4 Critical Considerations for a Highly Effective Returns Policy

Posted by Jon Dix on Mon, Apr 27. 2015 @ 10:04 AM

In an ideal world, every customer would be 100% satisfied with his or her purchase every single time. But let’s get real: sizing can be tricky, customers change their minds, and dealing with returned items is a major component of any ecommerce business strategy.

Returns require your attention. Studies have shown that a well-designed returns policy that minimizes hassle to the end user while streamlining internal processes results in increased customer loyalty and repeat purchases. On the other hand, companies with slow or difficult returns are likely to lose customers. Neglecting this aspect of your business can be costly, not just with regard to shipping dollars but also in terms of blown sales opportunities.

Today’s customer expects a returns experience that is as convenient and seamless as the initial order. Here are the four fundamental elements of an effective, efficient returns policy that keeps exceptional customer service top of mind, and keeps product moving smoothly.

#1: A Well-Defined Returns Policy

client return instructions

Defining your terms for the customer in clear, simple language is the foundation of an effective policy. Keep it easy to follow, with no room for confusion. Be sure to:

  • Include how many days the customer has to make the return, and be specific – does the clock start at time of purchase or date of delivery? Is the process the same for returns and exchanges, or are there differences?
  • Set clear expectations for the acceptable condition of returned products. For example, will you accept or reject shoes sent back with scuffs on the soles
  • Make your policy easy to locate, online as well as on the packing slip/insert. Many customers want to read a returns policy well before placing an e-commerce order. If it looks good to them, they hit “purchase.” If it doesn’t, they move on to another brand with an easier policy.
  • Ensure that your policy reflects the same voice and identity as the rest of your brand, so it’s an integral part of the customer’s experience, not an afterthought.

Don’t forget: in addition to defining your policy for customers, your internal team must also understand the policy to ensure consistent implementation – for example, knowing when exceptions should be granted to customers, and so on.

#2: Hassle-Free Return Shipping Logistics

client return label

Many customers choose companies with easy returns over companies with more complicated policies. So it’s important to avoid making the customer feel like they are doing all the work when it comes to labeling and shipping a returned item. To keep the experience as painless as possible:

  • Consider including a pre-printed shipping label – many companies do, and it’s a smart move since only 53% of U.S. households own a printer (source: PR Newswire), and not everyone can print at their office.
  • Make it easy to ship back using the original packaging – whether a box or a double sealable outbound poly bag – and if it can’t be reused, consider including a new package for returns along with the prepaid label. For example, a folded polybag is lightweight and easily inserted into original packaging, with minimal effect on outbound DIM weight. Talk to your logistics provider about how various options will impact transportation costs, and how to minimize those costs.
  • If yours is a multichannel organization, take advantage of upselling opportunities by allowing the customer to bring e-commerce returns into the store – often an easy, attractive option from the end user’s point of view. Plus, bulk shipping from points of retail to the warehouse can be much less expensive than individual shipping.
  • Customers want their returns processed just as quickly and accurately, and with the same level of communication, as original orders, so keep them in the loop at all times by sending updates on returns receipt, refund confirmation and so on.

#3: Clear Expectations for Returns Handling

a properly folded bonobos shirt

Your fulfillment team has worked hard to ship the perfect order to your customer, but he or she has sent back an item for some reason. Now what happens to that item? Make sure your team’s action plan is crystal clear:

  • Be specific in defining your return inspection and processing guidelines with your fulfillment partner, as what constitutes “damaged” can vary from one brand to the next. For example, one brand may consider a slight color bleed on a shoe sole as damaged, whereas another considers it acceptable to sell.
  • Include a way for customers to indicate the reason for return, as this can be a good guide. If the reason was a fit issue, for example, the item is likely to be in good shape for product restoration and restocking.
  • Have a plan for what to do with damages or non-sellable items. Talk to your fulfillment partner about liquidators and other options to recoup some cash for these pieces if possible. Consider breaking damages into two categories such “Liquidation” and “Destruction” on the processing side to avoid additional work and costs downstream.
  • Maintain a strong product restoration program to ensure that sellable returned items are steamed, re-folded and re-packed to your specifications. Choose a fashion-savvy logistics provider that trains and sources associates with a retail-focused background, to ensure successful quality inspections and keep all customers happy. (Stay tuned for an upcoming blog post with more details on product restoration services and selling first quality every time.)
  • Think ahead. Make smart choices for outbound items when they are first shipped to ensure more efficient processing later on. For instance, directly tagging a product instead of putting tags on bags will reduce the amount of re-tagging at the product restoration stage.

Prepare for the “exceptions.” For example, what if a particular return isn’t clear – how do you interact with your processing partner, and your customer? Make sure to have a plan in place. Also, be prepared for those exceptional times throughout the year when returns hit their peak, such as the post-holiday period.

#4: Focus on Reducing Returns Percentage

client size chart

Of course, one of the best ways to make your returns policy more efficient is to cut down on the percentage of returned items, by managing customer expectations and guiding them to place more accurate orders in the first place:

  • The number one reason for ecommerce apparel returns is poor fit, so educate your customer about sizing. Include visuals and comprehensive size guides to assist in determining best fit, and offer customer service assistance as appropriate. (Some e-commerce brands operate showrooms where customers can try-on samples in person, then place an order that’s shipped directly to them from the warehouse.)
  • Another major factor in returns: the product is not what the customer expected. Present accurate visuals in a range of full and detail shots that represent colors and styles as close to real life as possible. Amplify with specific product descriptions to ensure there is minimal disappointment when the customer opens the package.
  • Harness the power of technology for detailed analysis as well as speedy processing. Choose a tech-savvy logistics partner, and ask them about the best software options for returns tracking and processing. Use the data on returns percentage by product as well as category to explore why certain items are being returned at higher or lower rates, and to do a deeper dive to identify potential quality or marketing issues.
  • Consider soliciting feedback from your customers to drive future strategy – but be careful to limit your surveys, and only reach out if you truly plan to put the information to good use.
  • To make the inevitable returns as cost-friendly as possible, talk to your logistics partner about alternate returns shipping options that don't break the bank.

With a well-defined returns policy, convenient shipping options, a clear mandate for producing handling, and strategic tactics to lower the overall returns percentage, the second critical half of your e-commerce logistics plan will be in strong shape, and your customers will be likely to shop again and again.


Click here to download the Building Brand Equity with Packaging eBook

Topics: e-commerce, Dim weight, Returns