Returned Inventory: What do Your Customers Want & What do You Need?

This is the first part of a mini-series about returned inventory. Read part 2 now or skip straight ahead to part 3.

When planning for growth, it’s likely that you’re thinking about systems, process and people to deal with an increase in order volumes. Sadly, returns processing is generally an afterthought. This is the same for most modern retailers, who spend limited time thinking about how they can build a straightforward returned inventory process that results in a better experience for both the customer and themselves.

We know you are great at fulfilling and shipping your products, as most sales are a straightforward transaction (i.e. list, sell, ship). Providing great service and experience for the everyday transaction should be easy. However, everything that happens in exceptional events is where your consumers will measure the customer service they receive from you and whether they want to shop with you again.

What do your customers want when returning goods?

A survey sponsored by shipping technology leader Endicia revealed these new insights about American shoppers:

  • 51% want free return shipping
  • 36% want an easy and convenient shipping process
  • 12% want a swift refund or credit
  • 89% say they’ll shop again at an online store after a positive returns process

This same Endicia survey also established that over two thirds of American shoppers want a returns label in the box or an easy to print return label available online; both helping to make the returns process seamless and streamlined for them.

Having a smooth and seamless returns process for your customers can certainly give a competitive advantage. Consider that an obvious, easy to follow returns process can help remove any hesitation in the initial sale. Companies like Amazon and Nordstrom have created seamless returns processes that allow their customers to buy on impulse, resulting in more sales and growth for their businesses.

What do you need for customers returning inventory?

With these insights in mind, how should you go about offering a seamless returned inventory process without missing your margin targets or swamping your warehouse teams? We’ll explore some of the steps our modern retailers have taken to avoid being sunk by returns.

1. State a clear returns policy on your website

You should always communicate your returns processes and policies clearly. Publish your returns policy online – keep it short and sweet and link to it at checkout. This will remove any hesitation or concern for anyone considering purchasing your items; increasing your chances of a sale.

2. Offer flexible and fair returns

Be as flexible as possible with your returns policy and appreciate that customers do not want strict or unrealistic time restrictions on when they can return an item. Consider extending your policy to accept returns within 30 or 60 days, as opposed to just two weeks. This will work in the same way as above to remove your consumer’s hesitation to buy. You should also consider extending this return policy even further during the holiday season.

3. Contain returns information in order shipments

Any returns information you do have should also be contained on the shipping or packing slip that is sent with the order, so that your customers always know how to return their goods if needed. Remember that 89% of American shoppers surveyed said that they would shop again at an online store if treated to a positive returns process, so your streamlined processes could encourage repeat custom and thus, loyal customers.

4. Consider third party logistics and returns

You may also want to consider using third party logistics (3PL) and returns companies. Not only are some 3PLs offering returns labels in the initial delivery, but they are now offering advanced integrations with shipping services like UPS to win against their competitors. These advanced integrations can monitor when a returned package turns up in the couriers’ systems at the moment it’s dropped off at the UPS store. They can then track the return back to the warehouse and even notify you so that you can proactively service your customers. This is worth considering when sourcing a new logistics provider. We have also seen businesses automate much of their returns process by integrating their back office systems with their 3PL’s warehouse management systems.

5. Use a central omnichannel retail system

We strongly recommend that you ALWAYS keep your order processing, financials and inventory in the same system. As inventory moves in and out of the business and orders are processed and returned; such transactions will automatically be accounted for in real-time when using a suitable back office platform, like Brightpearl.

6. Remember the profitability of your products

Finally, when streamlining your returns process, you should never forget about the components that affect how profitable your products are. These include:

  • the actual purchase cost of the product – you need to have something to sell
  • the landing costs – the cost to bring the goods to your warehouse (e.g. shipping costs, insurance, tax and duty, agent fees)
  • the cost of shipping to your customer vs revenue collected for shipping
  • the cost of shipping back to your warehouse vs rate of return for this product line
  • any other fees (e.g. seller fees on Amazon and eBay)

If you have these points at the forefront of your mind when establishing and improving your returned inventory processes, then your retail business is sure to succeed. Your customers want easy, slick, hassle-free returns and you need great back office software behind you to ensure you can achieve just that. As we’ve discussed, this may result in just under 90% of your customers coming back to you for more and get on the road to becoming loyal customers to your brand and business.

Whilst you’re here, take a look at part 2 of this mini-series, in which we discuss the different returns processes you can implement and the pros and cons of each. And don’t forget to catch up on part 3 where we discuss top tips for reducing your returns!