The period right after the holiday season can be just as challenging for online retailers as the lead up to Christmas. This is the peak time for online shoppers to return purchased items or misjudged gifts. In fact, 54% of U.K. respondents regularly return their online purchases.
Many ecommerce businesses struggle at this time of year because they underestimate these kinds of online shopping return rates and the need for reverse logistics. But, beyond the cost of returns, what are the associated issues with returns for both businesses and customers?
This quick guide will answer these questions, helping you to prepare your supply chain for the return season of 2022.
Why do people return items?
In 2020, the U.K. saw an annual parcel shipping volume of 5 billion. Naturally, people will have returned a lot of those, for a variety of reasons. According to research from Statista, there are three main reasons why people return products:
Image source: Statista
The top reason has an overwhelming majority, of which alludes to one of the most returned item types:
- It didn’t fit. When it comes to clothing or shoes, it can be hard to judge what the fit is going to be like just by reading the product description and looking through the product page. Not only that, it can be notoriously difficult to buy clothes for other people.
- It was not as described. You can apply this reasoning to many product categories and the Consumer Rights Act 2015 mentions it as a product standard. Being “not as described” can range from the quality of the materials in the items to, or that the item functions differently (e.g. wired vs wireless headphones).
- It looked different in person. This one is similar to the previous reason, but not as drastic. Looking different in person can be down to the colour of the item, the size, or for clothes — the cut or how it looks on the customer.
You should also consider that there is a type of customer that will deliberately over-order from online stores and return unwanted items — serial returners, who often make sure stores offer free return shipping as part of their purchase decisions.
Whichever the reason, having robust returns policies help to improve the customer experience. Without a thought-out returns process both your business and customers will run into issues — which we’ll look at further down the guide.
Most returned item categories
Getting to know the type of product categories that gets the most customer returns can help you gauge the levels of online returns your ecommerce site might experience just after peak season.
With that in mind, here are the top five most-returned product categories according to research from Global Web Index:
Image source: Global Web Index
As mentioned earlier, clothes and shoes take the top spot of most returned items. With many online retailers like ASOS and Amazon offering hassle-free returns, it’s no surprise that customer expectations of the free returns experience have increased. You can also consider people who don’t want to try on clothes in mortar stores because of the pandemic.
After shoes and clothing, we’re looking at:
- Accessories (e.g. watches and jewellery)
- Health and beauty
- Movies, TV, music, and games
Many people buy these product categories as gifts during the holiday season. The fact they see high eCommerce return rates can cause a lot of issues.
Ecommerce returns issues for Businesses
Returns can ultimately have a negative impact on the bottom line. So, what are the main issues that come with processing returns? Especially with the levels of volume after peak retail sales season…
One of the top reasons returns cause issues is because of the unexpected costs that come with it. Many businesses will charge higher shipping costs or apply a higher profit margin to help offset return postage. But what about physical space to store the returned items? Or the staff needed for returns management and restocking?
Many retailers are opting for an omnichannel approach. However, research suggests most of them are trapped between multichannel and omnichannel. Why? Because they use a number of different systems (from returns systems, checkouts, inventory management, and CRM systems) that aren’t designed to interact.
As an added negative impact, the lack of integration between these systems also makes it difficult to track metrics for the cost and rate of return.
Customer loyalty vs loss prevention
The same research from ECR also details how businesses have a hard time balancing happy returns for customers and preventing financial loss from the return itself.
With the “customer first” or “customer is always right” mentality, easy refunds and store returns are seen as a way to keep up customer retention and conversion rates — which unless carefully managed can put a huge risk on an ecommerce brands profitability.
While these issues are always present no matter the time of year, in the period after peak holiday seasons, they compound even further — stretching a businesses ability to cope.
Ecommerce returns issues for Consumers
With all the above being said, when businesses experience issues with returns, it often has a direct impact on the customer’s experience too. Let’s take a look at what kind of consequences customers face during ‘returns season’ after the holidays.
As mentioned earlier, when a business realises that the costs involved in having an ‘easy’ returns process, that cost often gets passed onto the customer. The extra cost can come in the form of the item itself costing more, or there is a shipping cost involved in online orders.
The extra costs might even be more subtle — the company might hire less staff to mitigate the cost, meaning customer service can suffer and therefore costing them time and effort in resolving any issues.
Lack of first-time resolution
According to DigitalGenius’ proprietary data, call centre agents use between 5 and 8 different systems to resolve inbound queries (including returns). This situation can often lead to a drop in first-time resolutions (FTRs).
When the returns build up after peak season, it can be even more difficult for customers to communicate with businesses (and third-party logistics companies) to sort out returns.
More stringent returns policies
As a result of all of the issues businesses face with returns, many of them have now begun to adopt stricter returns policies.
These more stringent policies include incurring penalties for returning too many items, sending back used items, missing the deadline of the return, and returning goods without the right packaging.
Making returns more difficult for customers is a double-edged sword. On one side you’re more likely to recover costs with fewer returns, however, you’re also more likely to alienate potential customers by doing so.
Prepare for returns in 2022
Now you’re aware of the potential issues your business can face after peak online sales season, but what now?
Instead of relying on human efforts and manual processes, consider managing spikes in volume with the help of AI automation by DigitalGenius. Most (if not all) issues that come with ‘returns season’ can be significantly reduced by building workflows that work 24/7 at lightning speed.
Curious to find out more?