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The eternal conundrum of returns

Exploring innovative strategies for managing returns, enhancing customer experience, and addressing fraud in the digital age

eCommerce retailers are rethinking their returns policies to balance the competing needs of customer satisfaction, sustainability, and fraud prevention. Loyalty programs, customised returns processes, and strategic partnerships are key to achieving this. While free returns are no longer universally expected, retailers must innovate to stay competitive and sustainable

In a nutshell…

  • Loyalty programs can enhance repeat customer journeys by offering perks like free returns.
  • Brand collaboration can reduce costs and improve sustainability.
  • Returns policies need customisation; there’s no one-size-fits-all solution.
  • Free returns may not be essential; some markets adapt to paid returns.
  • Fraud and risk mitigation require innovative strategies.
  • Seamless customer experience in returns is crucial.
  • Supply chain collaboration can streamline returns logistics.

A closer look…

Returns management in action

As eCommerce continues to boom, the way retailers handle returns is evolving rapidly. One Retail Hive member recently shifted away from free returns, introducing retrospective charging. Surprisingly, this change didn’t deter customers, highlighting a shift in consumer behaviour. Platforms like ZigZag and Rebound are empowering retailers to A/B test returns policies, refining strategies for maximum efficiency and customer satisfaction.

Sustainability in returns, however, remains a complex issue. Although consumers are increasingly eco-conscious, they are often resistant to paying extra for green delivery or packaging. Retailers face the dilemma of funding sustainable initiatives without transferring costs to customers. In the short term, the inability to differentiate between petrol and electric vehicles for many final mile deliveries complicates sustainability claims at a time when retailers want to be transparent with their customers.

Members are also keen to address fraud in returns. Post-pandemic fraud rates have surged, including ‘friendly fraud’ where customers return used items instead of the new products they bought. Blacklisting fraudsters has limited effectiveness, and offering refunds before items are returned can lead to scams, despite reducing customer complaints. Finding that balance between fraud prevention and maintaining a positive customer experience continues to be tough.

Still to do…

Retailers need to continue innovating and testing their returns policies to identify what works best for different customer segments. Developing seamless returns processes that are easy for customers to navigate is the priority and offering choices, such as using chatbots or real humans, can significantly improve satisfaction.

Collaboration with brands and carriers to reduce costs and improve sustainability is also on the agenda. Transparent communication with customers about these efforts can build trust and loyalty. 

Optimising logistics by holding regional stock to reduce shipping costs and delivery times can be effective, though it requires careful management to avoid tax and regulatory issues. Lastly, with potential political shifts, such as changes in the US administration, retailers must stay agile and prepared for impacts on shipping costs and regulations.

Source: The Retail Hive: Supply Chain Leaders Exchange roundtable on “Redefining Returns: Driving Sustainability, Efficiency and Customer Loyalty”, May 2024

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