Can Retailers Use this Season’s Returns to Increase Customer Loyalty?

Jim Kelly

Jim Kelly, Group Vice President of Cloud Sales at OracleCoyote has been helping UPS Peak Season for years, so we know how stressful it can be for retailers to manage capacity constraints during the pre- and post-holiday rush. To help, we're sharing a few tips from Jim Kelly, Group Vice President of Cloud Sales at Oracle, to help you avoid hiccups this return season. 


The season of holiday shopping is here, and because of COVID-19, retailers are preparing for a mix of online sales and in-person shoppers. But are they accounting for the associated influx of returns?

In some product categories, return rates can approach 30 to 40 percent — and that number is at an all-time high during the holidays.

In a survey with Worldwide Business Research (WBR) Insights, Optoro found that 54 percent of consumers returned at least one gift they received during the holidays last year. 

As returns continue to become an inevitable part of the buyer’s journey — especially around the holidays — it’s increasingly important to consider an optimized returns strategy.

Every year, retailers spend an aggregated $50 billion on returns. 

Without one, retailers risk a significant loss in profit. Across the industry, returns cost retailers $50 billion in lost margin every single year. 

Are retailers aware of this risk to their bottom lines? And are they acting to mitigate that risk?


Behind the numbers

Optoro’s data shows that 69 percent of retailers recognize returns are vital to creating a good customer experience, but only 45 percent of retailers think they are doing a great job of extracting additional value from returns.

Furthermore, just 23 percent of retailers have invested in a technology solution to help process returns. Retailers clearly understand the importance of returns to their bottom line and the impact on customer loyalty but have not sufficiently invested in a solution.

97% of consumers are more likely to be repeat customers after a positive returns experience.

89% are less likely after a negative returns experience.

For consumers, a positive returns experience is a clear driver of engagement and loyalty.

Optoro’s survey found that the impact of a positive returns experience cannot be overstated — 97 percent of consumers would be more likely to purchase another product from a business after a positive experience.

A negative experience is incredibly impactful as well — 89 percent of consumers are less likely to shop at a retailer or brand after a bad returns experience.

So, what can retailers do to optimize their returns strategy and prepare for this season’s influx of returns?


1. Use your store network to accept and handle holiday returns.

Many shoppers prefer to return purchases to a physical store location – 59 percent of respondents have made at least one return of an item they purchased online to a physical store.

Retailers should use the visit for a return as a way to drive increased engagement and repeat store purchases.


2. Ensure that returns policies incorporate flexible, customer-friendly actions.

Customers expect a full refund rather than a store credit, as well as free return shipping.

In fact, 55 percent of customers won’t even buy an item in the first place if the returns policy isn’t flexible.


3. Invest in solutions that can help process and recover the most value from returns.

Retailers should invest in returns optimization platforms that process and route inventory to the highest value channel – at first touch. Consider deploying a software solution that allows you to eliminate waste from your reverse supply chain and capture the upside.

By doing these three things, retailers can get ahead of the influx of unwanted items this holiday season – and turn returns into a competitive advantage.


This article first appeared on UPS Longitudes.


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