ca. 30 Minuten
nach Wunsch auch mit VideocallOpen a website - choose - order - keep! This procedure is wishful thinking in every ecommerce organization. Because as simple as this process chain might seem at first sight, the more difficult it is to implement in reality. What is especially annoying for fashion companies in the eCommerce sector is located at the end of this causal chain: keep vs. return – customers order what they like and try it at home, but more than half of the goods will be sent back. The fashion industry has an average return rate of approximately 50% - 60%. Now it is time to find a way to control the return rates.
High return rates have also a significant impact on costs: between 10 euros and 15 euros can be incurred for an ecommerce organization per returned product. Not to mention that a portion of the goods aren’t sent back in perfect condition and, therefore, they can no longer be sold.
That’s How Turnaround Works in Return Management
The problem is detected quickly, but how do you get control of the return rate? Transferring the shipping costs of returned goods to the buyer is not a very popular option to minimize returns: the danger that the customer, or even the potential buyer, changes to the competition is just too big. The question then is: what is to be done?
Reducing returns or bringing them under control is also part of logistics. The optimal adjustment of returns handling, and the proper handling of the returns volume in the warehouse, are central aspects for keeping costs and effort as low as possible. But in order to come a step closer to reducing the return rate, there are other approaches.
1 - The Right Content is Half the Battle
Accurate product descriptions, comprehensive product pictures and product reviews from customers – the more information the potential customer has the lower the risk that the ordered product is sent back. Also, more content can have positive effects: videos that show the clothes on models, tips related to the garment (maintenance or suggestions for the combination with other fashion items), or perhaps even a fashion blog, are valuable content to the user. But where do you start? First, take a detailed look at the key figures for your products. You can detect the products that have a particularly high return rate. Once you have identified the troublemakers, you can generate targeted content for these products.
2 - Recognize Return Types and Segment Customer Groups
Get to know your customers and find out who returns how much and when. With the help of an analytics solution you can segment and analyze customer groups that have similar returns behavior. If you know the problem children, you can try simple and subtle education measures: exclude individual customer segments from marketing campaigns or special offers, stop selling products with a high return rate and talk to customers with high return rates to identify the specific causes.
3 - Reward Non-returns
Punishing customers who have too often, or too frequently, send back their orders in the past generates a great deal of negative discussion. The idea to reward customers if they keep their order is better. Vouchers for the next purchase or discounts on the purchase order – if nothing is returned – motivates them to keep the goods. But: not any incentive to minimize returns fits every customer. Customer segmentation plays a special role in identifying the various types of returns. You must know your customers in order to offer them exactly what they need to discourage them from returning goods.
4 - Payment Method and Return Rate: Analyze the Context
Many ecommerce organizations often misjudge the relationship between payment and return rate. Even today, many online sellers are not sure which payment method is behind most of the returns, or which payment methods create a low return effort (invoice, Paypal, debit), or a lower return rate (instant bank transfer, cash in advance and cash on delivery). An adaptation of a seller’s payment portfolio can significantly influence the costs of returns. It is important, however, to keep an eye on the effect on the order numbers. This makes it absolutely necessary to constantly watch the key data of the products and the customer behavior. That’s how to stay agile and be able to optimize and customize the setup of the payment options.
Returns – in particular, the control of the return rate – are a great challenge for ecommerce organizations. But the struggle to achieve well-functioning returns management has a pleasant side effect: you deal more and more with your customers, you will learn to know them better and you can, therefore, make an enormous contribution to more effective customer loyalty. Because only those who know their customers – their good and also their bad sides – can build a loyal and close relationship.
You see? By using a few simple principles, you can optimize your return management. What methods have you tried? We are looking forward to hearing about your experience. Leave us a comment.
Or do you want to know more about the topic of customer loyalty? Then watch our webinar: The Ultimate Guide to Data Driven Customer Loyalty!
