Imagine receiving 10-30% of your holiday gifts back because the recipients weren't satisfied. Retailers face this challenge every day, with in-store return rates averaging 8-10% and e-commerce returns reaching 30% or more. Inefficient returns processing not only drains resources and finances but also contributes to excess packaging waste and transportation emissions. However, the tide is turning as smart returns technology emerges as a game-changing strategy. This technology streamlines the returns process, enhances customer satisfaction, reduces costs, and promotes environmental sustainability.
Transforming the Returns Conundrum into an Opportunity
Traditionally, returns have been perceived as negative experiences for both customers and retailers. Smart returns technology changes this perception by turning returns into opportunities for re-engagement and delighting customers. It goes beyond providing an online customer portal for initiating returns; it can automate refunds under specific conditions or incentivize customers to return items at a nearby store rather than shipping them. At the warehouse, returns technology automates tasks, expediting the refund or exchange process. In essence, technology-driven returns are a win-win for all parties involved.
The Impact of Inefficient Returns Processing
Inefficient returns processing comes at a significant cost, with 80% of e-commerce retailers reporting that it's a significant to severe expense. Additionally, returns have a substantial environmental footprint, contributing to the emissions equivalent of over three million cars annually in the U.S. Return rates are growing faster than revenue rates for 91% of retailers, making returns either a threat to profitability and customer loyalty or an opportunity to keep costs low and customer satisfaction high. The adoption of technology will ultimately determine the outcome.
The Rise of Tech-Driven Returns
While retailers have embraced technology to optimize various supply chain processes, returns management has often been overlooked. However, with soaring return volumes and customer expectations for fast, easy, and free returns, technology is stepping in to address these challenges. When a returned product reaches a store or warehouse, technology streamlines the process by automatically identifying important details such as serial numbers to prevent fraudulent returns. Depending on the item's condition, the software can route it to the store location with the highest predicted resale value, recycle it, or send it to a re-commerce site. Customers are kept informed about the status of their return, eliminating the need for follow-up calls or emails.
Sustainable Returns: Benefiting Retailers and the Environment
Returns technology also addresses the environmental impact of returns. For instance, if a customer lives within five miles of a store, they can be encouraged to return the item there rather than through the mail, reducing emissions and packaging waste. Damaged items can be directed for recycling, while gently used ones can find a second life on re-commerce sites.
Practical Tips for Retailers
Implementing returns technology can be complex, given that returns often involve multiple teams and leaders in a company. Forming a dedicated team or appointing an individual to champion returns technology is crucial. Clearly define your business goals, whether it's improving the customer experience, automating processes, or supporting sustainability initiatives. Assess your existing tech stack to ensure seamless integration with returns technology. User-friendliness is essential; returns technology should be easy to train on and should streamline tasks for team members.
The Future of Tech-Driven Returns
As returns management challenges continue to mount, technology is advancing to address these issues. Artificial intelligence (AI) is playing a pivotal role. Virtual dressing rooms powered by AI assist customers in making informed buying decisions, reducing the need for multiple size and color purchases. AI-driven return policies can be tailored based on customer profiles, offering high-value customers more return options or lenient policies. AI also contributes to sustainable returns by considering various factors to determine the best location for routing returns and maximizing resale value.
The future of tech-driven returns is already here, with retailers leveraging technology to achieve faster returns processing, lower costs, happier team members, and delighted customers at every phase.
