{"id":25559,"date":"2021-03-10T07:50:48","date_gmt":"2021-03-10T07:50:48","guid":{"rendered":"https:\/\/www.parcelpending.com\/blog\/frictionless-returns-retail-strategies-for-returns-management\/"},"modified":"2024-03-18T21:34:38","modified_gmt":"2024-03-18T21:34:38","slug":"frictionless-returns-retail-strategies-for-returns-management","status":"publish","type":"post","link":"https:\/\/www.parcelpending.com\/en-ca\/blog\/frictionless-returns-retail-strategies-for-returns-management\/","title":{"rendered":"Frictionless Returns: Retail Strategies for Returns Management"},"content":{"rendered":"

Updated March 18, 2024<\/em><\/p>\n

The exponential growth in eCommerce over has brought with it an avalanche of returned goods harming sales, the environment and, if eCommerce retailers aren\u2019t careful and eCommerce predictions<\/a> fit true, their reputation. Here are strategies on how to implement a financially stable returns management process.<\/p>\n

Returns: The Extent of the Problem<\/b><\/h2>\n

According to the 2022 Consumer Returns in the Retail Industry<\/a> report conducted by the National Retail Federation, returns in the U.S. retail marketplace<\/a> account for a loss of $816 billion in sales. In terms of percentage relative to sales, the year-over-year rates remained stable at approximately 17% in both 2022 and 2021, but they have increased from nearly 11% in 2020. Over the past two years, online return rates have decreased from 21% to 17%, aligning with the overall return rates.1<\/sup><\/p>\n

Although the consumer return rate normally hovers between 25\u201330%, Narvar reports that it skyrocketed to 70% in 2020.2<\/sup> As Kate Reidel, Parcel Pending\u2019s SVP of Business Development, explains: \u201cPandemic consumers who went online to shop for clothes often resorted to bracketing, buying multiple sizes, since they didn\u2019t know exactly what they\u2019d need. That exacerbated the expense of managing returns.\u201d<\/p>\n

In 2020, apparel led the pack for the number one category of returned goods, coming in at an estimated 46.5%.3<\/sup> Footwear trots in second, with one expert estimating that for every pair of shoes kept, two to three are returned.4<\/sup><\/p>\n

Customers Demand Free Shipping & Returns<\/b><\/h2>\n

To customers, a free return shipping and\/or \u201cno questions asked\u201d product returns policy are irresistible \u2013 and ultimately play a significant role in maintaining customer loyalty and customer satisfaction, and increasing store traffic<\/a>. 70% of consumers in a 2020 survey requested free shipping as their number one online feature, and about 50% wanted free returns.5<\/sup> Retailers recognize the exorbitant costs of processing returns and returns management. However, they\u2019re fearful of being the first mover to change their liberal returns policy which might harm their reputations and sales. After all, 92% of consumers surveyed said that they would buy again if the product returns process<\/a> is easy.<\/p>\n

Customers Unaware of the Connection Between Returns & the Environment<\/b><\/h2>\n

Most shoppers believe that their returned product ends up back on their shelf. Actual inventory management<\/a> and returns logistics are far more complicated. \u201cThe cost of inspecting that good, repackaging it, getting it back on the shelf, the reverse logistics \u2014 all of that often outweighs the value of the good from being sold the second time,\u201d said Joel Rampoldt, a managing director in the retail practice at AlixPartners. Plus, during the pandemic, many retailers enacted policies that enforced spoilage, meaning the product could not be re-sold upon being returned.<\/p>\n

Customers who are environmental activists and vote with their wallets are mostly unaware that their return might actually end up in a landfill. Approximately 5 billion pounds of returned products end up there annually.<\/p>\n

Technology to Tackle Returns Management<\/b><\/h2>\n

The NRF reports that by 2025, global investment in reverse logistics technologies is expected to reach $604 billion as retailers aim to address a significant challenge in the shopping process and reduce return-related expenses.6,7<\/sup> Investing in returns management software and technology costs now but saves later.<\/p>\n

One of the killer technology battlegrounds in the product returns management system is the virtual fitting room. In 2022, Walmart launched Zeekit fitting room technology that allows shoppers to upload a picture of themselves to see how the product will really look. The relationship between the technology and product returns is clear: Shopify reported that customers who virtually tried on clothes were 40% less likely to return the product.8,9<\/sup><\/p>\n

Companies are also forging alliances to deal with returns processing and management issues. In 2021, Affirm acquired Returnly to help retailers remove friction from the customer return process. Returnly, founded in 2014, issues instant credit to consumers upon return approval versus return delivery. And in May of 2021, PayPal announced it acquired Happy Returns. Happy Returns not only helps with effective returns management but also works to reduce waste because it aggregates returns by retailers and uses reusable containers. Its cardboard-free program is estimated to significantly help the environment. As a point of comparison, 40% of consumers buy new packaging (i.e., cardboard boxes) when shipping a returned product back to a retailer.<\/p>\n

Smart Lockers Provide Safe & Efficient Returns<\/b><\/h2>\n

A return to the store is the lowest hit on margins for retailers. Using smart pickup and drop off lockers<\/a> for BOPIS and returns is fast (less than 30 seconds) and efficient too.<\/p>\n

Here\u2019s how the returns management solution works:<\/p>\n