Returns process optimization: everything you need to know

Returns process optimization: everything you need to know
Francisca Zimmerman
Francisca Zimmerman
Posted on
November 24, 2020
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Returns are an inevitable part of online sales. In most cases, a customer of an online store only gets to see his or her product upon receipt. This makes the chance of return considerably higher than with an offline purchase. 

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As a webshop, how do you deal with these returns or cancellations? Why is a return policy so important, how do you optimize your return process and how do you ensure that you limit the number of returns?

In this article you will get an answer to the following questions: 

  • Which rules are Dutch online stores bound by?
  • Why are items returns and what can you do about it?
  • How have the e-commerce industry and the returns process evolved over the past few years? 
  • Why is a good returns policy so important? 
  • What are the main benefits of returns process optimization?
  • How can you optimize your returns process with smart software?

The returns process: How does it work? 

As an online store you conclude a so-called distance purchase with your customers. This is a purchase over the internet or over the phone that takes place before a customer has had a product in his or her hands, or has been able to try out a service.

In order to protect both the customer and the seller in this situation, Dutch law offers some rules that regulate distance selling as much as possible. 

As an online store, for example, you have to take the following things into account: 

  1. A customer has a statutory (minimum) 14 day cooling-off period and may return (or cancel) a product or service within that period without giving a reason. An online store is of course free to extend this period. We will come back to this later in this article.
  2. In case of a return, the online store must refund the purchase amount within 14 days after the customer has indicated that he does not wish to purchase a product or service. 
  3. You may wait to make payment until you have received the return shipment or have seen proof of shipment. 
  4. You must inform your customers of the cooling-off period and your return policy. Are you not doing this? Then the cooling-off period is automatically extended to 12 months.

Of course, there are exceptions to the above rules. For example, there is no cooling-off period for travel, certain foods or flowers and digital products.
Want to know more? This article of the Consumers' Association gives a detailed explanation of the rules that apply to returns.

Why are items returned?

Why are items actually returned? This differs from industry to industry. However, various studies and our own experience show that the following reasons are common within most industries: 

1. The customer has ordered the wrong size

online stores selling clothing or products in different sizes often have to deal with customers whose items don't fit. These are generally two types of customers: 

  • The customer who has ordered one product in his or her size and it does not fit. There is a chance that this customer will return the product or exchange it for a larger or smaller size. 
  • The customer who already orders several sizes and only keeps the right size if one of the products fits well. 

The first category does not usually pose any major problems. For example, by placing a size chart on the website, customers in this category can often make a good estimation of the sizes, causing the number of returns to decrease. 

However, the second category poses a bigger problem. Sometimes customers order three or four different sizes, which means guaranteed returns. Some companies therefore choose to block customers who structurally take such actions. This is of course entirely out of self-protection because of the enormous number of returns in this category. In some cases this could even lead to the loss of the online store. 

2. The product does not look like the images in the online store 

It is not always easy to display a product (or service) realistically on the website. It sometimes happens that customers are disappointed upon receipt and still decide not to make the purchase. 

To prevent this as much as possible, it is advisable to add good quality pictures to an online store. Pay attention to the visibility of color, material, fit (if applicable) and make sure to use pictures from different sides and distances. It can also help to add videos of a product, as these often give an even more realistic image of a product or service. 

The more information you display in advance, the smaller the chance of disappointment upon receipt. 

3. Problems with reception 

What if the customer isn't home and a shipment cannot be delivered? Or perhaps something goes wrong with the mail and a shipment takes too long? This can cause a customer to lose interest and make a purchase somewhere else in the meantime. 

Unfortunately, such problems do occur, but on the bright side, there are some methods to reduce the chance of this happening. For example, work with reliable carriers, deploy track & trace and ensure clarity about the shipping process and the associated deadlines.

Are there special circumstances that cause you to expect a delay? Please state this clearly on the website and order.  

4. Bought as a gift during the holidays

The holidays are known for lots of sales, but also a huge growth in returns. In the fashion industry, as many as 50% of orders can be returned during this period. In most industries, the percentage is around 30%.

Why are so many products sent back during the party months? This is mainly because most purchases then are meant as gifts, which come with more risks than purchases for own use. There's a relatively higher chance on misjudgement in size or taste of the recipient of the gift. 

Does this return madness mean loss for online shops? Fortunately, that need not be the case. For example, by optimizing the return process, digitizing the return form and promoting exchanges, the holiday season can bring the profit hoped for in advance without stress.

See our blog about optimizing the returns process for the holidays for more useful tips. 

The returns process past and present

The e-commerce industry, with all its associated services and capabilities, has seen tremendous growth over the past 10 years. According to a report by Shopify, global e-commerce revenue was around $1.3T in 2014 and will reach a whopping $4.1T by 2020.

Online shopping has become as normal for consumers as a visit to the store. In fact, in the past year more and more consumers prefer skipping the physical store and ordering products online.

Also, in the past decade, most online stores have significantly expanded their shipping area. International shipping is now the norm, whereas years ago it was still far from commonplace. Will you only be shipping nationally in 2023? If so, you are probably lagging behind the competition.

What does this development mean for the returns process? 

First of all, this rapid growth in the popularity of online shopping shows that e-commerce services are still relatively new. Ten years ago, online stores already existed, but customer expectations in this area were much lower than today. 

Back then, if a product was not to your linking, you had to take action as a customer. This implied filling out and printing a return form and delivering the parcel to the post office yourself. This was the standard procedure and there wasn't much variation on it. 

Only in the last few years, during the explosion of online shopping, the possibilities for returns process optimization (and consumer expectations in this area) have increased enormously. Meanwhile, online stores offer a wide variety of services and carriers are fully responsive to the large number of e-commerce packages that travel the world everyday.

It's all about convenience these days. The customer expects a return shipment to be processed very quickly , preferably automatically and online. Printing is a thing of the past and in many cases it is no longer necessary to take a parcel away yourself. 

A nice advantage of this new online working method is that the underlying return reasons can be better analyzed. With the help of the right software, webshops can see this data in one overview on a dashboard. This was not at all common 10 years ago.

What does the future of the returns process look like? In our eyes it will be fully automated and extremely flexible. Take a look at our 'Why Returnista' page for some great features that we hope to see in more and more online stores in the coming years.

The importance of a good returns policy 

Before we look at returns process optimization, we'll give you a brief introduction to the returns policy 

What is a returns policy and why is it important to give it your full attention? 

A return policy consists of rules that govern how consumers can return and exchange items or services at a store. These policies include rules around deadlines, reasons for returns and refunds, for example.

The main purpose of a returns policy is to protect the shop. After all, if customers aren't bound to any rules what so ever, they can return a product for any given reason, at any time. This can cause returns to stores of items in poor condition months, even years after purchasing them. This leads to major losses on the part of the seller. 

The better thought out and the clearer the rules in a returns policy, the better an online store is able to regulate returns in an economical way. 

What is returns process optimization? 

Returnista's specialization, and an action strongly related to the return policy, is return process optimization. What exactly does this entail?

Returns process optimization is the design of the returns process in such a way that it is as advantageous as possible for all parties involved. 

Think about this: 

  • Actions that make the returns process for online stores as economical as possible, such as automated forms, platforms for data analysis and advice based on data that reduces the number of returns. 
  • Actions that make the return process as economical as possible for the customer, such as an online return form and the ability to have returns picked up at home or work by a carrier of your choice. 
  • Actions that involve the right parties, such as carriers, returns platform and pick-up points. 

Why returns process optimization?

Optimizing the returns process comes with enormous advantages for an online store. Below we've summed up some of the most important advantages: 

Increased customer satisfaction

Customer satisfaction is essential for the success of an online store. The more positive the customer experience, the greater the chance that they will come back and spend even more money compared to their first purchase. 

Moreover, satisfied customers play an important role in the promotion of an online store. If you make a good impression with your returns policy, then chances are that you will be rewarded with a good review and/or a recommendation from friends. Such actions have a strong positive influence on the  - long-term - growth of a company. 

Did you know research shows that returning customers spend about 67% more money on average than new customers?

Reduce returns

By organizing your returns process in a conscious way, and thus optimizing it, you reduce the number of returns. We recommend that online stores look into which actions are needed to reduce the number of returns without drawing up a strategy. Examples of such actions are: 

  • Promoting exchanges instead of returns
  • Offering a long reflection period 
  • creating analyses of what is often returned and what is not, followed by responding to this within the offering of the website
  • Clarifying product information on the website (e.g. realistic images and size tables)
  • Collecting relevant data

As described earlier, data collection is an indispensable part of the returns process optimization and also a strong method to reduce the number of returns. 

By setting up a functional data dashboard and linking it to an online returns portal, you will gain insight into, among others, the following things:

  • The amount of returns you receive on average, for example per day, week or month 
  • Which products or services are often returned and which are correctly retained
  • The reasons for returning (or retaining) certain products or services 
  • Which things the customer would like to see better or different

With the right online returns portal, you can easily link the information a customer leaves on the returns form to your data dashboard. This gives you real-time insight in all the data you need to keep improving your order and returns process.

Save time & money

A simple but valuable benefit and perhaps very obvious: return process optimization saves time and money.

If you automate your forms, process your registrations online and find smart ways to reduce returns or convert them into exchanges, you'll see immediate results in both your planning and turnover.

Save paper

Last but not least, by optimizing your returns process there is a good chance that you will save paper. After all, optimizing usually also means digitizing.

While it used to be common to have to print out return forms, this is no longer necessary. Everything goes online, automatically, and a return is recorded directly in the webshop's system instead of first on a form and then in the system. And, in a world where more and more companies are going paperless, it is almost impossible for a webshop to work digitally. 

Old fashioned return form

Returns process optimization with Returnista

Do you need help optimizing your returns process? With our returns solution you save time and costs, reduce the number of returns and increase customer satisfaction. 

With our platform, you can set up a returns portal in no time that perfectly matches the style of your website. You can then easily link it to an extensive data dashboard and have the option to tailor your returns process to the preferences of you and your customers. For example, do you want products to be picked up at the customer's home? Do you want to offer discounts to customers who exchange products instead of returning them? Or do you want to offer flexibility in choosing different carriers? This, and much more, is all possible.   

Returns are no longer a pain point with Returnista.Do you want a returns portal in the style of your online store, just like Decathlon, Loavies and ASOS? Request a demo on our website and get advice from one of our return consultants.

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