Halloween, Black Friday, Singles Day and Christmas: for many online stores, the last months of the year are also the busiest. However, more orders are often accompanied by more returns. Did you know that the amount of e-commerce returns increases by 200% during peak season? And more returns not only mean more work but also that you lose out on your previously generated revenue. Good preparation is essential to look forward to the festive months this year with confidence and be as profitable as you possibly can.
How can you prepare your business for the product return peak?
There are 4 key challenges you need to overcome to take your return process from ‘revenue killer’ to success factor – even during peak season!
1. Lower cost of returns
On average, a return costs €12,50. This includes shipping, administration, and return handling. Depending on your margins, that can be a huge chunk of your profit. If we look at how this amount is built up, we can decide on what levers to pull to lower these costs. We’ll talk about return handling later on, but how can you save on shipping costs? Most stores offer a free returns policy, simply because this improves conversion. However, during peak season, because of the increase in returns, this can cost you big time.
How to save on costs of returns
You don’t have to offer free returns to all your customers to provide the best customer experience. By offering both paid and also free returns, based on the return request, you can quickly reduce the total return cost. All it takes is for you to have a critical look at your return policy. Here are some ideas:
- Waive the customer’s return costs if they exceed your profit margin.
- Offer a free return only if your customer keeps more than half of their original order.
- Offer a free return only if your customer has returned less than X number of times during the year.
- Implement paid returns during a specific time window, such as sale periods and peak season.
The possibilities are endless, but totally depends on how critically you’ll look at your terms. This way you can still offer free returns as a service for your most loyal customers, but you also make sure that your return shipping costs don’t ruin your profitability during peak season. You can follow up on these terms via your return requests manually but if you’re dealing with a lot of returns or with complex return scenarios, then you should look for an automated way, such as the return software from Returnless.
2. Save time on return handling
Everyone knows time is money. And when it comes to return handling, we want it to take as little time as possible. To be able to do that it is essential that you have a clear overview of your incoming returns. You should know what returns you can expect, on which day they come in, and why they’re being returned. This enables you to plan the right number of personnel and instantly makes it clear to them what should be done with the returned parcel.
If you’re not already using return management software, then that’s the first thing you should do. Sorry, but it’s 2023, and a simple Excel spreadsheet to keep track of your returns simply won’t cut it anymore. You need real-time data and good-quality insights!
How to handle returns faster
With return software, you’ll have an instant overview of all incoming returns for that day or week. This allows you to smartly adjust your staff planning accordingly. It can be very useful to know on which days you can expect the most returns and if you need extra hands, especially during peak season. Return software that allows barcode scanning, such as Returnless, enables you to directly find and open all return details of that parcel, even before opening it.
If you’re going to invest in tooling, we recommend that you look for software that can update other tools and systems you work with already. For instance, you want return software to update your stock in your warehouse management system and create refunds in your invoicing tool. We can imagine it sounds too good to be true, but nowadays there are even possibilities for automated refunds as soon as the shipment is scanned in your warehouse. This will make a major difference in the speed at which your returns can be processed, taking your return handling from minutes to mere seconds.
3. How to prevent returns as a whole
When we look at return prevention there are two ways about it: Short term and long term.
In the short term, you can look critically at your return policy and decide what are acceptable reasons for returns. This enables you to reject returns that don’t comply with your policy in advance. It is imperative, however, that you let your customers register a return digitally. And if you don’t do this already – you should!
Customised items with personal engravings as well as hygiene products such as underwear are examples of products that you are allowed to reject. Besides that, you can also refuse returns whose return deadline has passed or offer alternatives such as coupon codes for damaged products. You’ll be surprised at how easily and effectively this can lower your return percentages.
In the long term, you should review your returns data. By logging and analyzing your return data regularly, you’ll gain important insights. When you have a large product range that consists of hundreds of products, it can be hard to spot the ‘problem products’ of your assortment. With return data, you’ll instantly know which products are returned the most and why. This enables you to optimize your assortment and website accordingly, preventing returns in the future.
4. How to keep your revenue
More orders usually mean a higher return rate, especially during peak season, and more returns mean you have to refund some of that revenue back to the customer. Or, is that not always the case?
Here’s a golden tip for you: Offer your customers multiple refund options while returning. For example, add the option ‘coupon code with store credit’. This way you avoid losing out on revenue and also encourage customers to visit your store again. Not all customers prefer a coupon code, but the ones that do will save you tons of money and you’ll be surprised how many customers prefer this method. Data even shows us that 35% of customers choose a coupon code instead of a reimbursement. Think about it for a second. This will have a serious impact on your business results by the end of the year.
Coupons are also a valuable method for exchanging items. This way, the customer can not only exchange the returned item for a different color or size, but he or she can redeem the code for any other item. Thus, this option is not only advantageous for you as a store owner because it preserves your revenue, but also offers customers an optimized shopping experience because they can use the credit at any time they’d like for a subsequent purchase. If you have no tooling in place yet for generating coupon codes in the return process, we suggest you look at Returnless as this tool even has the ability to automatically generate and send out coupon codes once the return is approved.
Get your return strategy ready for peak season
We can’t stress this enough: preparation is key. And it all starts with taking a close look at your return policy. Want to take it to the next level? We touched on it already during the article, but a digital return process is the way to go if you want your returns to become less of a headache and more of a winning factor. The software gives you direct access to automation, data insights, and handy features such as generating coupon codes that let you conquer peak season easily. Looking for specialized return software for handling complex returns? We recommend you check out Returnless.
About the author
Maxine Alders, Marketing Lead at Returnless
In her role as Marketing Lead at Returnless, Maxine channels market and customer insights into impactful and engaging content, aiding online retailers in navigating the complex world of e-commerce returns.