4 Holiday Shopping Tips Online Retailers Can Use To Mitigate Loss On Returns

Dec 6, 2018 · 5 min read

The 2018 holiday shopping season has arrived, and retailers are preparing for an increase in sales. Those increased sales, however, are tethered to significant spikes in product returns. This is a critical issue for retailers, and employing tactics to mitigate loss on returns is essential.

The return rate for brick-and-mortar businesses is hovering around 10 percent. But when it comes to online retail sales, ecommerce, the return rate is skyrocketing in excess of 30 percent. These high return rates can be even higher after the holiday shopping season.

“Returns can be like a deadly ecommerce cancer — aggressively attacking profit margins, gutting conversion rates, and ultimately threatening your business,” Nick Winkler of Shopify explained.

In fact, Shopify research found that more expensive products have a return rate as high as 50 percent. That could make a major negative impact on any retailer’s bottom line.

What is causing the perpetual increase of return rates? There are a few fingers to be pointed, from more relaxed return policies to shifting consumer behavior. Yes, the consumer can shoulder some of the fault in the rising return rate. One reason returns are going up is the volume of “intentional returns” being made.

Intentional returns happen when consumers bring the in-store shopping experience to the home. For example, ordering multiple sizes and colors of apparel products, trying them on at home, and then intentionally returning what didn’t fit, or what didn’t look good.

In fact, over 40 percent of online shoppers buy products with the intent of returning them!

That is astounding, and cause for concern for retailers. However, they can’t complain about it too much, since most retailers are in a cut-throat competition to offer the best return policy.

Some retailers offer free two-day shipping with free return shipping on items as well. This only fuels the returns fire — even more so during and post-holiday shopping season. How can retailers prep for the holiday shopping season when it comes to returns management?

The following four holiday shopping tips can serve as your returns management roadmap to mitigating loss on returns, both in-store and through ecommerce channels. Let’s dive in!

1. Put a Transparent Record of Returns in Place for Consumers

Technology is an asset when it comes to returns, and having a transparent digital return record in place can be very helpful. For instance, a record of returns can increase customer satisfaction. Online retailers can track returns made by customers and serve up details like receipt of return and refund status.

Having a transparent record of returns also benefits retailer profits directly. For example, having a record can help retailers identify customers who commit return fraud. This information allows you to then set up alerts on those customers, and flag their purchases, thus mitigating loss.

2. Be Proactive to Ensure Purchase Satisfaction

Not all customers set out to commit return fraud. In fact, a lot of returns occur when customers make purchases based on poor product descriptions and not so great customer support. This makes taking a proactive approach in the space of purchase satisfaction a must.

For example, have knowledgeable customer support representatives available to answer customer questions and concerns prior to purchase. This can greatly reduce the potential for returning a product, since the customer has correct information when buying online.

Another way to be proactive is to get online product descriptions right. Online shoppers this holiday season will be making buying decisions based on the descriptions they read. This is problematic if the description doesn’t exactly cover important details. So when a customer receives the product, it may not be what they wanted and return it.

3. Leverage Customer Feedback to Reduce Returns

After awhile, you will have a lot of data and information at your fingertips regarding product returns. Online retailers can leverage data to significantly reduce return rates and create better customer satisfaction. If you use the data and information to make essential product changes.

For instance, you may uncover that a product is returned more often than other products. This can eat up profits, since picking, packaging, shipping, and the reverse logistics process all cost. In fact, every time a package is touched, the cost goes up.

So instead of letting the return cycle continue for that heavily returned product, examine the reasons why customers are returning it and make changes. If the product ratings and reviews are beyond repair, it is sometimes best to eliminate the product from your inventory all together.

4. Integrate an AI Disposition Engine to Maximize Recovery on Returns

The perpetually rising rate of returns is not just a holiday shopping season problem. Returns are becoming a serious issue for retailers and manufacturers who traditionally rely on vendor agreements to make disposition decisions on returns. Sadly, these contracts do not work in a time when returns are impacting profits and the environment.

The good news is that there is innovative technology available to retailers and manufacturers. Utilizing AI supported machine learning and data science, returns can be maximized for recovery and sell through via B2C and B2B channels with a single end-to-end software solution.

For example, a top retailer or manufacturer can send millions of returned products to goTRGfacilities where they are received, checked-in, triaged, tested, reconditioned, repaired, packaged, and listed on 50+ marketplaces via R1 Cloud and the goTRG 9040 AI Disposition Engine.

Wrapping Up . . .

This SaaS business solution for returns management is providing retailers and manufacturers with the best disposition decisions for their returns. Whether during and post-holiday season, or year-round, utilizing AI technology to get the best value on returns is critical. The economic and environmental costs are too high not to make better decisions in the returns management process.

The above four ways online retailers can mitigate loss on returns can serve as your quick guide to more recovery profits and higher sell-through. How do you plan on managing returns for your business this holiday season?


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goTRG is a leader in business solutions and SaaS for multi-channel sales and supply chain, Inc. 5000 company with top global retailer and manufacturer clients.

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