Update Your Returns Process in 3 Easy Steps—or Be Swallowed by Amazon

By: on July 12, 2019

Amazon is getting creative in preparation for Prime Day by partnering with Kohl’s to offer in-store returns, setting a new standard for returns and exchanges in retail/supply chains.

This partnership is poised to change shopper expectations yet again. Can your business meet the increasing demand for returns process flexibility?

To better understand expectations for returns policies, we surveyed shoppers who have returned something in the past year about their experiences. Based on the results, we’ll cover three ways you can update your returns process to stay competitive with retail behemoths such as Amazon.

1. Think inside the box to improve the returns process

Meet customer expectations by designing packaging with the returns process in mind. Your customer doesn’t want to search around the house for a suitable box to ship the unwanted item back or pay the post office to print the shipping label.

Here are some suggestions based on the results of our survey:

  • Provide a prepaid return shipping label in the shipment. Nearly 20% of respondents say a self-addressed return label is their favorite return policy perk.
  • Make your shipping box one that the customer can reuse for returns. Fifteen percent of respondents say this perk is their most preferred returns option.
  • Offer in-store returns. Eleven percent of respondents favor this option above all others.

which factor of a returns policy is most important to you graph

Pro Tip: Your business’s returns policy needs to be clearly stated and provide instructions on what to do. While creating the instructions that go in the box may be responsibility of the marketing team, partner with them on the language of the policy, so you’re on the same page when it comes to customer expectations. Neither department wants a surprise here.

Pro Tip: If a product has a high return rate and the customer reason is consistently “defective item” but your team isn’t finding fault in the returned items—it’s time to look at how the item is described on your site. Confusion over the product’s design, installation, or even purpose could be the root issue here.

2. Calculate how to offer free shipping

Free shipping is quickly becoming non-negotiable for many consumers today, and that trend isn’t slowing down—even Etsy just announced free shipping on orders over $35. One way to keep up on this front is to offset the costs with a slight price increase.

Pull a report of the past 12 months of returns from your inventory management or supply chain management software. Identify the most often returned products and then calculate the average loss for those items. It’s possible that you will need to increase the price of those items to cover the expected returns.

Pro Tip: For free shipping to take priority, you may need to deprioritize improvements in another area. Our survey found that customers aren’t totally turned off by an out-of-stock message. This means you could focus efforts on offering free shipping instead of how to avoid stockouts.

Of course, both should always be improved upon, but this insight can help you prioritize.
how much does an out of stock message impact your return business graph

3. An unexpected differentiator that you can offer today

An overwhelming 73% of consumers say it would be nice to receive an exchange item before returning the original purchase. Add the 17% who expect it, and you have a major consumer desire your supply chain can help you fulfill.

Amazon Prime, Zappos, and Stitch Fix all provide this exchange service. For example, if a customer buys sneakers in a size 9 but question the fit after they arrive, they can request the size 9.5 or 10 in the Amazon app. Amazon will inform them of the deadline for returning the unwanted pair—typically four weeks out—and then ship the new pair.

This way, the customer can try on both sizes, decide which is best, print out the return label, and send the unwanted pair back before the stated date—or else they’ll be charged for both pairs.

expect to get exchange item before the return graph

Pro Tip: Your marketing team will likely jump on the delayed exchange idea, but keep in mind that your accounting team will need time to update their processes, such as how to support delayed payments. Your logistics team will also need to adjust away from the one-order, one-shipment mentality.

Prediction: This “try out” perk is a customer-loyalty building option right now, but we project this exchange program to be the standard within the next five years. V12 found over half of consumers hesitate to buy online due to the lack of being able to touch and feel the item, but this will be eliminated with try-on options, so we expect that percentage to shrink considerably.

In this article we shared recent survey results with consumer expectations for the returns process and policies. The three recommendations for updating your processes can each be supported with the right supply chain management or inventory management software program. If you’re looking to invest in new software, our advisors are always happy to discuss in a free consultation—call us at (844) 680-2046.

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