Generating Sales By Managing Returns

  •    Mikhail is the Head of Marketing at Shippo, the shipping dashboard and API that connects you to multiple carriers.

When growing a business, the first thing merchants do is try to figure out how to get a product to their customers. Reverse logistics, or returns as they’re commonly called, is usually an afterthought.

However 88% of customers review the return policy, and 66% do so before purchasing. It’s one of the most important policies they review before purchasing.

Depending on your return rates, how you handle returns can help you remain profitable or heavily eat into your profits. As you start to scale your eCommerce shop, here are some concepts to consider for your return workflow and operations.

1. Have a clearly outlined returns policy

One of the worst things a business can do is to not have a clearly outlined return policies in plain, easy to understand language. Make sure to include which items can or cannot be returned, the time frame which you will accept returns, who pays for return shipping, will the refund be in cash or store credit, and an outline of the returns process. It’s perfectly fine to not accept returns for all the items you sell, you just need to be upfront and clear about the limits.

1a. Have a separate international returns policy

Unfortunately, you probably can’t afford to have the same customer friendly policy for international customers as you do for domestic customers. Dealing with international returns is a potential nightmare for the customer and the business, so make sure to have a clear policy in place for international shoppers. Consider only allowing returns on items that make sense to ship back or be clear that international customers have to return items at their own cost.

2. Return Merchandise Authorization

Return Merchandise Authorization (RMA) is a process where the customer is required to contact you before returning an item. There are a host of benefits to putting this system in place, such as the ability to work with consumer on an alternative resolutions, estimating expected arrival times for returned items at the warehouse, and protection against fraudulent returns. However, an RMA means you need support staff or website capabilities to authorize the returns. It adds an extra step for the customer to take, who already may be dissatisfied with the purchase.

3. Put pay-on-use return labels right in the box

Make it easy for your customers to send back their order, 52% of customers want to see a return label right in the box. You can use pay-on-use return labels (also known as “scan-based” return labels in the industry) with all your orders. You will only get charged for these labels if and when they are used to ship something back. If your customer never uses the return labels then you will never pay for the label. This can increase customer happiness at minimal cost to you.

4. Be careful of free shipping and free returns abuse

If you have a free shipping promotion over a certain purchase amount and where the customer receives free return shipping, be aware that some shoppers will purchase items to meet the minimum and then use free shipping to return the unwanted items. Consider only offering free shipping on high value items as a disincentive.

5. Keep track of returns

Make sure to track which items are being returned and track the return rate as percent of total sales on a per item basis. Chances are, you will be able to identify a handful of items that have a high return rate, at which point you need to figure out why the items are being returned. Make sure to investigate all the possible causes including: bad description and photography on the website, poor use instructions, or bad product quality. If you can eliminate the high percentage return products from your inventory or fix the issue causing the returns, you can easily save time, money and customer frustration.

Take a second look at how you’re handling returns right now. Making these operational adjustments can drastically help you improve sales, and increase margins.