Four practices that lead to poor returns management
Ecommerce has unquestionably imposed itself on our way of consuming. Only a few clicks separate us from the desire to acquire a product. Direct logistics has ensured that in just a few days – sometimes only a few hours – we can have everything we want at the door of the house. But when the product has to go the other way because the consumer decides to return it, the matter becomes complicated.
The management of returns has become somewhat thorny for ecommerce, which in recent years have witnessed how as returns increased profit margins narrowed. The widespread extension of free and generous returns policies, driven in part by the big brands, has led many companies to give a twist to their management of reverse logistics, where they have also been able to find a competitive advantage.
At iF Lastmile we have been committed from the beginning to the optimization of reverse logistics through intelligent solutions. However, throughout this process, we have identified some of the most prevalent bad practices that lead brands to poorly manage their returns. Here are some of them:
- Lack of clarity in return policies. At iF Lastmile we warned some time ago that ecommerce return policies were in the spotlight. Thus, the redesign of these became a priority for many brands, which ended up discarding the gratuity of their management basically for reasons of profitability. Having overcome this debate, brands should focus on offering their customers transparent, accurate and flexible return policies that do not pose a first barrier for the consumer.
- Lack of automation of processes. Efficient returns management, which can be executed in just two clicks, goes hand in hand with meticulous stock control and real-time tracking. Otherwise, a manual management of returns is not typical of this time. Not automating processes such as registering online returns only widens the margin of error: investing in automating processes reduces customer service costs by 85%. In addition, it contributes both to improving the purchase or return experience and to having better control and visibility of the processes.
- Not providing sufficient information. Including enough information about a product and images of the highest quality is a form of prevention. After all, you provide the customer with the opportunity to make a better informed purchase decision that discourages subsequent returns. Without going any further, in addition to size errors, "not what I expected" is the second most frequent reason for a return, as can be seen from our latest report.
- Not encouraging product exchange. Beyond the smart and efficient handling of a return, it is important that brands incentivise, over and above returns, the exchange of one product for another. The iF Lastmile Returns Portal algorithm already does this, allowing to promote switching and cross-selling. First, because it is a question of loyalty: the customer wants to continue in the same marketing channel. And secondly, because of an obvious question of profitability.
Failure to offer alternatives - and not sustainable ones at that. A rigid and strict returns policy is quite a disincentive for a potential customer. Gradually, reverse logistics management has attracted as much interest as direct logistics. So, although most customers prefer home collection, many also want to have drop-offs enabled to execute the return. In addition, 45% of them choose sustainable return methods, which shows how important environmental friendliness is nowadays in our consumer relations as well.