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<p><strong>A happy holiday season starts with a strong returns policy. Here’s how to cut the costs of returns and keep customers happy.</strong></p>

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<p>January has traditionally been a time of rest and relaxation for retailers, a chance to slow down after a busy and stressful festive season. Instead, many brands are finding themselves grappling with retail’s equivalent of a holiday hangover: returns.</p><p>It’s estimated that between 13 and 30 percent of stock sold during the 2021 holiday season was returned. That’s the equivalent of<a href="https://nrf.com/research/customer-returns-retail-industry-2021" rel="noopener noreferrer" target="_blank"> hundreds of billions</a> of dollars’ worth of stock in the US alone.</p><p>And return rates are rising, thanks to a pandemic-induced surge in online shopping. Why? Because in-store shoppers return around 10 percent of products, while online shoppers send back up to 40 percent.</p>

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<p>Regardless of industry, returns represent a significant cost to retailers. Not only are there delivery costs to factor in, but staff might also spend time checking products for faults, before repackaging them, re-warehousing them and reselling.</p><p>Recently, global retailer <a href="https://www.asos.com/au/" rel="noopener noreferrer" target="_blank">ASOS</a> even pointed to soaring return rates as a contributing factor to its <a href="https://www.theguardian.com/business/2022/jun/16/asos-warns-on-profits-amid-significant-increase-in-customer-returns" rel="noopener noreferrer" target="_blank">downgraded profit estimate</a>. And there are other costs to consider too, with returns also impacting the environment.</p><p>Here's how to reduce return rates and save money…</p><h2>Present products clearly</h2><p>The rise of e-commerce has given rise to a new trend: bracketing. This occurs when customers purchase a product in several sizes with the intention of trying everything on at home and choosing the best fit.</p><p>In fact, a <a href="https://www.prnewswire.com/news-releases/narvar-study-finds-58-of-consumers-intentionally-buy-more-goods-than-they-intend-to-keep-301416568.html" rel="noopener noreferrer" target="_blank">Navar study</a> recently found that 58 percent of customers intentionally buys more products than they intend to keep and that “fit and size” continue to be the primary reason for online returns, accounting for 42 percent of returns.</p><p>The solution? Providing as much detail as possible about every product – fit, size, dimensions, features, material and appearance – to give customers as much confidence as possible in committing to a single size. That also means providing multiple, <a href="https://www.afterpay.com/en-US/for-retailers/access/product-photography/product-photography" rel="noopener noreferrer" target="_blank">clear photos</a> of the product or garment from a number of angles. A clear and detailed size chart is another must for fashion and footwear retailers.</p><p>Global clothing retailer <a href="https://www.everlane.com/" rel="noopener noreferrer" target="_blank">Everlane</a> takes this one step further by also <a href="https://www.afterpay.com/en-US/for-retailers/access/product-photography/product-photos-iphone" rel="noopener noreferrer" target="_blank">photographing</a> the same garment on models of varying sizes and body shapes so that consumers can better understand how they will look in the piece.&nbsp;&nbsp;</p><p>Some brands such as <a href="https://www.ganni.com/en-au/home" rel="noopener noreferrer" target="_blank">Ganni</a> offer free alterations to customers in a bid to reduce returns. The Danish fashion brand has partnered with clothing repair app Sojo for the service. “Online shopping has a huge environmental cost attached to it due to the amount of returns that are made – with the majority of returns being due to poor fit,” <a href="https://fashionunited.uk/news/fashion/ganni-partners-with-clothing-alteration-app-sojo/2021111859425" rel="noopener noreferrer" target="_blank">explains</a> Sojo CEO and founder Josephine Philips. “By partnering with Sojo to offer local tailoring, Ganni is reducing environmental impact and also creating clothes that fit customers perfectly, which [means they] will then be loved for longer.”</p>

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<p>"Online shopping has a huge environmental cost due to the amount of returns that are made."</p>

<h2>Try a tech solution</h2><p>Technology can also help consumers achieve the perfect purchase and reduce returns. Start-ups like <a href="https://www.perfitly.com/" rel="noopener noreferrer" target="_blank">Perfitly</a> and <a href="https://themodernmirror.com/home/" rel="noopener noreferrer" target="_blank">The Modern Mirror</a> are developing augmented reality (AR) technology to help customers ‘see’ how clothing will fit before they purchase. Similar technology already exists in the beauty industry (L’Oréal, for example, offers AR services allowing customers to ‘try on’ makeup and hair colours) and for accessories.</p><p>Optical retailer Bailey Nelson offers a ‘<a href="https://baileynelson.com.au/collections/virtual-try-on" rel="noopener noreferrer" target="_blank">virtual try-on</a>’ feature allowing customers to try sunglasses and glasses. Not only can these types of services reduce returns, but, according to Bailey Nelson, the virtual try-on feature has also increased conversions by <a href="https://www.cmo.com.au/article/691080/virtual-try-on-sees-bailey-nelson-online-conversions-lift-400-per-cent/" rel="noopener noreferrer" target="_blank">400 percent</a>.</p><h2>Forget free returns</h2><p>Although free returns policies have become ubiquitous – and it’s well known that many customers will buy but then abandon purchases thanks to free returns – some retailers are beginning to introduce paid policies.</p><p><a href="https://edition.cnn.com/2022/09/29/business/hm-return-fees/index.html" rel="noopener noreferrer" target="_blank">Global retailer H&amp;M</a> recently announced it was considering testing a paid returns policy, where online shoppers must cover the shipping costs of their returns. In May, <a href="https://www.zara.com/au/" rel="noopener noreferrer" target="_blank">ZARA</a> announced it would charge British customers £1.95 ($USD2.37) to return products by mail (a policy already in place in other countries). Other retailers, such as <a href="https://lisasaysgah.com/" rel="noopener noreferrer" target="_blank">Lisa Says Gah</a>, <a href="https://lisasaysgah.com/pages/faq" rel="noopener noreferrer" target="_blank">deduct shipping costs</a> from the overall amount refunded.</p><p>Another way to reduce the shipping cost of returns is to partner with a reverse-shipping provider or logistics hub to give customers the option to drop returns at designated ‘<a href="https://happyreturns.com/#homepage-return-and-exchange-portal" rel="noopener noreferrer" target="_blank">return bars</a>’ or <a href="https://hubbed.com/network/" rel="noopener noreferrer" target="_blank">drop-off points</a>. That way, returns can be collected in bulk by retailers, removing the final-mile delivery costs and avoiding having to pay for every individual return.</p><h2>Add friction to ‘free returns’</h2><p>Charging customers for reverse shipping is one way to discourage shoppers from returning products. But there are other ways to add ‘friction’ to the process in order to dissuade returns.</p><p>For example, offering free returns for products that are dropped off in-store removes the cost of final-mile delivery, while offering an extra-long returns period – say 30 days – removes the sense of urgency for consumers who may well forget to return their product or decide to wear it during that period.</p><h2>Opt for Afterpay</h2><p><a href="https://afterpay-corporate.yourcreative.com.au/wp-content/uploads/2021/04/Afterpay-Economic-Impact-report-2020-Accenture.pdf" rel="noopener noreferrer" target="_blank">A report by Afterpay Australia</a> found that customers who pay with Afterpay are less likely to return their purchases.</p><p>In Australia, return rates for in-store purchases are around 9 percent and 20 percent for online. With Afterpay, return rates are much lower: around 6 per cent for in-store purchases and just 2 percent for online.</p><p>This may be because many Afterpay customers use the buy now, pay later platform as a budgeting tool, which drives more considered purchases and a lower rate of return. Afterpay <a href="https://afterpay-corporate.yourcreative.com.au/wp-content/uploads/2021/04/Afterpay-Economic-Impact-report-2020-Accenture.pdf" rel="noopener noreferrer" target="_blank">reports</a> that in 2020, Australian retailers are estimated to have saved $30&nbsp;million in lower depreciation costs and shipping and handling as a result of lower returns.</p><h2>Outsource returns</h2><p>If you deal with large volumes of returns, one way to mitigate the operational costs of handling them is to outsource the entire process to a third party. By engaging a dedicated ‘reverse shipping’ company, you can receive returned products in batches rather than as a steady stream of daily parcels, and even choose to have products verified by a third party rather than overwhelming your warehouse staff.</p><p>Specialist returns staff – from companies such as <a href="https://happyreturns.com/" rel="noopener noreferrer" target="_blank">Happy Returns</a> and <a href="https://smartreturns.in/" rel="noopener noreferrer" target="_blank">Smart Returns</a>, which operate dedicated returns facilities – may also be faster and more efficient at sorting returns. Many also have relationships with liquidators and recyclers who can help recapture value from damaged products.</p><h2>Reframe returns as an investment – not a cost</h2><p>Some experts believe that the secret to reducing the costs of returns is not to view returns as a headache, but to instead reframe them as an investment in long-term customer value.</p><p>That’s because a good (or bad) return experience can make (or break) a customer’s relationship with that brand. According to <a href="https://optoro-corp.s3.amazonaws.com/WBRConsumerReturns2018OptoroReport.pdf" rel="noopener noreferrer" target="_blank">Optoro</a>, 89 percent of consumers are less likely to shop at a retailer or brand if they had a bad experience with their returns. On the flip-side, 97 percent of customers say they would be more likely to purchase from a company that they had a positive return experience with.</p><p>From that perspective, the solution to rising returns may well be to make returns as easy and fast as possible for customers to maximize brand loyalty and extend customers’ lifetime value.</p><p>That means clearly outlining your returns policy online (including on your header or footer, product pages, cart checkout and FAQ page), and offering customers flexibility, speed and great communication when it comes to delivery and refunds.</p><p>Reverse shipping provider <a href="https://returnly.com/" rel="noopener noreferrer" target="_blank">Returnly</a> takes this one step further. When customers return a product they are given an instant ‘<a href="https://returnly.com/blog/why-a-successful-holiday-season-starts-with-returns/" rel="noopener noreferrer" target="_blank">Returnly credit</a>’, which allows them to shop for a new item online rather than being forced to wait days or weeks for refunds to be processed. Not only does this enhance the returns experience – and engender customer loyalty – but it also increases the customer’s propensity to buy again.</p>

<p>"Being able to facilitate easy returns plays a huge role in success."</p>

<p>Brett Chester, chief marketing officer at <a href="https://www.shippit.com/" rel="noopener noreferrer" target="_blank">Shippit</a>, describes the returns process as “the other side of the shipping coin,” and something businesses should be thinking about as a core aspect of their business.</p><p>“Being able to facilitate easy returns plays a huge role in success,” Chester says, explaining that in using third party providers like Shippit, retailers still have full control over return policies while enjoying the many benefits of outsourcing like a reduction in administrative tasks and cheaper shipping rates.</p><p>Retailers could even look to build returns into the DNA of their brand. For Australian online furniture retailer <a href="https://eva.com.au/" rel="noopener noreferrer" target="_blank">Eva</a>, a lucrative returns policy that includes free delivery, free pick-up returns and a 365-day return window offers it a unique point of difference in a crowded market – and one that translates into meaningful brand growth.</p><p>“It starts with thinking about the customer first and then building that into product margins,” says Lia Ang, Eva’s head of marketing, adding that its flexible policy “is the feature that resonates strongest with customers”.</p><p>She explains, “We know that delivery and pick-up costs are huge turn-offs when it comes to purchasing online, so the balance to strike is to make sure your margins are enough to absorb those costs for the customer while not being so exorbitantly high [that] customers won’t pay for your product.”</p><p>While a year-long-returns policy is generous, Ang says the unique position also works as a way of creating consumer confidence, saying, “what we were hoping to illustrate is the trust in the quality of our products, and that we design and build products to be with you for a long time”.</p>

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<p><em>All references to any registered trademarks are the property of their respective owners. Afterpay does not endorse or recommend any one particular supplier and the information provided is for educational purposes only.</em></p>

A happy holiday season starts with a strong returns policy. Here’s how to cut the costs of returns and keep customers happy.

A happy holiday season starts with a strong returns policy. Here’s how to cut the costs of returns - from presenting products clearly to charging for returns - and keep customers happy.

Reduce product returns: 5 tips to save money and reduce returns

Five ways to reduce returns – and save money

Five ways to reduce returns – and save money US

<p>The secrets to fast, efficient shipping during the festive season.</p>

<p>Four in five Americans now shop online every week, and whether they’re buying beds or beauty products, fitness equipment or flowers, online customers all have one thing in common: they want their purchases to be delivered quickly.</p><p>So, at the end of the year, when customers are purchasing seasonal gifts, it’s more important than ever for e-commerce retailers to meet customer expectations for shipping and delivery.</p><p>“A good shipping strategy is something that sets and meets customer expectations without impacting a business' bottom line,” says Brett Chester, the chief marketing officer of multi-carrier shipping platform<a href="https://www.shippit.com/" rel="noopener noreferrer" target="_blank"> Shippit</a>. “It also empowers businesses by giving them back time that can be eaten up with administrative tasks [allowing them to] spend on more important things like innovation, product development and planning for the future.”</p>

<p>"A good shipping strategy sets and meets customer expectations without impacting a business' bottom line."</p>

<p>Here’s how to create an effective strategy that meets shipping expectations, and delivers on customer satisfaction – without breaking the bank.</p><h2>1. Communicate delivery times clearly</h2><p>Despite retailers’ best efforts, there’s always the possibility that shipping delays will occur, especially during major shopping events like Black Friday and Cyber Monday in November, and Christmas sales in December.</p><p>To mitigate disappointment, it’s essential to communicate with customers about delays as soon as possible.</p><p>“One thing we know is that consumers don’t like a surprise,” says Brian Walker, CEO and founder of <a href="https://trg-aus.com/" rel="noopener noreferrer" target="_blank">The Retail Group</a>. “A lack of transparency and customers being caught by surprise can be pretty injurious to trust.”</p><p>To ensure communication channels are open, Walker says retailers should publish all shipping information – including approximate delivery times, prices and pre-Christmas purchase cutoff dates – online and let customers know about possible delays before they purchase.</p><p>And don’t forget to publish your return policy. Shoppers will want to know whether you accept returns or offer refunds, and whether they have to pay to return items.</p><h2>2. Provide a range of delivery costs</h2><p>Where possible, multiple shipping options should be provided. Don’t assume that all customers want the cheapest delivery option; some may be willing to pay a premium for speedy shipping (especially if they’re running late with their holiday shopping).</p><p>“Increasingly, we’re seeing retailers offering a choice of free, standard delivery or paid express delivery. The majority of customers will still choose the cheaper option, but having that optionality is becoming more important,” Walker says, reiterating, “it adds up to knowing your customer and providing them with the choices that are relevant to them”.</p><h2>3. Offer super-speedy delivery</h2><p>The concept of ‘fast delivery’ has been redefined in recent years, as more retailers, not to mention on-demand grocery delivery startups, seek to differentiate themselves with ever faster delivery times.</p><p>Today, many retailers are offering two-day, same-day or same-evening delivery times in addition to standard shipping options. Consider how quickly you can deliver shipments to customers – and remember that you can always offer same-day or next-day delivery to customers who live within a specified distance from your shop or warehouse.</p><p>If you do decide to offer super-fast shipping, ensure that your fulfillment, inventory and tracking processes are seamless and that your site and staff can handle large volumes of orders.</p><h2>4. Offer pick-up services</h2><p>Since the COVID-19 pandemic, when online shopping rates soared, consumer expectation has evolved; today, many buyers expect options like curbside pick-up, where stores will bring products out to customers' cars so they don't need to go into stores.</p><p><a href="https://cdn2.hubspot.net/hubfs/393073/2020%20Consumer%20Report/MedZing2020-Future-Of-Commerce-Report-FNL.pdf" rel="noopener noreferrer" target="_blank">Studies</a> have also shown that nearly 90 percent of customers expect to use curbside pick-up in the future, and that <a href="https://www.medallia.com/blog/buy-online-pickup-curbside-changing-customer-behavior-retail-biggest-opportunity/" rel="noopener noreferrer" target="_blank">customers</a> who enjoyed a positive experience with this option are more likely to ship with that brand again.</p><h2>5. Keep communicating, post-purchase</h2><p>Today, customers expect to know exactly where their package is as soon as they have pressed ‘purchase’. To offer customers reassurance – and a sense of control – consider providing real-time shipment tracking, text notifications (that alert customers when packages have been dispatched or delivered) and email updates upon delivery.</p><p>When clothing retailer <a href="https://www.cue.com/" rel="noopener noreferrer" target="_blank">Cue</a> partnered with Shippit, which offers real-time delivery updates to customers, the clothing brand saw a 70 percent increase in sales conversions and an overall increase in sales of 130 percent.</p><p>“The more information and the more options a consumer has, the more confidence they will have in making a purchase because they know what to expect – and that all comes back to communication,” Chester says.</p><p>Real-time delivery notifications can also be personalized so that they become part of the post-purchase customer experience.</p>

<p>"The more information and the more options a consumer has, the more confidence they will have in purchasing."</p>

<h2>6. Consider free shipping</h2><p>Offering free shipping is one of the <a href="https://www.statista.com/statistics/1231069/leading-reasons-for-buying-products-when-shopping-online/" rel="noopener noreferrer" target="_blank">top reasons</a> customers decide to purchase, and many shoppers now expect free shipping, abandoning their cart to shop elsewhere if it isn’t available.</p><p>For retailers, while ‘free shipping’ carries a business cost, absorbing this cost may be worthwhile if it secures a sale. Find out more about how to offer free shipping without breaking the bank <a href="https://www.afterpay.com/en-AU/business/access/shipping-strategies/free-shipping-guide-retailers" rel="noopener noreferrer" target="_blank">here</a>.<strong>&nbsp;</strong></p><h2>7.&nbsp;Go green</h2><p>Another factor to consider is the environment as there is a growing demand among younger shoppers for sustainable and compostable packaging. Many customers have come to expect ethical brands’ packaging to reflect their stance on the environment, while others may want to pay extra to offset carbon emissions (a service that can be implemented with apps such as Carbon Click.</p>

<h2>8.&nbsp;Look at shipping as a long-term investment</h2><p>While many retailers simply see shipping as the final step in a sales transaction, both Walker and Chester say good shipping experiences during peak sales time should be seen as a long-term investment in customer retention and growth.</p><p>Walker points out that most shoppers have pre-researched their purchases before they make them, and checking shipping times and costs is often part of this process. “In addition to price, offering a better shipping deal can be the thing that gets you across the line,” he says.</p>

The secrets to fast, efficient shipping during the festive season

The secrets to fast, efficient shipping during the festive season, so you deliver on customer delivery expectations