Consumers have come to expect free returns, and many are “taking advantage of that free ride,” noted Tony Sciarrotta, executive director of the Reverse Logistics Association, during a session at NRF 2023: Retail’s Big Show. In fashion, bracketing—or buying multiple sizes and colors with plans to return the excess—is rampant.
Return rates have also grown as sales moved from physical stores to online, resulting in escalating financial and environmental costs tied to single-use packaging materials, shipping, and items that cannot be resold. Instead of trying to recoup these costs by charging shoppers for return services, the answer is building in efficiencies and preventing returns in the first place.
Companies should think of returns as a “reverse sale,” suggested Sciarrotta, noting that there are “a lot of silver bullets in this gun you can use for reducing returns.” This starts with making sure the customer is happy.
“Our most likely way to work against returns or to kind of get those dollars back is to actually reduce returns through a better customer experience,” said Joan King, executive vice president, digital and international at Crate & Barrel. “It’s absolutely everyone’s job in the organization to help reduce returns.” She added that all employees should have visibility into KPIs and data about returns.
Shrinking the return rate starts with product creation and quality control to avoid defective goods. At the retail level, it is critical to have accurate and detailed product descriptions, including dimensions, so the customer gets what they expect. In the home category, technology like augmented reality can help shoppers determine if a piece will fit in their space.
Moderator Brendan Witcher, vice president, principal analyst at Forrester Research, noted that key details should go at the top of the page for those who are already familiar with the product. “If someone’s just learning about the product, we find they’re actually willing to go down the page,” he said. “So below the fold, you put the real big, chunky details.”
Imagery also matters. Sciarrotta pointed out that fashion photographed on models leads to greater returns. “You open the box, put it on, you never look that good,” he said.
The next step of the chain is delivery, and packaging should be designed and constructed to prevent damage en route. The box is also an engagement opportunity. Speaking about his previous experience at electronics brand Philips, Sciarrotta advised the audience that unboxing enjoyment also has an impact. For instance, eliminating difficult to open containers—such as clamshells—and having a user-friendly instruction book can improve the experience.
“If you exceed their expectations, they’re going to love you, and they’ll put up with more problems making that product work,” said Sciarrotta.
A number of retailers have shortened their refund and exchange windows, but this is the wrong approach to lowering returns. “If you leave it in their hands longer…it grows on them,” said Sciarrotta.
Sometimes, returns are unavoidable, but retailers can guide shoppers to the most cost-effective channels for returns processing. For instance, at Crate & Barrel, more than 70 percent of returns are brought back to stores. Consumers don’t want to box up items again, and the home retailer encourages customers to bring unwanted items to brick-and-mortar locations instead of putting returns in the mail by marketing free store returns.
Not only does this cut down on shipping costs, it also raises the likelihood that goods can be recaptured and resold at first quality. By leveraging ship-from-store capabilities, Crate & Barrel can move inventory back out to customers directly from its doors, without sending it to a warehouse.
“Compared to pure plays who don’t have stores, we market it as a strategic opportunity, a strategic advantage for us that we have stores that customers can bring it right back to,” King said.
Having store employees—rather than a third-party—look at goods as they come back can also help thwart fraudulent returns. As online retail has grown, return fraud has climbed from 1-2 percent to 10-12 percent, per Sciarrotta. “We can’t blame all the inflation on supply chain problems,” he said. “There’s more fraud, and that costs us all money.”
If merchandise comes back that is not salable for full-price retail, companies have a few options. Crate & Barrel uses outlets as a channel for “second-quality” goods, selling them at a discount. Other possibilities to keep goods from becoming waste are donations or redesigning them for reuse.
“If people are looking for profit dollars, returns is a straight line to improving your bottom line,” said King.