Startups have become synonymous with growth and innovation. And over the last five years, eCommerce startups like Hungry Panda, Boxed, Verishop, and Bellroy have modulated, customized, and defined customer expectations for quality products and services. However, even these popular startups cannot defy the norm of the industry- returns.
As returns are becoming more frequent across all verticals of the eCommerce startup ecosystem, the right question to pose is- how do eCommerce startups manage returns? In most cases, returns mean a loss of revenue and a complex system of reverse logistics to get products back from the customers. However, with a strategic process in place, eCommerce startups establish a communication channel with customers, facilitate cost-effective ways to collect returned products, transform them into inventories and coordinate the reverse logistics process.
In this article, we will take a closer look at successful methods eCommerce startups can adopt to manage their returns.
2) Ways eCommerce Startups Encounter Returns
But first, let’s understand the two modes by which returns are initiated.
2.1) When Initiated by Customers
In most cases, the customers initiate the returns process by making a returns request in your established channel. This can be over the phone, by email, or by placing a return on your website.
The customers can either return the product by courier to the startup or the startup can assign a courier to pick up the product from the customers. Once the item is returned, the startup will process the item to restock it and issue a refund or exchange the item for the customer.
2.2) When Handled by Retailers
For some eCommerce startups operating on the D2C model, the retailer of the product takes control over the returns process. The retailer can generate returns labels and direct the customers to ship the item to the origin warehouse or collect the items in bulk and ship the items later.
Let’s also take a look at the two types of returns to understand which one can be prevented.
2.3) Controllable Returns
These forms of returns are caused by a lack of attention to detail and how the products are handled during the shipping process. For example, returns made for the wrong order size, products differing from the image on the website, and different products shipped or products damaged during transit.
These returns can be reduced by optimizing the product descriptions, incorporating customer reviews, hiring an excellent retail fulfillment partner, and carefully packaging and handling the product to avoid damage.
2.4) Uncontrollable Returns
For returns that stem from customers’ change of preferences, wardrobing practices, and serial returning habits, it is difficult for eCommerce startups to directly control them. That said, uncontrollable returns can be prevented to some extent with proper measures taken in the returns policy, placing the cost of a return as a deterrent and optimizing the holiday season returns.
3) The Need for eCommerce Startups to Manage Returns
3.1) Reduce Cost and Save Time
With an automated returns management system in place, startups can cut back on hiring extra hands for processing returns, and delays are reduced in restocking the inventory and reselling the items.
3.2) Manage Inventory Flow
With a returns strategy, eCommerce startups can plan on managing stuck inventory, especially in cases of apparel eCommerce startups. With inventory management software sifting through large volumes of data to calculate inventory stock in real-time becomes easy.
3.3) Reduce Return Rates
Managing returns cut back on return rate especially when data is available for eCommerce startups to identify quality issues and pain points.
3.4) Customer Satisfaction
Manging returns are the sure way to score on customer satisfaction. Speedy exchanges, multiple return options, and refunds will entice customers to purchase from the startup.
3.5) Sustain Profit Margins
With a proper strategy in place, it is possible for startups to boost their profits either by getting more leads with an excellent returns policy or by reselling returned products.
4) The Right Approach to Returns Management
The ways and reasons that returns are generated for an eCommerce startup are manifold. Therefore it is only reasonable that startups find a cluster of solutions that address the issues of increasing costs, arranging inventory space, allocating labor, checking the quality of the products returned and controlling the reverse logistics journey efficiently.
This is where a returns management strategy comes into play. This involves concrete management decisions and digital solutions that streamline the returns process for a rapid scaling that almost all eCommerce startups aim to achieve.
The first step is to appoint quality tools that handle the Returns Material Authorization (RMA). Here inventory software and robotics can help in managing data, calculating real-time inventory stock, generating returns labels and shipping slips, and validating RMA requests.
The second step is to channel digital solutions for quick and efficient carrier integrations, notifying customers, and integrating with barcode scanners for real-time updates on the shipment will help eCommerce startups to monitor the package’s condition and regulate any delays.
The third step is to supervise the supply chain for reverse logistics be it supervising the carriers or working with a warehouse management system. One of the primary goals of returns management provides a top-notch quality assurance of products returned so that they can be quickly brought back to the forward supply chain.
5) How do eCommerce Startups Manage Returns
Now that we have a fair understanding of an ideal returns management strategy, here are the ten ways eCommerce startups can manage their returns optimally.
5.1) Return to Fulfillment Center or Retail Store
The first priority for any eCommerce startup is to regain the revenue lost for a quick recovery. A fulfillment center or a retail store is quick in processing the quality of the item and merchandising for restocking the item back in the inventory. Therefore, reselling the item becomes convenient.
It is an added bonus if a startup has a retail store. Customers prefer in-store returns as they are easy and convenient for instant refunds. Customers can also quickly exchange products if available in the retail store, adding to customer satisfaction.
5.2) Outsource to 3PLs
Outsourcing to logistical partners may not seem a necessity at first, but it is one of the highly effective ways to manage returns. Hiking a 3PL not only automates the returns process including integrating with eCommerce platforms and returns tools like Happy Returns, and carriers but also streamlines the restocking, tracking, and accessing discounts in returns labels, and packaging, etc.
5.3) Invest in Saas-Based Solutions
Automating returns is the best way an eCommerce company can handle returns, especially since manually handling returns is time-consuming and prone to errors. This is why using SaaS-based software that allows eCommerce startups to streamline their returns placement, customer portals, communications, refunds, and tracking.
Integrating with Saas-based returns management solutions easies the process of processing returns requests, allocating carriers, tracking shipments, and notifying customers a far easier task.
5.4) Analyze Returns
A good returns strategy requires data that predicts the reasons for an eCommerce startup is facing returns as well as consolidating the different qualities of the products shipped back for further processing.
With careful analysis of the data, an eCommerce startup can classify the types of returned items that can be restocked as it is or restocked with minimal alterations if they can be resold in a secondary market or disposed of them altogether.
Analyzing returns data also gives a startup the necessary outlook to evaluate the performance of key indicators like returns per unit, time cycle of a product returned, customer satisfaction and conversion rates, etc.
5.5) Improve Customer Service
If a customer returns a product, it does not necessarily end their engagement with the startup. In fact, reaching out to the customers for their feedback about the product returned and the services established a bond of trust that ensures continued engagement.
Understanding customer grievances, offering prompt solutions to customers and connecting back after resolving the issues (via emails, texts, and calls) boost brand loyalty. Improved customer service salvages a bad shopping experience for many customers.
5.6) Process Returns Fast
With heightened business competition, it is not uncommon for customers to demand speedy returns processing and refund or exchange. In fact, issuing refunds fast can be the recovery point for about 88% of eCommerce customers to transact with startups in the future. It has been found in a data report that over a quarter of customers would repurchase after their returns in processed within 4 days.
5.7) Improve Quality Control and Accuracy
Improving the quality of the product before packaging, using sturdy packing materials, and ensuring that products are safely handled can drastically reduce returns in the category of faulty products which takes upto an estimated 23% of returns.
Quality assurance and accuracy come when there is a good order fulfillment system in place. While quality checks can be done during the picking and packing process, a better result can be obtained when there is a dedicated workspace assigned for quality checks by separate personnel.
Similarly, eCommerce startups can make use of inventory management and shipping software to automate order processing to reduce human error.
5.8) Formulate Excellent Product Listings
A good product listing has the potential to ward off unwanted returns for many eCommerce startups. While highlighting the features of the product to get customer attention is important, it is equally essential to jot down essential points like size, dimensions, how to use, and how to wash, how to recycle or dispose of the product.
Adding high-quality product images, and videos and stating customer reviews will amp up the product listings and give all the information one would require before purchasing the product or service. Additionally, using UX tools, virtual assistants can automate the process of recommending the correct size for the shopper’s next purchase.
5.9) Craft a Customer Friendly Returns Policy
One component that has a major impact on returns is the returns policy. A returns policy sets expectations in customers for a positive returns experience. If possible, including free returns, offering a longer returns window, charging for returns shipping, guiding customers on generating returns labels, and scheduling easy returns pickups are all determinants of customer satisfaction with returns. A good returns policy can improve customers’ lifetime value and in many cases increase sales with tactics like money-back guarantees, quick replacements, etc.
5.10) Customer Reviews
Customer reviews are gold mines for all eCommerce startups and a reason why eCommerce startups should carefully consider this feedback. Identifying pain points of the returns process and issues with products becomes easier after reviewing customer feedback.
Also, re-engaging with customers about their feedback will uphold the integrity of the startup and add value to how customers perceive the brand. A positive experience will generate more sales even when a customer is returning a product.
6) Why Automate the Returns Process
As mentioned above, automating returns is a key to a perfect and improved customer experience. Using cloud-based software can save precious time for eCommerce startups. They can relieve themselves of communicating with various carriers, and warehouse managers over emails or spreadsheets when SaaS-based solutions do the job in real-time.
With meticulous accuracy in carrying out tasks, returns management software allows eCommerce startups to design a self-service portal for facilitating returns or exchanges and establishes a conditional workflow to determine if an item can be returned. Automating also involves the quick generation of returns labels or QR codes and integration with warehouses or fulfillment centers for a faster returns process.
7) How ClickPost helps eCommerce Startups to Manage Returns
ClickPost is a SaaS-based returns management solution that proactively helps eCommerce startups to manage and streamline their reverse logistics journey. Operating with Push and Pull APIs, ClickPost is well-positioned to administer the entire lifecycle of a returns product starting with providing a self-service portal for eCommerce startups.
The portal is branded according to the aesthetics and functionality of the startup where customers can easily file a return request. ClickPost easily configures with the rules provided by businesses to automate the approval and denial of return requests. No manual labor is required anymore. Along with this, ClickPost also designs branded tracking pages with features of cross-selling products.
Next, ClickPost’s AI intelligently allocates a shipping carrier for the reverse logistics based on multiple parameters of performance so that only the best carrier suited to undertake the journey gets the order. This process also includes the automatic generation of AirWay bills and shipping labels. eCommerce startups gain speed, efficiency, and accuracy in this stage.
There are occasions when exceptions happen during pickups like customer addresses not being found or customers not available. This can be a frustrating point for both the start-up and the customer with a lack of communication. This is where ClickPost saves the trouble. As soon as an exception is reported, ClickPost contacts the customer to get their feedback and reschedules a pickup date and time that is convenient for the customer. This way both the customer and the startup company can rest assured about refund and stuck inventory.
Managing return is a critical step in scaling up business for all eCommerce startups. With a handy set of returns management solutions and partners, the returns journey can be customized to suit the convenience of quick seven-day or fourteen-day returns for customers. Managing returns becomes all the easier if SaaS-based software is employed to automate crucial steps in the returns process.