Retail Returns Best Practices
There is no doubt about it. To most retailers ‘returns’ is like any number of four letter words in the foul language category. However, there are a number of retail returns best practices that retailers can use to make the process smoother, and to even put a silver lining on it. After all, following a few simple retail returns best practices can encourage customers to shop at your store again in the future. Done poorly, you will permanently lose that shopper.
The following seven retail returns best practices are summarized in a free returns management brief, just published this month.
Retail returns best practices that every retailer should follow include:
1 – Create a Favorable Returns Policy
They bought it, so they should keep it, right? Whether you believe this or not, if your policies reflect this feeling your customers will catch on. Then they simply won’t buy from you. After all, with so many alternatives available would you choose to purchase from the retailer with the favorable returns policy, or the unfavorable one?
Customers are on the lookout for retail returns policies. One study found that 82% of online customers will complete an online purchase when there is a favorable returns policy. To highlight the point, by providing FREE mailing for returned items encourages that initial purchase. It also means not penalizing your customers with a restocking fee. In this light a big advantage for omni-channel retailers, unlike online pureplay retailers, is that you can accept returns in-store. It is an advantage because 60% of customers prefer to return merchandise in-store. So having an online, mobile and physical presence is a strategic advantage you want to leverage to its fullest extent. As an omni-channel retailer, make sure your returns policies allow online and mobile purchases to be returned in-store.
Let Customers Return Without Receipts
As part of your retail returns best practices make it as easy as possible for a customer to return an item. Yes, the item may require the original tags, like the bar code, or RFID chip. However, needing a customer to have the original receipt is a thing of the past. Any good order management system will have a record of the order. It can be easily reversed and repaid to the customer’s account, or credit card. In fact, omitting the need for a receipt may even allow you to process returns faster, as the customer does not have to fumble checking pockets, wallets or purses to find the original receipt. Highlighting this might even be a competitive feature, making your returns process and policy easier than most of your competitors.
What to do About Mismatched Returns?
Mismatches happen. Sometimes you will get a pair of red gloves despite the fact that the box claimed they were black. Alternatively, the order was for a blue ball, but a pink ball was shipped from the store. No reasonable returns policy would dispute taking the item back. However, a good OMS lets the associate accept the item – despite the mismatch, then correct and update the inventory system in real-time. This way the red gloves are reshelved as ‘red’ gloves, and show up as ‘red’ gloves when a customer wants to see the in-store inventory for a particular location. Handling this well keeps your customer satisfied and lets you process the return as quickly as possible, to increase your odds of selling that merchandise again, at full value.
Quick Tip: Find an Online Policy Generator
To get started and make quick progress, find a returns policy generator online. There are many from which to choose. Most are inexpensive, and will structure a policy as a starting point. You can then tailor it to your specific needs, and be able to post it online, and have a copy in your stores within an hour or two.
2 – Provide Reasonable Terms
The National Federation of Retail (NRF) found that about 10% of returns are fraudulent or abusive. However, don’t lose sight that the vast majority of your customers are reasonable, honest, and good people. Keep these customers in mind when setting your return terms. Also remember (as expressed above) that 82% of your customers will either purchase or be turned away, based on a retailers return policy, and terms. Part of retail returns best practices are that retailers should stay within the typical timing range. Most retailers offer a 7-90 day return window. To entice customers to purchase, and give your customers the benefit of the doubt, 30-90 day return terms are most reasonable, for non-perishable goods.
When returning goods in-store your customers expect that if an item is returned and assessed to be in good resellable condition, that they should be reimbursed immediately. For most in-store returns, you may want to provide this level of service to your good customers. However, refund delays of 3-60 days are not uncommon. Keep in mind that longer repayment delays may be more applicable to returns sent in by mail, though.
A longer repayment window can be useful for curbing fraudulent returns. For example, if a return is suspect, then taking the time to carefully inspect the merchandise, is a good practice. As such, delaying payment until after the items have been reviewed and accepted, is a good standard practice.
Order Management Helps Isolate Chronic Returners
When accepting returns, monitor your customer accounts closely, to avoid encouraging chronic returners, or worse – fraudulent ones. Good order management systems centralize the order and customer data as a main real-time system of record. This allows your associate to review a customer’s purchase history, to identify whether there is a pattern of excessive returns. You may want to incent customers who have low returns ratios. For example: Knowing a high-value customer (many purchases, low returns rate), is likely to buy again once the return is processed, you may want to provide an added in-store incentive. If the customer is a chronic returner, empowering the associate NOT to offer incentives, is prudent.
Remember that chronic returns may be a function of channel from which the merchandise was purchased. Returns account for 8.00% of in-store purchases. However, online purchases often experience 20-30% return rates.
If a customer typically uses online for their purchases, you should expect a higher return rate from them. For these shoppers, a savvy associate can recommend specific sizes that fit based on their last order. This rather than blindly ordering three of four similar products in different sizes.
3 – Make Sure You Have Clear Policies
When 67% of shoppers are checking the returns policies before buying, yours has to be clear and understandable. Drop the legal jargon. Other than lawyers, no one else understands it and lengthy ‘legal speak’ just irritates the reader (your customers). Do it enough and they will just go to your competitor. Remember that when shoppers are doing their research online first, it is easy to compare your policy against that of your competitor. If yours is confusing, but the competition has a simple and clear policy – guess where a customer will be making their purchase?
4 – Deliver a Great In-Store Experience
Most shoppers don’t buy products with the intention of returning them. For most, the returning process is not the service experience they cherish. Remember also that 89% of your customers who need to return an item, will purchase from your store, again. Naturally, that only happens if they have a good returns experience.
Many customers like shopping with omni-channel retailers because they can do their research online, make their choices, then order the item, and pick it up right away from a nearby store. No sales pressure. No time wasted wandering from one store to the next. Many times, it is the in-person service experience that becomes a significant advantage, over
Many times, it is the in-person service experience that becomes a big advantage over online-only retailers like Amazon. Think of any home project. When you need a part right away, you don’t think about ordering online. Sometimes you want the opportunity to ask an associate who might have some experience, for some advice on the project. That’s a value add service that you just don’t get from online alone.
A key to remember in retail returns best practices is that the returns experience is just as important as the initial sales experience. A positive service experience means the trust level with your customer improves. They now know that it is a hassle free experience, meaning that they are more comfortable taking risks with some purchases. Make it a hassle, and you know that customer is unlikely to come back.
Take the time to train front line associates on the returns process. Train them on the order management software, how to process a return, and the service level you expect them to meet during experience. The better the associates are trained with the returns software, the quicker they will be able to process customers. A fast returns experience increases the odds your customer will be pleased. Also, make sure your employees know the important part that a positive returns process plays at encouraging customers to come back.
Is the Returns Desk Easy to Find?
Don’t hide your returns desk. Most people expect to find it at the front of the store, or near the entrance. Put up signs that make it clear. Make sure you have given it enough room, as not to feel like a cluttered afterthought. Remember also, to keep the returns area tidy to maintain your overall consistent brand experience.
When is the Best Time to Return Items?
If you want to be helpful to your customer, and help spread the workload – tell them when the best time is to return items. As an example, for most retailers, Saturday afternoons tend to be a busy returns period. If your retail stores are prone to long returns line-ups, a clever idea is to put up a sign telling customers about days and times with low returns traffic. This won’t help all customers, but many will appreciate the helpful advice. Some might even take you up on the better time to return. Best of all, it might help spread the load on your in-store associates.
5 – Encourage More Shopping
A personal favorite of the retail returns best practices is to encourage more shopping! This may seem obvious, but most miss the mark here. When a customer is in the process of returning an item train your associates to encourage them to shop further. All it takes is telling the customer about a new line of Golf shirts that just arrived, or a sale on high tops.
With the customer order history from the order management system, you can offer your high-value customers (low returners), an extra bonus on their next purchase. You might encourage them to take an in-store credit, providing them an addition 5-10% bonus – if they accept. Don’t force this issue, though. Always give your customer the choice, otherwise they may perceive this as a sneaky or manipulative returns tactic. That might get you the next sale, but it might also be the last one with that customer.
6 – Monitor Returns with Your Order Management System
Use your order management system to provide regular returns reports to help you track and improve your store’s performance. Several reports can help here like:
- Returns Abuse Report
- Manager Overrides
- Returns by Category
Chronic returners can be a serious problem. Either they are returning a high volume of goods legitimately, or they may be a sign of a returns abuser. For these cases, you may want to train your staff with approaches to try with these high returns ratio customers. A call center example includes informing the customer about their last order and size that fit them well. This rather than blindly accepting an order for the same shoes in three different sizes.
Manager override reports are important to note whether there is a challenge with the system, a need for a process change, or a need for further associate training. An uncommon level of manager overrides by one individual may also alert senior management to potential abuse. Alternatively, it might be a simple misunderstanding of the policies or procedures on the manager’s behalf. Either way, the report will help identify the challenge.
Like the 80:20 rule, most returns take place on a small subset of product categories. This is particularly important, as returns affect a retailer’s margins. Products with high return rates require more processing, add shipping costs, and require more effort to resell the items. In the case of defective products, this also requires the additional step of sending items back to the manufacturer, in addition to your staff’s processing time. Knowing high return rate categories means you can avoid stocking in those goods in the future.
7 – Focus Efforts on Speeding Up Resales
To maintain retail margins, you want to get returned items in good resellable condition back on the shelves, and inventoried as fast as possible. Only about 20% of returned merchandise is defective, yet only 48% of the items are resold at full value. Clearly, there is room to improve here.
Again, the order management system is key to helping get returns processed faster. A good order management system provides real-time merchandise returned into the inventory system. The faster it is re-inventoried, the faster it can be shown to other customers, online. Real-time re-entry into the inventory system also means the store can reshelve the merchandise immediately.
One final aspect is that retailers should not feel the need to discount a product’s price unless there is a problem, or an intentional tactic to sell through items. As much as possible, avoid discounting goods unless there is a defect or the packaging has been damaged.
Retail Returns Best Practices
The seven retail returns best practices outlined above, and summarized in the Returns Management Brief, are not exhaustive. These are among the more common practices followed by retail returns leaders. It is important to ensure your organization provides good associate training. Cover aspects like the need for a clear and fair returns policy, and how a good returns experience increases a customer’s likelihood to purchase from your retail chain, again. In addition, make sure that your order management system supports your returns efforts. Good order management systems provide an easy to use interface, include robust returns features, and provide reports to highlight challenges and areas for improvement.
There is no changing the fact that returns will continue to be a ‘bad word’ in retail. However, rather than merely curse the fact that it happens, leverage the right retail technology and best practices to improve the experience for your customers. Try it , you might just retain some of those otherwise lost margins.
Charles Dimov is Director of Marketing at OrderDynamics. Charles has 21+ years experience in Marketing, Sales and Management across various IT and Technology businesses. Previous roles include Chief of Staff, Director Product Marketing, and Director Sales. Charles has held roles in brand name firms like IBM, Ericsson, HP, ADP, and OrderDynamics.