In a previous article penned for PARCEL (There’s Gold in Them Hills, May/June 2013) we discussed how online retailers can leverage a good returns process to increase customer satisfaction, lower costs and even improve the bottom line. In this article we focus on the front end. What can online retailers do to prevent returns in the first place?
Let’s start with the assumption that returns are an inherent part of any e-commerce business. Each industry, company and product has individual characteristics that will affect the intrinsic rate of return. For example, apparel retailers typically expect a higher rate of return than does a book retailer. With apparel, the buyer may not be entirely sure if an item pictured on the website is the right color, size or will really fit in a flattering way until it is received and tried on. When you order a book online, you are pretty sure that you want that book. You will not be disappointed if the book is printed on one size paper or another.
Given this understanding, some level of returns should be built into the financial model depending on the category being sold. As long as the return percentage is within a tolerated range, the model is ok. Exceed that range and your financials take a beating. The focus of this article is to address issues that can reduce the tolerated percentage of returns in order to improve the bottom line and become more profitable. Fewer returns than are expected/budgeted lead to a positive impact on your financials. This can be accomplished by being proactive.
Ensure Quality. One of the first opportunities in the process is right at the beginning, when inventory arrives at the fulfillment center. Set up and adhere to a thoughtful quality control process to ensure that the product you are selling is of the expected quality. Inspect a percentage of all stock that arrives. This percentage may vary by product category and vendor; i.e. if you’ve had problems with goods coming from a particular vendor or factory in the past, the percentage should be higher. If you find problems with the initial inspection, expand to a greater percentage. You should not only look at the quality of the item but also confirm that labeling is correct and points to the correct item in your system. For example, if the item is a Large but labeled as a Small you can certainly expect lots of returns if not corrected.
Confirm Addresses. Run address verification software to ensure that the address you are shipping to is complete and valid. If not, the order will be returned by the carrier as undeliverable, or worse yet, lost. The best place to incorporate address verification is at the time of order. Build it into your shopping cart so that the consumer can confirm any address discrepancies in real time. If you cannot achieve this in your cart, move the process into the backend prior to processing the order. Be prepared to hold orders while customers are contacted for clarification and correction as needed.
Fulfill Accurately and Package Properly. Inaccurate shipments obviously lead to returns. Make sure that you or your fulfillment provider is using the best warehouse management technology, bar code scanning and other means to ensure accurate picking and packing. Mistakes should be a rarity – typically no greater than one-tenth of one percent. Also, put thought into how the orders are being packaged. Take into account both protection and presentation of the items. As consumers, we all want to feel good about what we have purchased. A poor presentation leads to buyer’s remorse, which has a direct correlation to your return rate.
Speed Matters! Process and ship the order quickly! As far as the customer is concerned, this is the most important order that your company has and they want it now. You are in a race to deliver before the customer changes their mind. If you lose this race, the package is coming back. Aim for same-day shipping. This is not an easy task but is worth the effort. If you outsource fulfillment, find a provider that not only can do this but understands why it’s important.
Communicate! Let the customer know what’s going on. Tell them that you received their order and are working hard to get it to them. Let them know when it has shipped. Provide tracking information. This will reassure them that the process is going correctly. And enable them to follow up on their own. Email or call after they have received the package to ensure that they are satisfied. Customers want information and they want you to care. Making the customer feel valued will not only reduce returns but will build loyalty and even translate into additional sales! What a dramatic swing of the pendulum!
Customer Service. First, review your company’s strategy for this important function. Do you offer a way for your customers to contact you? Is it easy and convenient? Have you elected to limit the options that your customers have? For example, do you only offer customer service via email? Consider the value of having a full service, multi-mode customer service group. Customers that have the ability to choose their method of communication, from phone to email to chat, etc., will ultimately enjoy the experience much more. Having live agents on the phone may appear to be costly on the surface but there is value in solving the customer’s problem immediately and on the customer’s schedule. Outsourcing this function to a call center or your fulfillment provider transforms fixed costs into variable costs. This makes outsourcing the function affordable for companies of almost any size.
Training and Saving the Sale Techniques. Agents who know the products and promotions inside and out can relate with the customer and provide engaging support. Empower the customer service agents with a robust, well thought out and generous Save the Sale strategy. The dynamics of this will vary by product and promotion. Each program should be devised with the objective of minimizing returns. First, a knowledgeable customer service agent may be able to walk the customer through usage problems with their product. If the customer is not using the product correctly, the product will not perform and thus the customer will want to return. Only a properly trained agent will be able to correct this. Another effective Save the Sale technique is to extend the return window for the customer and ask them to continue to try it out. In many cases this alleviates the customer’s concern about timing. Having extra time may lead to the customer changing their mind and retaining the product. Depending on the circumstances it may be possible to persuade the customer to keep the product in exchange for a discount, or a coupon towards a future purchase, which may be less expensive than processing a return. Be creative. There are a lot of options.
Now we have the elements of an unbeatable two-pronged strategy. These front end best practices will lower the absolute number of returns which will improve your bottom line. Couple this will the strategies outlined in our previous article, and you reduce the absolute cost of any actual returns. The winning strategy covers both ends!
Ayal Latz is President, a2b Fulfillment, Inc. Visit www.a2bf.com for more information.
Let’s start with the assumption that returns are an inherent part of any e-commerce business. Each industry, company and product has individual characteristics that will affect the intrinsic rate of return. For example, apparel retailers typically expect a higher rate of return than does a book retailer. With apparel, the buyer may not be entirely sure if an item pictured on the website is the right color, size or will really fit in a flattering way until it is received and tried on. When you order a book online, you are pretty sure that you want that book. You will not be disappointed if the book is printed on one size paper or another.
Given this understanding, some level of returns should be built into the financial model depending on the category being sold. As long as the return percentage is within a tolerated range, the model is ok. Exceed that range and your financials take a beating. The focus of this article is to address issues that can reduce the tolerated percentage of returns in order to improve the bottom line and become more profitable. Fewer returns than are expected/budgeted lead to a positive impact on your financials. This can be accomplished by being proactive.
Ensure Quality. One of the first opportunities in the process is right at the beginning, when inventory arrives at the fulfillment center. Set up and adhere to a thoughtful quality control process to ensure that the product you are selling is of the expected quality. Inspect a percentage of all stock that arrives. This percentage may vary by product category and vendor; i.e. if you’ve had problems with goods coming from a particular vendor or factory in the past, the percentage should be higher. If you find problems with the initial inspection, expand to a greater percentage. You should not only look at the quality of the item but also confirm that labeling is correct and points to the correct item in your system. For example, if the item is a Large but labeled as a Small you can certainly expect lots of returns if not corrected.
Confirm Addresses. Run address verification software to ensure that the address you are shipping to is complete and valid. If not, the order will be returned by the carrier as undeliverable, or worse yet, lost. The best place to incorporate address verification is at the time of order. Build it into your shopping cart so that the consumer can confirm any address discrepancies in real time. If you cannot achieve this in your cart, move the process into the backend prior to processing the order. Be prepared to hold orders while customers are contacted for clarification and correction as needed.
Fulfill Accurately and Package Properly. Inaccurate shipments obviously lead to returns. Make sure that you or your fulfillment provider is using the best warehouse management technology, bar code scanning and other means to ensure accurate picking and packing. Mistakes should be a rarity – typically no greater than one-tenth of one percent. Also, put thought into how the orders are being packaged. Take into account both protection and presentation of the items. As consumers, we all want to feel good about what we have purchased. A poor presentation leads to buyer’s remorse, which has a direct correlation to your return rate.
Speed Matters! Process and ship the order quickly! As far as the customer is concerned, this is the most important order that your company has and they want it now. You are in a race to deliver before the customer changes their mind. If you lose this race, the package is coming back. Aim for same-day shipping. This is not an easy task but is worth the effort. If you outsource fulfillment, find a provider that not only can do this but understands why it’s important.
Communicate! Let the customer know what’s going on. Tell them that you received their order and are working hard to get it to them. Let them know when it has shipped. Provide tracking information. This will reassure them that the process is going correctly. And enable them to follow up on their own. Email or call after they have received the package to ensure that they are satisfied. Customers want information and they want you to care. Making the customer feel valued will not only reduce returns but will build loyalty and even translate into additional sales! What a dramatic swing of the pendulum!
Customer Service. First, review your company’s strategy for this important function. Do you offer a way for your customers to contact you? Is it easy and convenient? Have you elected to limit the options that your customers have? For example, do you only offer customer service via email? Consider the value of having a full service, multi-mode customer service group. Customers that have the ability to choose their method of communication, from phone to email to chat, etc., will ultimately enjoy the experience much more. Having live agents on the phone may appear to be costly on the surface but there is value in solving the customer’s problem immediately and on the customer’s schedule. Outsourcing this function to a call center or your fulfillment provider transforms fixed costs into variable costs. This makes outsourcing the function affordable for companies of almost any size.
Training and Saving the Sale Techniques. Agents who know the products and promotions inside and out can relate with the customer and provide engaging support. Empower the customer service agents with a robust, well thought out and generous Save the Sale strategy. The dynamics of this will vary by product and promotion. Each program should be devised with the objective of minimizing returns. First, a knowledgeable customer service agent may be able to walk the customer through usage problems with their product. If the customer is not using the product correctly, the product will not perform and thus the customer will want to return. Only a properly trained agent will be able to correct this. Another effective Save the Sale technique is to extend the return window for the customer and ask them to continue to try it out. In many cases this alleviates the customer’s concern about timing. Having extra time may lead to the customer changing their mind and retaining the product. Depending on the circumstances it may be possible to persuade the customer to keep the product in exchange for a discount, or a coupon towards a future purchase, which may be less expensive than processing a return. Be creative. There are a lot of options.
Now we have the elements of an unbeatable two-pronged strategy. These front end best practices will lower the absolute number of returns which will improve your bottom line. Couple this will the strategies outlined in our previous article, and you reduce the absolute cost of any actual returns. The winning strategy covers both ends!
Ayal Latz is President, a2b Fulfillment, Inc. Visit www.a2bf.com for more information.
