What are the best ways to reduce product returns for your business sales? Our guide looks at the changing retail world and how to improve returns management.
How to use digitization to improve product management
Nowadays almost everyone orders their products online. It is usually the easiest way and almost every article and product you need is quickly available – whether it’s clothes, technology or beauty products. And if a product is not suitable or does not look as expected, it is simply returned. But what happens to the returns? How many returns are there each year and what are the consequences? In this article we answer these and other questions about returns management and show you how you as a retailer can reduce product returns!
How have returns developed in recent years?
The number of returns in online retail has increased significantly in recent years. Since customers usually do not have to pay for the returns, more and more people are sending unsuitable products back. A calculation by the University of Bamberg corresponds to around 10 returns per year per person of working age. In addition, the University of Bamberg has carried out a study that shows how high the probability of return is. In the fashion area, the probability of parcels ordered on account is 55.65 percent. According to the study, women send parcels back much more frequently than men. The probability is 54.27 percent, for men 40.29 percent.
According to returns research, there were still around 250 million returns in 2013. In 2018 there were already 280 million. The 300 million mark was then reached for the first time in 2019. In recent years alone, the number has increased by around 50 million a year! It can be assumed that the number will continue to increase. At a time when sustainability is a big issue, retailers are heavily criticized for such an increase in returns.
What are the effects of poor returns management?
What are the immediate consequences of the returns mentioned? How does this affect companies and the environment? The high number of returns not only creates a lot of work for processing in the corresponding companies. Added to this is the expense of transportation. In 2018, total costs of an estimated $5.46 billion were incurred for the transportation of returns alone! A return costs $19.51 on average . Half of it comes from transportation alone.
And what happens to the returned articles afterwards? 79 percent of the articles can still be resold as A goods, and still 13 percent as B goods. On the other hand, 4 percent end up directly in the garbage! Another 3 percent go to industrial users or non-profit organizations. So it’s not that an item can be sent back and simply sold to the next customer. All products have to be transported back to the company, carefully checked, perhaps cleaned or repaired, or disposed of directly. The returns bring with them some negative aspects that should be taken care of with modern returns management.
Strategies to reduce product returns
Products are returned for a variety of reasons. Either the top does not fit, the make-up looks really different than in the article description or the laptop ordered does not arrive properly. In addition, many clothes order directly in several sizes. This makes it clear before the package is received that part of the goods will be returned. However, these points can all be reduced to improve margin and sustainability. We therefore give you some examples and tips for your returns management.
What solutions are there?
- Item descriptions should really correspond to reality and should not be described better than they actually are.
- Article pictures should be designed professionally and realistically. This way, the buyer can get an accurate picture of the product beforehand and consider whether the product is really the right one. For some companies, a 360-degree view of the product is now even possible. So the article can be viewed from all sides. Car brands in particular use this variant in order to be able to offer the customer the best possible preview.
- All products should be tested for functionality before they are dispatched. In this way it can be guaranteed that the products will also be sent properly and do not have to be returned unnecessarily.
- To reduce the order of articles in different sizes, dimension tables help directly in the online shop. So every customer can measure directly which size is optimal for the respective buyer. Then items of clothing no longer have to be ordered in different sizes and there are fewer returns. The fashion company Zalando always writes in the article descriptions, for example, what size the model is wearing in the picture and the dimensions of the model.
- Many companies, such as Rocka Nutrition, no longer pay return costs – which has long been more than usual and was expected by buyers. The number of returns can also be reduced in this way.
So there are many ways to reduce the number of returns. It remains to be seen whether these options will actually be implemented and whether buyers will accept the alternatives. If you think carefully, you will surely come up with a number of options for improving your returns management for the future and making your contribution to sustainable purchasing and fewer returns.
