With the holidays rapidly approaching and the price of gasoline continuing to hover a little south of four dollars a gallon, you can expect many Americans to leave the family car in the garage this year and shop online.
That likely means a boost in e-commerce, and a spotlight squarely on a topic many businesses would prefer to avoid -- online returns.
How much thought has your company given its returns policy? If the answer is “not very much,” you may be missing a golden opportunity.
UPS recently commissioned Forrester Consulting to take a look at online returns, and what they found may surprise you. In a nutshell: returns policies are a bigger factor in consumers’ online buying decisions than most retailers realize. Businesses who make it easier and less expensive for customers to return their products derive an advantage over competitors – and are likely to, in the long term, see increases in sales, customer loyalty and incremental revenue.
Forrester found that retailers generally fall into two groups when it comes to returns. A few see returns as a natural byproduct of the online sales process, given that consumers can’t touch or feel items prior to an online purchase. And they realize that a generous returns policy can be a competitive advantage.
However, the study found a wide majority of retailers are closer to the other end of the spectrum, believing returns should be avoided at all costs because they drive down margins and involve interactions with unhappy customers.
Forrester found that consumers felt differently. Specifically it found that those consumers who are likely to return items tend to be the most active online buyers – online retailers’ best customers.
Some of our customers tell us they’re seeing the same things first-hand. For example, Florida-based Smartphone Experts, a leading online retailer of smartphone accessories, says a fast and convenient returns service has played an important role in helping the company maintain its marquis clients.
The company e-mails its customers a UPS return label they can print out and attach to the envelope or box, and customers returning an item can easily track its progress online.
“Just knowing that it’s easy to return something makes customers feel good about ordering from us,” said Diana Kingree, director of commerce at Smartphone Experts.
So how can you craft the returns policy that works best for you? Forrester concluded one of the most important things you can do is to match your returns policy to your business, realizing that a ‘one size fits all’ approach may not address the business needs of every company.
For example, if you sell women’s apparel or home soft goods, you have a relatively low cost for accepting returns, but your customers have a relatively high chance of receiving an item that doesn’t fit or otherwise doesn’t match their expectations.
You should take care to ensure that products are being accurately depicted online – with Web site features like customer reviews, alternate views, and detailed and accurate sizing information. For those customers who still elect to return an item, Forrester recommends prepaid return labels or subsidized returns.
If, on the other hand, you sell larger electronics like televisions or computer hardware, you have a higher cost to accept returns but a much lower risk of customers receiving something they didn’t expect.
Consider warranty programs at checkout to provide customers peace-of-mind, and be sure to insure your shipments to protect your business if goods are damaged. If you have bricks-and-mortar locations you can provide a level of confidence by offering in-store pickup/delivery programs. And if you have a sophisticated customer database, think about offering more generous returns policies to your best customers.
Whatever your program, make sure to communicate it to your customers – both in the “help” section of your website and on product detail pages. This is particularly important if you sell expensive items or items that are difficult to ship, and/or items that are challenging to render accurately online.
Here’s wishing you many happy returns this holiday season!
To download a full copy of the Forrester report, visit http://whiteboard.ups.com/#/library.