Is your business losing revenue as it’s hit with more and more return costs? Our research shows that more than half of UK consumers always return a product when they’re unsatisfied. While there are ways to reduce returns, some are still inevitable — a costly affair for businesses. But how do you minimise expenses now without losing valuable customers tomorrow?
Returns not only incur immediate costs but can also influence your financial situation in the long run. Don’t forget — if you have an online shop, returns encompass more than just the direct shipping fees; they extend to the time and resources expended by customer support and logistics teams. With some food for thought, let’s dive into our seven tips for reducing the cost of e-commerce returns for your business:
- Leverage pre-negotiated carrier return rates
- Offer returns as a paid option
- Suggest in-store returns and drop-off locations
- Implement a Return Merchandise Authorization (RMA) system
- Don’t forget proper packaging for the return parcel
- Insure returned parcels against shipping incidents
- Save resources and labour costs through automation
Tip 1: Leverage pre-negotiated carrier return rates
Your e-commerce shipping volume and business needs look different from your neighbour’s. What if you could get access to carrier rates that actually make sense for your business setup? Well, you can. Having specialised multi-carrier capabilities means someone else already paved the way for the best rates.
By tapping into pre-negotiated contracts with other carriers, you can access better and more cost-effective shipping methods that will also delight your customers. Plus, if you already have a great deal with a specific carrier, a great shipping solution lets you easily upload and use your own contract.
Tip 2: Offer returns as a paid option
Many webshops are turning away from free returns and implementing a return fee. By initiating paid returns and holding customers accountable for restocking fees, you can deter frivolous returns and avoid costing yourself more.
But how much can you charge to return an order? During our 2023 consumer research, UK respondents said that they’re willing to pay up to:
- £4.70 for an order with a purchase value of €15 (± £13)
- £5.10 for an order with a purchase value of €50 (± £43)
- £6.80 for an order with a purchase value of €150 (± £128)
Though it’s encouraging to see that an increasing number of customers are willing to cover return costs, it’s worth highlighting that the majority still prefer retailers to handle returns. Make sure any return shipping charges remain within the limits if you don’t want to risk customers turning away from your store. Be transparent about the return shipping fee and make sure your return policy covers return shipping costs.
Tip 3: Suggest in-store returns and drop-off locations
If you allow in-store returns, you can increase foot traffic to your physical store, potentially leading to more sales. But how do you save on the orders that need to follow a different route? Easy. Use existing service points to facilitate hassle-free return options for customers. Say goodbye to multiple parcel pickups and hello to convenience!
Drop-off returns have extra benefits if you play your cards right — customers don’t have to print labels at home and you don’t have to worry about the return shipping label cost either. By implementing paperless returns, your customer can simply scan a digital return label at a service point to drop off their return successfully.
Tip 4: Implement a Return Merchandise Authorization (RMA) system
Have you heard of Return Merchandise Authorization? An RMA system can help reduce return costs by ensuring that only genuine returns are accepted. Requiring customers to get an RMA number to return items helps streamline the process and keep track of returns.
Combining this with a return portal allows you to manually accept or reject returns being sent, reducing the likelihood of unnecessary return shipping costs. Additionally, it can help track return shipments, making it easier to manage the return process and ensure that customers receive their refunds or exchanges promptly.
Tip 5: Don’t forget proper packaging for the return parcel
Be super clear about how you want items to be packaged when returning items. Better yet, when possible, provide your customers with the appropriate packaging that they can use. Carriers have specific requirements when it comes to parcel packaging, and packaging surcharges will apply when these requirements are not met.
Consolidating returns by allowing customers to send orders they received separately back in one box can cut return postage costs. Though it may result in heavier parcels, the potential fuel and emission savings might outweigh extra expenses. The actual impact on return costs depends on carrier requirements and each business’s unique circumstances and logistics.
Most importantly, don’t be wasteful with your packaging! Be mindful of the type of packaging you use and cut out unnecessary elements — it’s good for the planet and for your purse.
Tip 6: Insure returned parcels against shipping incidents
When your items are shipped, whether to or back from your customers, there is always the risk of damage, loss or theft during transit. Traditional carrier insurance has limited coverage and during a time when speedy responses are crucial, direct carrier claims take an average of 20 days to complete. Can you envision the funds slipping away?
Consider getting insurance with better coverage for returned merchandise with fast claims processes that not only cover the full sales price but also the return shipping and reshipping. While this may entail an additional upfront cost, it can provide financial protection against unforeseen events that could result in higher return expenses.
Tip 7: Save resources and labour costs through automation
Are you still letting customers contact your support team to manually create a return? Every return-related query your customer support team has to answer adds to the overall cost of your company’s returns. Reduce return-related contacts by offering a self-service return portal, minimising support costs.
If customers are not informed about the status of return shipments, customer service teams are hit with WISMR or “Where is my return?” queries. Send automatic tracking notifications to keep customers informed of delivery details so that the team’s time can be better spent dealing with more complex issues.
Combat costly returns for your e-commerce business
With a magnifying glass on your returns handling procedure, you’ll soon uncover where time and money are slipping away. By leveraging carrier rates, offering paid returns, and providing drop-off options, along with implementing the right systems, you can minimise financial burdens. Follow our tips to keep your expenses in check while keeping customers satisfied.
Are you ready to see what difference it’ll make when you start leveraging the right shipping solutions and automating the return process? Book a demo with us today to find out how we can bring your return costs down.
