Create a winning returns strategy for your business with three key considerations

Posted on Feb. 20, 2018 by Canada Post in Shipping Solutions

Product returns are a hidden opportunity for your ecommerce business. While there are certain complexities you'll need to think through to create an effective returns strategy, if you handle them well, returns don't have to be a loss for a store's bottom line. In fact, our extensive knowledge of the market tells us they can be an opportunity to acquire and retain customers to boost your sales over the long-term.

Whether you're developing an initial policy for your business, or improving an existing one, there are three key considerations that will help you design the best returns strategy for your business.

1. Your customers' returns experience

Canadian shoppers value an easy and convenient returns process. In fact, ⅓ of Canadian shoppers said that they would not shop with the same merchant again after a negative returns experience. The process is made up of each step your customers must take to successfully return your products -- from finding a box to ship the returned item, to receiving a refund or exchange. Be mindful and create an easy and flexible returns policy that makes people feel confident to shop with you.

To do so, one key factor is knowing where your customers are located. For instance, if you have a physical retail network, you can give your customers the option to return their item to one of your storefronts, in addition to being able to return it by mail. The ideal experience will not look the same for all your customers, and providing flexible options like these can enhance the experience from their perspective.

2. Your game plan for returned items

There are many ways to deal with returns, and it's important to have a solid game plan in place to do so efficiently. From a logistics standpoint, merchants need to have a process in place to manage their returns that aligns with their priorities. These considerations are key to developing a good returns strategy that works for your business:

Visibility

Think about what returns data you want to have visibility on, and how it can help you optimize your operations. Including a return label in your original shipment allows your customers to easily ship their returns to you. The drawback is that this approach may not give you visibility ahead of time on what's coming back to you. On the other hand, if you require pre-authorization for each return, it will require more time and resources to process them.

Custom policies

Depending on your business, having multiple custom return policies based on your product mix or operations may be a necessity. For example, you may only offer refunds (not exchanges) on certain categories of items or vice versa. This may be a requirement for you, but keep in mind that having different policies will add complexity to the customer experience.

Your returns journey

You need a clear understanding of what will happen to your returned items, and where they will go. You may have different processes in place depending on the item -- be aware of them all and create efficiencies wherever possible.

In terms of customer service, ask yourself how you plan to interact with shoppers during the returns process. A cordial exchange by phone with a dissatisfied customer, or a short feedback form by email, will give you the opportunity to gather valuable data on the item returned and the customer's experience. This data can help you improve the experience you offer your customers. Here are some ways to leverage your returns data:

Save sales with exchange opportunities

A swap is always better than a return. Suggest alternative products and encourage your customers to exchange rather than receive a refund, but make both choices available.

Dig deep to avoid future returns

Don't stay in the dark about your returns. Ask why your customers want to return their items -- their answers could point to missing or misleading product information on your website. This can help you make improvements to your e-commerce store.

Tip: As you design your returns strategy, remember to consider all teams that are impacted by it. Your e-commerce, operations, marketing, customer support, and store network teams should all be aligned to ensure returns are processed smoothly.

3. Your returns strategy budget

Returns will inevitably come at a cost to your business, but with the right strategy and tools you can reduce their impact on your bottom line. It's best to be prepared for them and invest in a strategy that creates efficiencies over the long haul. Plan for a cost for every item returned (and look for ways you can share that cost with your customer) and the initial cost of implementing your returns solution.

Work within your budget

Can you afford to cover the full cost of return shipping? With Canada Post solutions, merchants are only charged when a return label is used by the shopper. If covering the full cost is not realistic for you, there are options you can look at to share the cost with your customer. 30% of Canadian online shoppers are willing to pay to return items if the cost of shipping is reasonable.¹

Make the right investment

Your initial investment cost will vary depending on the level of sophistication you want from your solution. Canada Post can help with its full suite of returns solutions (that range from turnkey to customizable) which can be easily integrated into your website. Ultimately, it will come down to how much you are willing to invest.

Crafting a great returns strategy can be challenging, but it is essential. It will encourage first time customers to buy from you, and may even convert them into loyal shoppers -- boosting sales long term. It can also create efficiencies and help your operation run more smoothly. To design an ideal returns strategy, keep your customer's experience in mind, determine how you will manage returns logistically, and calculate your budget for them. Remember that shoppers value a good returns experience, so plan wisely.

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¹Source: 2016 Canadian Online Shopper Study, CPC 16-202, April 2016

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