There’s no denying that returns are one of the most expensive parts of the retail industry. Unlike a physical store where the customer can see and feel an item before making a purchase, it is difficult to do this online.
As eCommerce continues its domination due to factors like the COVID-19 pandemic, the rate of returns is rapidly growing alongside it. However, retailers are beginning to come up with new ways of asking their customers to keep their products rather than return them.
This begs the question; is it cheaper for retailers to do this rather than process a return? Retail giants in the United States, such as Target, Walmart and Amazon have utilised AI to determine the necessity of costly returns.
Sucharita Kodali a Retail Industry Analyst at Forrester stated, “Retailers have been allowing customers to keep low-value transactions instead of returning them for some time.”
“We did a study with Narvar a while ago and found that about 12 percent of people said their last return was a refund where they got to keep the item.”
Narvar Consumer Report 2019 | Shared via LinkedIn
As the study shows, only 10 percent of people returned the item in-store and 16 percent dropped their return to a designated drop-off location.
While asking customers to keep their low-cost items isn’t anything new in the retail industry, it’s becoming a more developed process for larger retailers.
If you still would like to physically return an item, American retailers such as Target, Walmart and Amazon are encouraging customers to donate the goods to a charity or op-shop – or alternatively, you can sell the goods on online marketplaces like Facebook, Gumtree and eBay.
While this new returns policy may seem like an easier way out for retailers, it’s not always the best option for the customer. If customers have the option to keep an item and receive a full refund, this can open the doors to potential scams and fraud.
But there is a risk with anything new or established, so this shouldn’t put retailers off from the opportunity.
Before you think about introducing this returns policy to your own online store, you should address why customers make frequent returns. Satisfactory customer service leads to less returns.
Another US retail giant, H&M, began working on this issue by onboarding live chat tools, discussing the reason why customers want to return an item, and encouraging different purchase patterns that may result in fewer returns.
ASOS offers its customers automated recommended sizing and Sephora uses AR to help customers pick their correct shades when shopping online. All of these are great tools to improve customer service and satisfaction.
As e-commerce continues to expand and grow in Australia and worldwide, the need for a comprehensive and cost-effective returns policy is necessary to develop a profitable business.
However, before retailers begin giving away their items in exchange for a refund, we need to understand why customers are returning an item and make sure we are selling something worth keeping.