Key to managing returns is an understanding of how they fit into the whole proposition retailers and brands make to their customers, says Renaud Marlière, Global Chief of Business Development of Asendia.
By tracing the evolution of thinking on returns, it becomes possible to draw two clear conclusions. The first is that returns are not going to go away. The second is that the only way to really manage them is to see not just the threats but the opportunities as well.
The story began around 2010, even though returns had been a problem for a long time before that. It was clear back then that no one department or director owned the problem and therefore any initiatives to mitigate them focused on solving only one or two aspects of the problem. Jump forward 10 years and returns now benefits from a host of technologies aimed to prevent them happening in the first place, managing them more efficiently when they do happen and measuring the life-cycle of a return so it is clear just how much they are costing the retailer or brand.
The situation today, as research in February 2023 by Asendia reveals, is that retailers and brands will need to manage returns more creatively if they are manage the cost as well as meet the demands of customers for who returns are very much part of the brand experience.
For instance, when 8,000 shoppers in the US, UK, Canada, Germany, France, Switzerland, Hong Kong and Spain, across five demographics (Gen Z, Millennials, Gen X, Baby Boomers and the Silent Generation) were asked to consider, when having an international order fulfilled, what would influence their decision to make a purchase currently, returns were in the top three concerns.
- 33% – understanding where my product is being shipped from so I understand the cost and distance the product will need to travel to reach me
- 32% – preferred returns method (Paperless, drop off box, collect, postal office, in-store) are available
- 32% – grouped deliveries – so there is less packing waste/products are delivered in one go, rather than across multiple individual deliveries
These findings were broadly similar to the same question being asked for domestic orders.
Retailers and brands then need to know where to commit their investment in returns. In the same research, shoppers were asked which delivery and returns services they would be prepared to pay more for. 44% prioritised speed, 30% return in store option and 26% more choice of returns method.
In another piece of contrasting research by Asendia in the same month among 800 international retailers and brands in US, UK, Canada, Germany, France, Switzerland, Hong Kong and Spain, we wanted to see how they planned to respond to the trends. Among their many priorities for the next two and five years, which include reducing their operational costs, Initiating sustainability programs and trying to address staff shortages, making returns processes more efficient / less costly came in at number two.
Returns are clearly still one of the biggest headaches for retailers. 29% want to reduce volumes of returns made by shoppers, in light of the figures in the research which show that 57% felt returns volumes would increase.
The desire to tackle returns is readily understood in the context of lost income and the cost of handling them. Industry figures that show that in the US alone, shoppers returned $816 billion of merchandise in 2022.
Retailers in the Asendia research said their average returns rate on their website was 23% while in the US and Switzerland the rate was 27%. As a result, on average, it costs international retailers $25.20USD to process a domestic return, rising to $31.20USD in the US and $30.80USD in France.
In order to balance the management of their costs with consumers’ expectations, retailers and brands must invest in a digital ecosystem that is flexible and agile. However shoppers engage, they expect the entire process to feel connected, coherent and simple. They may want to order a product online, sample it instore, then have it delivered to their home. Our practical advice for retailers is to dedicate resources into integrating inventories and ordering systems across the business. A shop assistant should be able to check stock availability throughout the retail network and place an order at the store of the customer’s choosing. In this way, the retailer can never under or over-sell.
Ultimately, retailers and brands need to find the best solutions and partners with which to build this ecosystem that will enable them protect their margins and boost sales, both of which will enable them to prevent returns from becoming a bigger burden rather than an opportunity.