Many of the retailers Clear Returns indexes have just had their highest returning season ever. This doesn’t just damage profits, it hits customer experience and future revenue too.
The problem has become too big for retailers to ignore – which is why there has been a recent flurry of changes to overly generous returns policies. John Lewis, for example, recently reduced its policy from 90 days to 35 days – a commercial necessity in an environment where a product cycle may be as short as 8-12 weeks. Other retailers e.g. Nordstrom and LL Bean, are rightly asking the question around whether it is sustainable to continue their free shipping and, “return anything you want, when you want to” policies, in an environment where returns rates are 30%+.
Returns have a disproportionate impact on the bottom line, so reducing a return rate by just 1 percentage point can boost gross profits by 1.6% and operating profits by a massive 15%.
At Clear Returns, our ground-breaking returns technology has helped retailers understand that returns are a fundamental, but overlooked, component of online shopping, and that different customers respond to returns in different ways.
Some shoppers happily buy first, choose later – their high returning behaviour is costly, but it doesn’t impact loyalty. A very small minority abuse returns policies by returning worn, fake or stolen stock, or by deliberately damaging product – the retailer and the rest of their customers pay a very high price for this. Then there are the customers who hate to return and only do so if the retailer messes up – if they are not identified and treated differently to the ambivalent returner, they will likely take their business elsewhere.
A one size fits all approach to returns policy and customer service isn’t helping customers or the retailer, and is the area where there will inevitably be seismic shifts in thinking in the coming year.
The biggest challenge is knowing where to start. This is why Clear Returns now offers ecommerce and multichannel retailers a standalone Returns Insight package as a roadmap.
- Uncover the real drivers behind your returns so you focus spend and effort.
- Learn how your business compares against the industry so you can judge urgency.
- Get robust data on the costs of returns to your business, and their impact on profits and customer experience, so you can measure the cost of inaction and identify priorities.
- Understand your core groups of customers in terms of their attitudes and sensitivity to returns, so you can plan a more targeted service and policy approach.
- See the areas of returns improvement and keep optimization that your competitors are already addressing.
Returns are not inevitable or unavoidable – if measured and understood correctly they can be managed and reduced, resulting in increased profit and increased customer satisfaction and loyalty. With Returns Insights you’ll be on the path to tackling the real causes of your returns in just 6 weeks.