Online retail has come a long way in a very short time. One-click checkouts, next-day delivery, and buy-now, pay-later features are all stock standard today, and it’s easy to forget that they’ve all come to prominence in the last decade.
But there is one part of the online shopping experience that has barely changed – returns. When a customer has an issue with a product they are often thrown back into the dark ages.
Paper forms, printing out labels, postage charges and long post office queues all feature in the typical online returns experience. This leaves customers frustrated at the retailer, and can undo all the good work the retailer has done to get the sale in the first place.
The results of independent research we commissioned into returns showed just how damaging negative experiences can be for online retailers.
What did the research reveal?
Speaking to 1000 people who’d bought something online in the last 12 months, we saw that returns were the number one pain point for consumers, with 41% saying that they had stopped shopping with an online retailer after having a poor returns experience.
The most frequently cited negative experiences were being charged for return postage, no refund option, and delays receiving refunds. Most concerning of all, returns do not just affect the future behaviour of the relatively small cohort of customers who do return a product.
Nearly three quarters – 72% – of shoppers surveyed said that they would check a retailer’s returns policy before commiting to a purchase.
These findings have serious implications for online retailers. It’s true that online retail is growing at a healthy rate, with 46 percent of shoppers saying that they’re purchasing goods online more frequently than they did a month ago.
What’s the solution?
To hold onto these new customers, retailers need to embrace smart returns policies that will support them to drive customer retention and sales growth.
Smart returns are digital to capture more data for the retailer and improve the experience for the consumer, they offer a range of drop-off options to make the physical handover hassle-free and quicker.
They are also clear and simple to understand without hidden conditions like no refunds, credit note only!
Integrating returns data with a retailer’s broader data set helps paint a more complete picture of customer behaviour and business performance. It can help pinpoint product or merchandising issues, but it also facilitates more accurate customer mapping and customer lifetime value analysis.
As your data around customer behaviour becomes richer and more detailed, you will be able to tweak your returns policies to suit different customer types.
For instance through data, you can begin to implement personalisation strategies that reward high value customers with free returns and charge less value customers or even “un-friend” those who exploit the service.
It’s important to look past the immediate profitability of the individual item being returned, and have a clear picture of what lifetime customer value looks like. The term multi-channel retail already felt overused before the crisis, but the sentiment is even more important now.
Business transformation strategies have been expediated, ecommerce penetration has lept ahead by years and being able to offer consumers a seamless experience wherever they are interacting with your brand is non-negotiable.
As businesses scramble to collect and interpret data on rapidly-changing customer behaviour, those who can transform and integrate the often-neglected areas of their business – like returns – will be able to provide a superior customer experience and drive retention.
Ecommerce is still rapidly growing, and while consumers and businesses alike are wary of what the immediate future holds, more shopping online will mean more returns overall.
Those companies that can recognise the opportunities inherent in this often perceived painful process will be well-placed to win long-lasting customer loyalty and obtain the data they need to make better business decisions.
Those that neglect it will pay double by losing loyalty in the short term, and essential intelligence in the long run.
Justin Dery is the CEO, Doddle Asia Pacific. Justin joined Doddle in 2017 to establish the first international expansion in Australia. He is responsible for managing Doddle’s regional go-to-market strategy, including managing its key partnership with Australia Post.