July 26 2006 12:11 PM

Editor�s Note: The following is an excerpt from a white paper on returns. Due to space constraints, quotes from customers and some additional material have been omitted. The full text is available in the Member�s Only section of our Web site: www.psdmag.com. Even though this paper focuses on e-commerce sales sites, it is equally valid for any company that wants to add Web-based returns options for its customers � whether they are traditional, catalog or Web-based.
E-merchants have devoted a great deal of attention to the online shopping experience in an effort to attract customers and generate repeat online sales. Equally important is the customer experience after the sale � accurate order fulfillment, simplified returns and exchange processes, as well as high-quality customer service every step of the way. E-merchants recognize the importance of these issues, but rate themselves as less than moderately successful in meeting customers� post-sale expectations. Indeed, there is growing evidence that a positive after-the-sale experience builds brand loyalty and generates additional online sales from repeat customers.
Last year, an estimated 14.1 million North American households shopped online, generating $18.8 billion in sales. During the 1999 holiday shopping season alone, more than $7 billion in merchandise was shipped by e-merchants to US consumers. This year, US online sales are surpassing $3 billion a month.
While e-commerce sales are expected to continue to increase, there are indicators that growth could be even greater if online return and exchange processes are simplified. In a recent Jupiter Communications survey, 67% of e-commerce sites indicated that their return rates were less than 5%; however, a related consumer survey found that 37% of online buyers and 54% of online browsers were deterred from purchasing online because e-merchants� return and exchange processes were too difficult. The impact on e-merchants may be even greater for product categories such as consumer electronics and apparel, which generally have return rates between 10 and 20%.
The Consumer Online Experience
E-merchants have devoted a great deal of attention to the usability of their Web sites in an effort to encourage consumers to shop online. This has been in response to evidence that an estimated 62% of consumers have given up at least once while looking for products online and an estimated 42% have simply used the Web to research their purchases before shopping in traditional retail channels. A quick and easy shopping experience has become a prerequisite for purchasing online and the basis of brand loyalty when consumers begin to shop online.
Equally important is the customer experience after the sale. There is growing evidence that consumer decisions to shop at any given Web site are affected by whether the last order was accurate, whether there was a simplified way to return or exchange merchandise and whether there was access to high-quality customer service after the sale. A great experience in these areas builds customer loyalty, while a negative experience may lead some customers to the conclusion expressed by one consumer in recent research by the Delta Consulting Group: �I am positive I will never purchase anything from anyone, or any company, where I cannot stare someone in the face while making the transaction!�
Consumer Expectations
Recent research has found that consumers regard more than just the user interface and navigation as important when they shop online. In fact, they tend to evaluate their online shopping experiences much like any other retail experience, by considering factors such as whether an item is in stock, delivered when promised and priced competitively. Outlined below are some of the key concerns that customers express about their after-the-sale online shopping experiences. The following conclusions are based on a study conducted for Stamps.com by NPD Group and Delta Consulting Group.
1.         Consumers expect return and exchange policies to be highly visible on e-merchant Web sites. Many consumers think that current returns and exchange processes offset the convenience of shopping on the Internet. As a result, they want to have a thorough understanding of an e-merchant�s policies before they buy. This is especially true for issues that do not generally arise during brick-and-mortar transactions, such as restocking fees, when and how the product will be replaced, and whether the consumer will be compensated for the return shipping.
2.         Consumers expect accurate order fulfillment and reimbursement for return shipping when a fulfillment error occurs. The level of integration between the Web site and fulfillment operations can also impact order accuracy. As a result, it is not uncommon for customers to receive the wrong merchandise. When this occurs, customers expect the e-merchant to cover the cost of return shipping. Unfortunately, e-merchants do not always adhere to this policy.
E-merchant reimbursement for the return shipping improves consumer perceptions of the merchant. Indeed, customers say they select merchants based, in part, on whether the merchant has a policy of paying the return postage.
3.         Consumers expect real-time online access to return merchandise authorizations (RMA) and return shipping labels. A great deal of the frustration surrounding e-merchant return and exchange policies is that the procedures place undue demands on consumers. To obtain the RMA, customers generally have to call a toll-free number or e-mail the merchant. This increases e-merchants� customer service costs without any real benefit to consumers.
As a result, many customers say they would like real-time online access to RMAs and return shipping labels, preferably through a menu driven application on e-merchants� Web sites.
4.         Consumers expect access to high-quality customer service when they encounter problems with obtaining RMAs and return labels online. Many consumers desire high-quality customer service as a back-up to online generation of the RMA and return shipping label. Preferred customer service options include e-mail and a toll-free number customer support.
5.         Consumers want immediate replacement of incorrect, damaged and defective merchandise. Consumers that receive damaged, defective or incorrect merchandise say they would prefer that e-merchants reship items immediately, rather than wait to receive the returns. This would expedite receipt of their purchases and improve their overall level of satisfaction. Additionally, many consumers say they want to be trusted to return the merchandise, much in the way that they trusted the e-merchants to initially ship their orders.
6.         Consumers want feedback (via e-mail) when the return is received, the replacement merchandise is shipped and the            account credited. Customers don�t like to be left in the dark. Many want feedback on the status of their returns and exchanges, especially when e-merchants receive their returns, ship their replacement merchandise and credit their accounts.
7.         Consumers want e-merchants to respond to their inquiries in a timely manner. In addition to receiving feedback on the status of their returns, consumers also want e-merchants to respond to their e-mail and telephone inquiries in a timely manner.
8.         Consumers want greater consistency between customer service, Web sites and back-end operations. Not only do consumers expect accuracy, they also expect consistency. Conflicting information from different parts of an e-merchant�s operations is not appreciated. The back office must be well integrated with customer service and the Web site to support this.
E-Merchant Strategies
Based on these perceptions, e-merchants should consider the following strategies when working to enhance the value of their customers� after-the-sale experience: Feature information on your return and exchange policies on your Web site. Develop a company policy on whether to reimburse return shipping costs when a fulfillment error occurs. Provide real-time online access to return merchandise authorizations (RMA) and return shipping labels. Develop a company policy on whether to provide immediate replacement of incorrect, damaged and defective merchandise in advance of receiving the return. Provide greater consistency between your Web site, customer service and back-end operations.
When exploring options to address consumer expectations for the after-the-sale experience, you should look for the following: A complete Internet-based multi-carrier return shipping and reverse logistics system that lets customers generate return merchandise authorizations and return shipping labels at e-commerce Web sites. A comprehensive system for managing returns of products purchased online that gives e-merchants access to accurate information about their inbound returns inventory and can be used to provide more up-to-date information on whether a product is in stock. A sophisticated real-time communications and information system that connects the e-merchant Web site with shoppers, shipping carriers and returned goods disposal vendors to give customers timely and accurate feedback on the status of their returns and provide greater consistency between e-merchants� Web sites and their customer service and back-end operations.
Make an Educated Decision
There is a growing number of online return options. However, not all are currently capable of integrating among the customer, shipper and returned goods vendor and most are carrier-specific, such as the service offered by the U.S. Postal Service. However, because customers may demand choice, newer services, such as iReturn.com, that offer multi-carrier options and a high level of integration may be more advantageous.
While e-merchants have already devoted a great deal of attention to the online shopping experience, many are also recognizing that customer experiences after the sale are equally important. In fact, merchandise return and exchange experiences affect consumer brand loyalty and future decisions about where to shop online.
Kim Parks is senior vice president and general manager of the E-Commerce Strategic Business Unit at Stamps.com. Prior to joining Stamps.com, Parks was vice president of the Expedited Package Service business unit for the U.S. Postal Service. She can be contacted by phone 310-314-7254, fax 310-581-7500 or e-mail lkparks@stamps.com. For more information on iReturn, visit www.stamps.com/ecommerce/.