Improving cash flow with your returns solution: 3 tips

Improving cash flow with your returns solution: 3 tips
Jonas van de Poel
Jonas van de Poel
Content Writer
Posted on
April 19, 2022
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E-commerce today is a lot more mature than it was a few years ago. With more competition between online online stores, it is becoming increasingly important to distinguish your e-commerce business.

Since 2019, the number of online shops has increased by as much as 134%. In the same period, the number of returns also increased by 431%. So returns cost more money than ever, but at the same time offer the perfect opportunity to stand out from your competitors. 

There are a number of reasons why so much more is being returned than before:

  1. An influx of older and inexperienced online shoppers  
  2. Higher sales (and therefore returns) during the pandemic
  3. Bracketing: buying different sizes online and returning what doesn't fit
  4. The rise of buy now, pay later (BNPL) payment options such as Klarna

Olivier Muller, co-founder of returns platform Returnista, recently spoke about the above situation with Kevin Sipin in the webinar for the e-commerce industry from cash flow management platform, Agicap. 

What is the effect of your return flow on your cash flow?

Due to the rapidly increasing competition in recent years, the pressure on cash has also strongly increased. On top of that, in the same period the cost of advertising has risen sharply, while this is an acquisition channel that many e-commerce companies depend on.

Research we have conducted among some 1,000 online stores shows that a return costs on average 12 euros per product. 

With today's cut-throat competition in the e-commerce landscape, improving your return flow can therefore save you a lot of money and ensure a healthier cash flow.

How to improve cash flow with your return solution: 3 tips

Many e-commerce businesses face the same challenge: maintaining good cash flow amidst growing return pressure. With these 3 practical tips, you can change that today.

1) Reduce your return rate

Modern consumers greatly appreciate free returns. If you want to see your sales figures grow, you will also have to offer free returns.

However, this means that your return rate will increase. To prevent this from getting out of hand, there are a number of actions you can take to lower your return rate.

For example, the use of clear and thorough product descriptions helps. This allows customers to know better in advance what they are buying. The use of high resolution photos and videos is also essential. 

Furthermore, you will do well to offer an excellent customer service experience. optimizing the customer experience for mobile users can also make a huge difference to return rates.

More tips? You can download our free checklist with 7 handy tips to reduce your return rate here.

2) Unlocking cash through faster turnover

An important aspect of creating a healthy cash flow is getting products ready for sale again quickly. 

When a consumer receives a product at home, it often takes a few days before he or she has decided to return it. After that, it often takes another few days before the product is back in the warehouse. 

With a bit of bad luck, there is also a queue in the warehouse for processing returns. In this way, it can take up to 2 to 3 weeks before a product is back in stock.

You can tackle this problem by taking a number of actions:

  • Let customers report returns in advance
  • Link your return solution to your e-commerce platform
  • Take back in stock products still to be returned

The above actions are easily achieved with a return solution like Returnista. For example, users of this return solution see a 65% decrease in the processing time of returns.

This will free up a lot of cash and significantly reduce the pressure on your cash flow. 

3) Turn returns into exchanges

Keeping cash on board does not have to be a problem, as long as you actively facilitate exchanges. The most common return reasons have to do with a purchase being too big or too small. By offering a different size immediately during the return process, you can prevent a large number of unnecessary returns.

If, in addition, you allow payments for more expensive or cheaper items to be made directly during the returns process, you minimise the pressure on your cash flow. 

Proactively offering coupons when customers request a return can also have a big impact. For example, e-commerce companies using Returnista's smart exchanges convert up to 40% of their returns into exchanges. 

If you want to see Olivier Muller's entire story, watch the webinar recording below:

Wondering how the right return solution can improve your cash flow?

Do you need help optimizing your returns process? We are happy to help.

Returns are no longer a pain in the ass with Returnista software. Increase customer satisfaction and reduce your costs with the help of a beautiful returns portal and a complete data dashboard. Do you want to get more value out of your returns process, just like Decathlon, Loavies and ASOS? Then request a demo on our website.

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