Returns Management: the Power of Data

Cutting-edge printing, labelling and scanning resources are vital to a coherent returns management process, with which e-commerce retailers and/or their logistics partners can dramatically cut the time and cost associated with the processing of goods returned by consumers – and achieve customer service goals at the same time.

Customer returns are a 592.8 billion-Euro economy

Poor product quality, the wrong size or having second thoughts: whatever the reason, in 2015, consumer returns worldwide totalled an astonishing 592.8 billion Euros per year. Put another way – to help focus the mind – the value of goods that consumers decide they didn’t really want that year ranked as the world’s 21st largest economy, just behind Switzerland and ahead of Argentina, based on the World Bank’s then most recent available global economies’ ranking.¹

And that was before the pandemic, which applied rocket boosters to the already unstoppable rise and rise of e-commerce. Falling profit numbers at high-profile ‘fast fashion’ e-tailers, such as UK-based BooHoo, have been attributed in part to the high rate of product returns by consumers, leading companies to drastically alter their returns policies in some cases.²

Stronger returns rights are also a feature of the 2022 EU Consumer Rights Directive which aligns rules across the bloc.³ Given the narrative, it’s no surprise that the volumes of goods returned by customers is an increasingly dangerous concern for some retailers. 

The returns challenge is a particular red light for those without a clear returns policy and a slick returns management process with which to execute that policy. Meanwhile, customer are free to shop serenely without such concerns; we have all heard the stories ‘of a friend of a friend’ – buy three pairs of the same shoe, send back the two pairs that don’t fit; or even all three. Who cares? Certainly not that individual customer, when they are not paying to do so.

What is a downside of a reverse supply chain system?

Why is it so easy for customers to return goods at no mailing or logistics cost to themselves? Simple – in a competitive, fast-moving and cut-throat e-commerce marketplace, it quickly became the norm for retailers to offer free returns on orders. It was generous but it was also necessary, because the nature of competition demanded it. 

In the developing days of e-commerce, free delivery and free returns very quickly became competitive necessities in many sectors, with smaller retailers having to make sacrifices in order to match their larger-scale rivals. Having surmounted the hurdle of convincing nervous consumers to securely commit personal credit card and financial details online in order to make a purchase, the merchants’ next challenge was to promise those consumers that there was no threat to their pockets if the shoes were the wrong size or the pullover not quite the colour it seemed on the laptop or smartphone. As an exercise in changing consumer habits and in winning the trust of customers, it has worked like a dream – but as an exercise in cost and workflow management, perhaps not so much, certainly for those enterprises without the scale or processes to absorb returns in large numbers. 

The conclusion? Returns management matters, indeed it is vital if a tightly-run B2C concern is to have the agility and fitness needed to thrive in today’s commercial environment.

Proper returns management is complex because it comprises both customer service requirements and cost-efficient, sustainable reverse logistics, neither of which can be achieved without planning, experience and true commitment. That is a tricky combination, particularly if there might also be a dispute to resolve in the mix – perhaps a poorly packaged parcel, or incorrect or damaged goods.

What are the benefits of return management? It's all in the numbers...

The key word in returns management is data. If you collect and analyse data on every return into your business, you make fast, enduring learnings about both your customers and your products. You learn which items are returned more than others, and, crucially, why. You learn which products you are able to repackage and resell, particularly if time is an important factor (for instance, with fast-moving fashion items). You gain reliable learnings about wider inventory management and control, when cost control is often at the heart of who wins, and who loses. You learn about the efficiency of your processes and if they are working as well as they could be.

Data is also vital to a clear and properly communicated returns policy. You make it easier for your customers in several ways – they have clear understanding of how and what to do and in what timeframes, plus they have the precious capability to track parcels, just as they did in the outbound process of the purchase. You are also making life easier for the customer and yourself by inviting them to print or complete the enclosed returns label themselves. 

The printed material you enclose inside the package gives you the opportunity to communicate directly with the customer and to direct clearly the availabilities and limits of your returns policy (which can be modified to suit the customer relationship, whereby loyal customers are entitled to free returns, perhaps). Paperless returns are also now becoming more common, in which the consumer returns the parcel via the physical store or a recognized locker using an online QR code for validation, though printed labels are usually still required to be affixed to the parcel at that point.

Central to these capabilities is full exploitation of your print, labelling and scanning portfolio. To collect and harvest data at frequent touchpoints easily and reliably, you will rely on each individual parcel to help you - and it will do so via QR-code, barcode or RFID scanning. The quality and repeatability of that printing is absolutely essential, because without it you gain either no data or inaccurate data and therefore no learning.

Explore how Brother’s passion for quality label printing can ensure labelling success across your warehouse and supply chain.

SOURCES:

1. Market Watch, June 2015
https://www.marketwatch.com/story/consumers-return-6426-billion-in-goods-each-year-2015-06-18

2. https://www.bbc.co.uk/news/business-66992862

3. https://commission.europa.eu/law/law-topic/consumer-protection-law/consumer-contract-law/consumer-rights-directive_en#:~:text=About%20the%20directive,-The%20Consumer%20Rights&text=It%20aligns%20and%20harmonises%20
national,they%20shop%20in%20the%20EU.