CEO spotlight: Happy Returns cofounder David Sobie answers retailers’ top 5 questions about exchanges & returns
What are today’s biggest issues with returns?
First, at a macro level: the massive problem of returns is increasing as shopping shifts online. This creates a $0.5 trillion dollar problem for retailers—and it’s compounded by the fact that shopper expectations are also changing. Specifically, shoppers now expect returns for online purchases to be free. Retailers must foot the service bill.
Second, online shoppers are highly dissatisfied with returns by mail, which for years was the only option for returning purchases from digitally native brands. Poll data shows shoppers want returns that are:
Free
Fast, i.e. offer immediate refund or exchange
Easy, i.e. no printing labels, no boxing items, no packing tape
Dropped off locally rather than sent through the mail
Eco-friendly
Unfortunately, returns by mail are only able to meet one of these criteria (free)... if the retailer covers the cost.
What are the most easily solvable returns problems that retailers simply haven't gotten around to yet?
Four solvable problems for retailers are:
Reducing the net return rate by converting more returns into exchanges. This can be accomplished by deploying an online return and exchange flow that promotes exchanges based on the item being returned, the return reason, and the availability of size and color variants. Our customers increase exchange rates up to 33%.
Improving the shopper return experience by offering returns in-person to a third-party network, where returns are label- and box- free, trigger an immediate refund or exchange at drop off, and are shipped in environmentally-friendly reusable totes, i.e. cardboard free.
Reducing the cost of returns by (again) allowing returns to a network that employs aggregated shipping, i.e. multiple items in the box rather than multiple boxes. Offering immediate refunds and exchanges at the point of drop off also lowers cost by reducing customer service calls inquiring about the status of a refund.
Reducing the environmental impact of returns by improving reverse logistics to reduce shipments via aggregation and employ reusable shipping totes rather than single-use cardboard for shipments.
Can retailers continue to afford to take the financial hits from increasing returns? Or is this just an inevitability that has to be dealt with?
Online shoppers expect exchanges and returns to be free. The free option does not need to be returns by mail.
In-person exchanges and returns to a third-party network are significantly cheaper (20-30%) than returns by mail.
Why? Because of the opportunity to aggregate items before shipment and reduce customer service contacts. In fact, many Happy Returns’ retail customers are re-instating fees for returns by mail, while making returns in person free, to incentivize shoppers to use the lower cost, more eco-friendly option.
To calculate your potential savings with such a solution, use this ROI Calculator.
Do you foresee more retail partnerships like Amazon/Kohl's occurring?
Unlikely. Few online retailers have a large enough volume of returns to forge specific location partnerships and the software expertise to enable a great customer experience. One exception here is Rent the Runway, which has a large volume of returns because 100% of sales are rentals that require items to be returned.
That said, Amazon has permanently raised shopper service-level expectations for exchanges and returns, and other retailers will need to respond. Retailers without store networks like Whole Foods, partnerships like Kohls, or extensive locker deployments will likely need to join existing third-party networks built to enable in-person drop-offs, aggregated shipping, and immediate refunds.
More information about Happy Returns’ Return Bar Network can be found here.
Where does Happy Returns eliminate many of the hassles with returns? What can other retailers learn from this?
For shoppers, we reduce the hassle and wait of returns by mail by empowering them to make label- and box-free returns in person for an immediate refund or exchange at time of drop off. Shoppers no longer need to print labels, secure boxes, wrestle with packing tape, and wait for weeks, checking their credit card statements to confirm refunds.
For retailers, we lower the net return rate by offering a retailer-branded online return flow that proactively promotes exchanges. We lower costs and improve the shopper experience by giving shoppers the choice to exchange and return in person to a nationwide network of 700 locations in 143 metro areas. Accepting items in-person allows us to aggregate shipments, cutting shipping costs. Finally, we reduce the environmental impact of exchanges and returns by reducing shipments via aggregation. We also ship in reusable totes, a cardboard box- free alternative.
