retailers and merchants can turn product returns into a good shopping experience for customers by using some of the tips we’ve shared in this article.
This is why having a centralized POS is very important. It should help you handle order history, payment, customer, loyalty programs, and more. It needs to work seamlessly with all parts of your system.
Thill Inc. provides returns management services, if you’d like to learn more about how we can help, be sure to reach out to our team.
We have over 50+ years of experience, specializing in order fulfillment, warehousing, analytics, value added-on services, and more.