Retailers need to be at the top of their game when handling returns to offer piece of mind to online shoppers. Charlotte Hardie reports

Online returns can be a deal breaker. Get the process right, and customers are likely to shop with you again and again. Get it wrong, and they may give your website a wide berth for ever. And yet the trouble is, for years, many etailers have focused all their attentions on the outbound delivery, forgetting that overlooking the returns part of the supply chain can prove costly.

As KSA partner Richard Traish says: “Get returns right and it’s an incredibly powerful enhancer to customer loyalty. Done badly and it’s a brand eroder.”

Furthermore, returns are, unfortunately, big business. About £1.3bn of goods are returned to retailers each year. With the busiest trading time of the year gathering pace, a resultant surge in the number of returns is to be expected once the festivities are over. So what is the optimum online returns process and how can retailers change their existing systems to improve cost efficiency and customer loyalty?

Now that online shopping is firmly embedded in the shopper’s psyche, the issue of free customer returns is hotly debated among retailers. Many retailers do now offer such a service (see box, right) but long term, as multichannel becomes even more established, Traish believes that all retailers will need to seriously consider how they can follow suit. As free returns become increasingly common, they may well lose customers if they don’t.

To be or not to be… free?

Research suggests that online shoppers are becoming more demanding and now expect that returns should be free (see box, far right). Collect+ chief executive Mark Lewis says: “Many fashion and footwear retailers are saying to their customers: ‘Your living room is our changing room’, and free returns are part of their proposition.”

Certainly for retailers such as Marks & Spencer, which has scale, it is easier.

It has always offered free returns since its ecommerce launch in 1999.

A spokeswoman says: “It’s important that our customers can shop on our website with confidence, knowing that they can return products in a waythat suits them.”

But for many other retailers, the ability to offer free returns is not always financially feasible at present - either because of the scale of the business or the margins at stake. Those retailers selling low-value or discounted goods would find it particularly difficult.

M and M Direct marketing director Neil Sansom says the retailer had been looking at ways to improve its returns process for some time and was conscious of the amount of money its customers were spending returning goods via the post office. “I’ve seen emails where the cost of returns was £10 or £20, depending what they were returning,” he says. “We could offer free returns if we put up our prices, but we’re a value retailer and I’m against putting prices to cover service costs when not everyone would incur those costs.”

The retailer came up with a solution. It now offers a pre-paid service in partnership with Collect+. Customers can now choose to pay £1.49 at the point of purchase for a Collect+ label, and those who do decide to return their purchases can do so at one of the 3,500 corner shops that are part of the Collect+ network. Consumers can search online before they make their purchase to locate a participating store near them, to ensure it is convenient.

Peace of mind

Since its launch earlier this month, Sansom says shoppers are not baulking at the notion of a pre-paid returns system. Even if they do not end up returning the goods, many consider £1.49 a price worth paying given the potential alternative of queuing in a post office during the working week. “It’s a case of peace of mind, and when you consider that the average purchase is £50, it’s not that much for the choice and convenience it brings,” he says.

If retailers cannot afford to offer blanket free returns in the short term, there are options that will make the returns process more palatable for the customer. At Long Tall Sally, for instance, warehouse and logistics manager Richard Brodrick says it makes significant effort to look after its most loyal customers and targets them with promotional returns, as well as prioritising refunds to their accounts. The top echelon is rewarded with a one-day delivery and express return to help ensure its customers spend every season and each month. So in this sense, free returns can be used - at the very least - as a convenient marketing tool. Just as promotions are used on the high street to drive footfall, they can also be used online to drive traffic.

For those that worry about the feasibility of offering widespread free returns, retailers also need to be aware that an inefficient returns process is costly, and that there is often a significant amount of money that could be saved that could help fund investment in improving the returns process.

For instance, many retailers find that a huge proportion of their call centre enquiries were made up of customers tracking their deliveries, returnsand refunds. Brodrick says at Long Tall Sally this accounts for a staggering 90% of such calls.

Improved automation, which sends customers emails informing them of when refunds have been made, would help reduce the volume of costly enquiries, which in many cases is diverting staff attention from sales enquiries.

Ultimately, even if free returns are not an option, customers want choice and convenience and they want the returns process to be simple and transparent from the outset. As Collect+ chief executive Mark Lewis says: “The battleground has moved away from having a great website product to having a great end-to-end experience.”

For a consumer, an unwanted and unreturned product is a constant reminder of an unsuccessful online shop. If retailers really want to cultivate a loyal online customer base and build their online brand for the future, then the shopper has to come first in the returns process.

The lowdown on returns

  • £1.3bn worth of goods are returned each year
  • 12% of online shoppers admit to buying goods with the intention of returning all or part of the order
  • 59% of shoppers expect the returns process to be free
  • 58% of shoppers have stopped shopping with a retailer after a poor returns experience
  • One in 10 online shoppers have been left out of pocket as a result of poor returns policies, which left them unable to return unwanted goods in time for a refund
  • 28% of those interviewed said returning goods to a local post office was their key returns complaint
  • 18% said their top returns complaint was the cost of postage
  • 12% have not returned unwanted items because of the returns process, leaving them out of pocket
  • One in three shoppers said they hold the retailer directly responsible for a poor delivery or returns experience
  • 47% said they always check the retailer’s returns policy before purchase

Source: Collect+ research based on interviews with 2,000 consumers

Some retailers that offer free returns