Rethinking Returns: How to Tackle the Inevitable

Rethinking Returns: How to Tackle the Inevitable

Introduction

Retailers face a significant challenge with product returns, with the National Retail Federation reporting that U.S. consumers returned $743 billion in merchandise in 2023, accounting for 14.5% of all purchases. Online returns were even higher, at 17.6%, with $248 billion in online returns representing one-third of all returns.

Strategies for Preventing and Mitigating Returns

1. Promoting Transparency About Return Policies

   • Retailers should clearly communicate their return policies to build customer trust. According to research, 77% of consumers say the returns process influences their trust in a brand.

2. Enhancing Product Reviews and Fit Guides

   • Authentic and detailed product reviews can help customers make informed decisions. User-generated content, such as photos showing the product on different body types, can enhance transparency and reduce returns.

3. Utilizing Augmented Reality (AR) Solutions

   • AR can provide visual demonstrations of how products will fit on different body types, helping customers make better choices before purchasing.

4. Leveraging Loyalty Programs

   • Offering more flexible return policies or rewards in loyalty points can incentivize customers to return products through the retailer's system rather than outside channels.

5. Speeding Up Refund Processes

   • Streamlining refund processes encourages customers to remain within the retailer's ecosystem, reducing the complexity and costs associated with returns.

Case Study: Seager Co.

Challenge Seager Co., a bootstrapped ecommerce startup founded in 2015, faced inefficiencies in its legacy return process, which was manual and ineffective.

Solution Seager adopted Narvar's end-to-end post-purchase platform, inspired by a seamless exchange experience during a personal purchase. The retailer implemented self-service exchanges, reducing return-related inquiries by 40-50% and "Where is my order?" emails by 15-20%.

Results

• Approximately 43% of revenue from returned products is retained since launching with Narvar.
• Intelligent returns rules helped save money by optimizing shipping methods.
• Narvar Track significantly reduced "Where is my order?" inquiries and increased engagement with marketing assets.

Conclusion

Addressing product returns requires a comprehensive, multi-faceted approach that includes enhancing transparency, leveraging technology, and streamlining processes. Retailers can achieve significant cost savings and improved customer satisfaction by implementing these strategies effectively.