Product returns are notoriously costly for retailers to take in and process. But returns are also a valuable tool companies must take advantage of, ReverseLogix CEO Gaurav Saran told Digital Commerce 360.
ReverseLogix is a returns management system designed to streamline the return experience for customers and reduce costs for retailers. Fortune 500 and 100 companies including Shopify, FedEx, and Samsonite are customers.
To offer free and low-cost returns, retailers must process them efficiently. If customers are happy and data is used to make improvements, they can actually be a “superpower,” he said.
Saran shared ReverseLogix’s three principles of returns:
- Transform a difficult process into an enjoyable experience for loyal customers
- Minimize losses
- Maximize intelligence
Returns are the key to loyal customers
Making returns easy for consumers is a way to create a loyal customer, Saran said. Free returns in particular are important to customers.
An August 2022 Digital Commerce 360 survey of over 1,000 consumers found shoppers regularly consider a potential return before they purchase. 54% take free returns into consideration, and 39% also look at the cost of a return. One-quarter of consumers said the timeframe is important.
Giving customers a good return experience is crucial if retailers want the customers to shop with them again, Saran said. One strategy for wooing customers with convenient returns is offering home pickups and alternate drop-off locations, like reverse logistics vendor Narvar. A courier picks up the return from the customer’s house and ships it with the appropriate service. That convenience resonates with customers.
31% of respondents in the Digital Commerce 360 survey said that they prioritized the convenience of returns over other considerations.
Minimizing returns losses
Returns are never ideal for a retailer, Saran said.
“The minute someone starts a return request, that is an instant loss for the brand. No matter what you do, it’s a loss,” he said.
But successful retailers can find ways to make those losses as small as possible. They can also give merchandise a second life by getting it back into stock or circulating in recommerce.
In 2022, about 16.5% of retail purchases were returned, totaling about $816 billion, according to the National Retail Foundation. Salesforce predicted a “return tsunami” in 2023.
Part of minimizing these losses is processing returns quickly and efficiently, reducing the amount of time and employee hours spent on them, Saran said.
Global Retailer, a U.S.-based footwear retailer, said in a case study shared with Digital Commerce 360 that ReverseLogix made returns 60% faster through the customer returns portal, processing technology, and tracking technology for customers.
ReverseLogix’s integration across the retailer’s divisions was central to saving time and money.
“The retail side has its own portal to create returns,” the retailer’s director of distribution management said in the case study. “Customer service has their own portal. Our stores are integrated with UPS for better visibility and tracking. Instead of having to print one return label and one shipping label, we’ve streamlined that to one label that has all the information we need.”
Retailers typically discuss returns as a total loss, Saran said, but they’re also a rich source of data for companies.
ReverseLogix collects data from customers on why specific products are returned, revealing problems in the product. For example, if “most customers are returning a particular product because they said it’s too tight, maybe sizing is a little bit off,” he said.
That data allows retailers to know what versions of items are selling and which are not, which can impact future inventory decisions. The ReverseLogix technology can intelligently take into account the type of product, price, seasonality, and other information to make the best recommendation for processing a return.
Retailers use that data to make informed suggestions about how to process a return and work toward sustainability targets, Saran said. That could mean letting a customer keep a product that would cost more to ship back than it’s worth, or connecting with a local repair business.
The data from these returns may be a missed opportunity for companies that don’t have an integrated online return process.
46.7% of Digital Commerce 360’s Top 1000 retailers offer online returns processing, and just 27.4% have free return shipping. Jewelry, apparel, and accessories retailers are the most likely to offer free return shipping.
Returns are a chance to upsell
Loop, another returns management company, said it broke return records in 2022. It says it processed a return every 1.25 seconds on average on Dec. 27, 2022, its busiest day ever, and 300,000 returns between Dec. 26 and Dec. 30.
All those returns were also opportunities to get customers to spend more money. The system, which is integrated with Shopify, allows consumers to return purchases for refunds, but they can also exchange the product. Loop surfaces other products customers could buy using the value of the refund, so the Shopify merchant doesn’t lose the sale completely.
Process returns holistically
The key to achieving these principles is integrating returns into every part of an ecommerce business, Saran said. Returns impact customer success, manufacturing, and supply chain teams, he said, so you have to think about returns every step of the way.
The retailers that can do this successfully are able to integrate returns into the creation, shipping and purchasing process. In some cases, with the right data and processes, retailers can “convert a loss maker into almost a profit center,” he said.
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