CSCMP's Supply Chain Quarterly
October 17, 2019
Forward Thinking

Want more online business? Improve your returns process, study shows

State of Online Returns study shows that retailers are failing to deliver a good customer experience when it comes to returning items—and that even Amazon has room for improvement.

Retailers looking to get a leg up on the competition for online business should take a good, hard look at their returns process, according to a study released this month by supply chain software company Narvar.

Narvar surveyed more than 3,500 online shoppers in five countries to determine what customers expect from retailers when making returns and found that many retailers are failing to deliver a good experience. Customers want an easy, flexible returns process that minimizes the effort required of them—and they're not getting it, the researchers said. Just 60% of respondents said they were satisfied with their most recent return of an online purchase, the survey showed.

Key survey findings include:

  • In-store returns present an opportunity and a point of failure for retailers. 
    • 36% of shoppers said it's easier to return an item to a store because they receive immediate credit and don't have to worry about their returns getting lost in the mail, yet only 10% actually returned their last purchase in-store;
    • 16% return their online purchases via designated drop-off options, with half of those shoppers noting convenience as the main driver;
    • 16% of all shoppers said they buy items they had not originally planned to purchase when making an in-store return. U.S. shoppers are more likely to be spontaneous when making an in-store return, with 22% reporting that behavior;
    • Shoppers find in-store returns convenient, but only 38% of U.S. consumers said it's actually easier to return in-store, down 10% from 2017.

Retailers that can develop more flexible returns strategies have the best chance to capture additional business, according to Sucharita Kodali, of Forrester Research, who previewed the survey results. Offering extended hours and additional locations for returns, potentially through partnerships with other organizations, is a step in the right direction, Kodali said.

The study also found that a premium returns experience can greatly improve consumer perception of a brand and the likelihood of repeat business. Thirteen percent of respondents said they would not shop with a retailer again if they had a negative returns experience, and  24% reported being unhappy with their return experience because they had to repeatedly check whether the retailer had processed their refund. 

There are steps that can alleviate the problem, however.

"Incentives like free shipping on exchanges or the ability to easily swap out sizes can translate to loyal customers," Kodali explained. "On the flip side, a bad experience can prevent that customer from shopping with you again, including performing an exchange."

The study also found that online retail giant Amazon has not cornered the market on the returns process, leaving room for others to step in and stake their claim. The survey found that: 

  • Globally, Amazon returners reported being slightly more satisfied with their experience (61%) than non-Amazon returners (58%);
  • The percentage is higher in the U.S., where 71% of Amazon returners said they were satisfied with their experience and 60% of non-Amazon returners said they were satisfied;
  • When returning via Amazon, shoppers reported more "marketplace" issues such as damaged items (21%) and misrepresented products (14%) compared to other retailers (16% and 12%, respectively);
  • The Amazon returns process is not seamless: 46% of Amazon shoppers said they needed to print a return label (30% for a non-Amazon retailer) and 34% needed to package their item (25% for a non-Amazon retailer).

"For years, retailers have looked to Amazon's returns playbook to inspire their operations. However, Amazon's returns experience is not necessarily superior in all ways," Kodali explained. "Consumers rely on Amazon for speed, convenience, and transparency, but findings show Amazon has not yet mastered a frictionless returns experience. Competing retailers are finding ways to differentiate—for instance, by offering more flexible options for pick-up or drop-off, or by designing processes with fewer steps required of shoppers."

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