Exchanges: How the Achilles’ heel of retail—returns—is becoming Zeus’ forehead
Despite many and varied strengths, one vulnerability plagues nearly every online and omnichannel retailer. It’s a black hole of revenue and customer loss. It’s a headache-inducing, complex set of processes and policies. And it’s an integral part of the retail brand experience.
It’s RETURNS: the Achilles’ Heel of the fast-growing direct-to-consumer, online and omnichannel retail industry.
Consumers hate returns.
Retailers hate returns.
The environment hates returns.
For too long, returns have been the 800-lb gorilla lying in wait on the back end of the buying experience: destroying brands, savaging revenue and profit, and leaving ill will between buyers and retailers in its wake. Innovative, scalable remedies are needed for legacy, antiquated returns systems, processes, and policies to reverse the effects of lost sales.
This blog details the impact of conventional returns processes today, then proposes some counter-intuitive and even surprising ways that you and your team can solve returns differently this year.
They could help you increase your exchange rate 33%—while making your customers happy, improving your bottom line, and inspiring your boss to do the two-step
in the lunch line.
Who doesn’t want to see that?
Traditional returns and reverse logistics dent revenue
A shopper returning a product for a refund sets in motion a chain of events that conspire to hurt retailers’ revenue and profit while opening the door to a brand-customer interaction that can easily and quickly go south. The sale is lost. The merchandise must be collected and inspected, then re-stocked at markdown prices or donated/disposed of. At scale, it can be complex and capital intensive. One study about returns estimated lost sales to be $369 billion in 2018.
Shopper loyalty also suffers
Then, there’s the matter of the customer. Remember her? She’s the reason the retailer is in business in the first place. And, yet, antiquated returns processes almost always alienate her.
More than 75% of consumers feel returns are the most painful part of buying online. They hate the boxing and taping. They hate the standing in line at the post office or UPS or wherever they ship from. They hate waiting for their refund.
87% of shoppers are unlikely to buy again from a brand after a poor return experience.
Sustainability initiatives demand a change
And finally, there’s another stakeholder negatively impacted by returns. While it itself has no voice, it enjoys tremendous agency from its legions of fans worldwide, many of whom align their shopping closely with retailers that support it.
It’s the planet. Earth. And it’s buried in cardboard.
Today, 165 billion packages ship in the U.S. every year, consuming nearly 1 billion trees. And as e-commerce grows almost 15 percent annually, fashion will use up a quarter of the world’s carbon budget by 2050 if nothing changes.
A more comprehensive approach
Thinking holistically offers retailers, consumers, and the planet a new solution.
While retailers have traditionally sought to reduce their return rate, today’s leading brands are flipping the model and focusing on something more important–how to better the return process to increase exchanges, amplify customer lifetime value, and enhance sustainability.
Forward-thinking retailers view every return as an opportunity:
To increase customer lifetime value with an experience that delights the entire shopping journey by accepting items via in-person networks, no boxes or labels required—and by initiating refunds immediately on the spot
To retain revenue with intelligent, software-based suggestions that convert refunds into exchanges
To reduce costs 20% by outsourcing the primary hassles of reverse logistics to an end-to-end partner that aggregates shipments through in-person drop-off networks.
To significantly reduce their carbon AND cardboard footprints, with reusable, cardboard-free packaging and aggregated shipments.
These retailers don’t love returns more than anyone else. They’d also rather spend their time on other things. They get different results because they solve exchanges and returns differently.
Forward-thinking brands understand how seizing these opportunities can change the entire experience. They want to convert a burden into a business advantage. They want to create a new way to delight their customers. And they want to do their part, genuinely, to start reversing environmental harm.
Simply by thinking holistically—and often, in the process, partnering with an end-to-end expert partner—these industry leaders integrate meaning and purpose with their commercial goals while benefiting the planet and delighting environmentally-conscious consumers. They also free up their own time and expertise to focus on their core mission.
More information is available about how you can reimagine your omnichannel enterprise or online business with online returns software and reverse logistics.
Caitlin Roberson
VP of Marketing
Caitlin Roberson is the Vice President of Marketing at Happy Returns. Previously, she served as Director of Enterprise Marketing at Lyft and partner at top-tier venture capital firm Andreessen Horowitz. Before that, she started and sold a content marketing agency.
