How Digital Commerce Businesses Can Benefit from an Excellent Returns Management System

The exponential growth of the digital commerce industry in recent years has sparked an unprecedented level of competition among businesses that deliver and sell products online. Many enterprises have begun to realize that in order to win the loyalty of customers, they must effectively deal with one aspect of the online sales process that has traditionally been considered as a source of frustration: product returns. Returns management is part of the wider process of reverse logistics, which involves the flow of products from customers back to their point of origin in a supply chain.

Given the economic uncertainties that have plagued businesses in recent years, it is quite understandable why a lot of digital commerce enterprises have become more averse to generous returns policies. Managing outbound shipping is hard enough, so the mere thought of returns and the possible heavy burden that they may pose to a company’s bottom line is enough to make many businesses want to avoid having to deal with them as much as possible.

But there is an enormous opportunity for returns to become a profit center for retailers – increasing business via referrals to friends and family, providing cross-sell and upsell, opportunities, and delivering an optimal customer experience that will lead to repeat purchases. Therefore, not maintaining an efficient and liberal returns program can backfire and damage your relationship with customers and limit the growth of your client base.

Consumers don’t like inefficient returns management systems and stringent returns policies

Consumers, in general, are more likely to buy from online retailers if these retailers make it easy for buyers to return the products or if they provide liberal shipping policies like free shipping, free returns, and the ability to return items for whatever reason.

When discussing these consumer views, it is worth mentioning that a lot of digital commerce businesses fail to comprehend the immense dissimilarity between online shopping and buying from a brick-and-mortar store. By shopping online, customers often have to deal with a variety of risks: buying products without being able to see and touch the items for themselves, receiving products that are not as described or depicted online, accepting goods that have been damaged while in transit, and receiving products that have manufacturing defects.

If you’re running a business and you think that returns are not a good thing, you should be aware that your customers probably feel the same way. Returns can sometimes be considered by customers as an unnecessary bother if they create unnecessary work for the shopper or have inflexible policies.

The thing is, you can expect that the customers who are most likely to return items are also the ones who spend the most. Thus, one can just imagine how inflexible or strict returns policies can negatively impact a company’s sales, as well as its relationship with its customers.

Dealing with returns proactively

According to the Supply Chain Management Review, there are two basic interrelated aspects of returns that businesses we should understand better in order to identify opportunities that will make their supply chain processes more efficient. These are the source of the returns and the reasons for the returns.

First, businesses should be aware that returns can either come from intermediaries (like distributors and retailers) or from end-customers (the actual individual consumers or business customers who use the products). These two types of sources are very different from one another.

When it comes to end-customers, returns can indicate product quality issues or failure on the part of the customer to understand how the product works or how it should be used correctly. It stands to reason that these types of returns should be seen by businesses as a challenge for them to improve their products or to better communicate the features of these products. In other cases, shoppers may buy more than one item with the intent of sending some items back once they have a chance to see them in-person. In this case, the returns policy needs to be extremely flexible and easy for the shopper in order to get them to make the initial spend.

Returns from distributors and retailers, on the other hand, often result from stock and inventory issues. For instance, a retailer might return an old batch of products because the stocks are no longer moving or because fresher products are now available from your firm. This is not always a negative thing, of course, since newer products tend to produce higher profit margins for both retailers and manufacturers. However, in such instances, manufacturers will have to contend with the challenge of what to do with the returned products — Do they resell them? Do they repurpose them? What exactly is the best way to deal with these products? To prevent this from happening in the first place, businesses need to have a better grasp of the level of market demand for their products.

The key to effective and efficient returns management is understanding the total impact that returns can have on your business. Once you have determined this, you will be in a better position to identify the right policies and tools (e.g. shipping software, parcel deliver service provider, and so on) that can positively influence your returns management system and processes. These proper tools and policies will also give you the added benefit of being able to demonstrate to your customers that you are concerned about their needs and are committed to their satisfaction.