Speed, reliability, flexibility, cost…all key elements of the delivery journey that today’s retailers look to optimise, seeking an edge over their competitors and gain a valuable share of customer wallet. Yet returns remain largely overlooked. Despite being one of the biggest costs on the balance sheet, many retailers simply write off returns as the cost of doing business. While true, returns will always be an unavoidable cost, retailers need to consider how they can turn this cost into a competitive advantage.
Driving customer loyalty through flexible returns
Of course retailers should look to drive down their returns rates. Improving product images, descriptions, size guides, and customer service assistance are all valuable tools to help customers in making the right choice. However, without the ability to touch and feel products before purchase, online retailers will always be faced with high return volumes. Retailers should look to turn their return policies to their advantage. Just as many consider the costs of free shipping promotions as a customer acquisition cost, they should view returns costs as a customer loyalty tool. A recent Royal Mail shopper survey estimated that 60% of shoppers would not continue to purchase from an online retailer following a difficult returns experience.
Our own survey of leading European retailers highlighted that as the delivery industry has rapidly evolved, the returns market has lagged behind. Leaving a gap for retailers to carve out an advantage over their competitors, by offering flexible and convenient returns policies.
More options = greater convenience
Having items arrive that don’t match the customer expectation is a frustration; either because they don’t fit, the colour isn’t right, they don’t look the same as on the website, or simply the wrong item was delivered. Offering returns options that mean customers have to go out of their way to return said item/s adds to this frustration. Yet this is exactly what many retailers are doing. The results of our recent European retailer survey showed that on average 3.3 delivery options were available to customers, but for returns the number is only 2.1. It might come as a surprise but the biggest gaps were associated with ‘alternative delivery’ options such as Click & Collect, Convenience Stores (such as Collect Plus) and Collection Lockers. Options that have become increasingly popular with customers for their convenience, yet many retailers still do not employ these same alternative locations for customer returns.
Almost one quarter of those local multi-channel retailers in the UK, Germany and France offering Click & Collect delivery options did not allow in-store returns. When we consider one of the biggest drivers behind Click & Collect investment is the incremental customer spend generated in-store at the time of collection, it seems strange that retailers do not see the same potential benefit associated with in-store returns. Enabling stores to accept returns also allows retailers the opportunity to convert potential refunds into exchanges by utilising in-store stock (particularly valuable for fashion and apparel retailers), saving the sale and delighting the customer.
No hassle, free returns
Our survey also looked into the cost of returning goods. The results were varied both across the countries surveyed, and also within each. Overall, only 58% of retailers covered the costs of returning items through national postal services. Yet were much more likely to cover the costs for options such as Collection Lockers and Convenience stores. Our recommendation to retailers would be at a minimum to cover 100% of the cost of returns for one of the options offered, and closely align that option with local customer needs.
International retailers are much more reliant on courier collection services in foreign markets to handle customer returns. The vast majority offer such options to the customer at zero cost. Good for the customer, but bad for bottom line profits. International players need to accelerate their journey on a local level, offering connections with local carriers, postal networks, and convenience stores. Only then can they hope to meet customer demands in a profitable way.
We recently released their European eCommerce Delivery & Returns Index 2016. The survey of 100 leading online and multichannel retailers selling in the UK, France and Germany will help you understand customer expectations in each market when it comes to delivery and returns. The report is available to download here.