Returns: The competitive advantage - a study by CouriersPlease | June 2021 Returns - platformOS
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Returns: The competitive advantage
a study by CouriersPlease | June 2021
Returns
couriersplease.com.auCouriersPlease/Power Retail White Paper
CONTENTS
Executive Summary ...................................................................................3
What do consumers want? ......................................................................5
What can retailers do? .............................................................................. 6
CouriersPlease Returns explained ........................................................ 8
Returns Dos and Don’ts ........................................................................... 9
CouriersPlease June 2021Executive Summary
While much of the focus of online retail centres on making the sale, a large element of this is the
(somewhat contradictory) loss of the sale: returns. Strictly defined, online returns is the process
of a customer sending a previously purchased item back to the retailer. But the wider definition
encompasses so much more.Returns are about customer retention, loyalty, brand awareness,
retargeting, reviews, ratings, customer service and experiential marketing. As with most elements of
e-commerce, returns don’t exist in a silo.
The stats show that online purchasing is on the rise, consumer behaviour is changing, and how
retailers approach returns (from policies on their website to the physical returns process) can be a
huge strategic advantage.
Returns and the technology that supports them have been evolving to keep up with consumer
demand. Are you leveraging what’s on offer?
CouriersPlease (CP) are Australia’s leading Power Retail is the ultimate information resource
metropolitan courier service, providing for online retailers and suppliers.
customised shipping options for online retailers. Our team of editors, content developers, data
analysts and researchers are at the forefront
With over 35 years domestic experience we are of the industry, and offer the latest, cutting-
experts at connecting Australian businesses to edge insights into the fast changing world of
the local communities through our friendly face- e-commerce.
to-face service.
Across our data and research, media and events
With CP you can build the shipping service your divisions, we show you where you need to go,
business needs, in partnership with one of our and help you to get there.
800+ independent franchise owners.
Find out more: powerretail.com.au
Find out more: couriersplease.com.au
CouriersPlease June 2021Since online retail commenced its upwards If two e-retailers are offering the same product
trajectory, so too has the debate around returns with a similar price tag, the cost of returns can
intensified. Consumers have been slowly be a factor in where they choose to buy. If a
transitioned away from shopping in physical retailer offers free returns or low cost to return,
stores to feel more comfortable purchasing consumers are likely to purchase from them.”
online. Whether it’s a couch, a washing machine
or new leggings, there are many elements that For retailers, it’s a tricky balance. They need to
come into play to ensure that items are added to balance the needs of their consumers with their
a consumer’s cart. It’s not just price that impacts business objectives and the commerciality of
purchase decisions, but also optimising images returns. Despite what shoppers believe, returns
and product descriptions (not to mention all the come with an enormous cost. It’s not just the cost
elements that lead to the consumer heading to of physically returning the goods to the store,
the retailer website in the first place). A huge there’s inventory management, restocking costs,
factor that comes into play here is returns. customer service, packaging, etc. But there’s an
enormous cost for those who don’t offer smart
“As the online retail market grows, retailers are returns policies: loss of conversions, loss of
not only working to improve the shipping of marketing opportunities, loss of loyalty, customer
goods but also combating the challenges of service headaches and increasing competition.
returns and reverse logistics,” says Jessica Ip, So, what are retailers meant to do and where do
Chief Transformation Officer for CouriersPlease returns fit within the rapidly changing e-commerce
(CP). “The returns experience might be a landscape and increasingly heightened
retailer’s competitive edge to drive customer expectations of consumers?
retention. This includes the cost to consumers.
“As the online retail market
grows, retailers are not only
working to improve the shipping
of goods but also combating
the challenges of returns and
reverse logistics”
CouriersPlease June 20219 Million
Aussies purchased
something online in an
average four-week period
57% 30
of Australian online by 2021, the average
shoppers return at least Australian household
one item per year will have 30 connected
devices
What do consumers want? journey. The path to purchase can no longer be
seen as a funnel. By 2021, the average Australian
“I believe that the online retail landscape has household will have 30 connected devices.5
changed drastically in the last few years,” says Sixty-nine percent of Aussies use a smartphone
Ip. “The industry has seen an increase in gross and watch television simultaneously, using an
purchases of both physical and service products. average of three different screen combinations
Australia’s e-commerce market revenue is every day,6 while 63 percent start shopping on
expected to grow 14 percent over the five years one device and continue on another.7 While
through 2018 to 2023, bringing the total revenue consumers used to enter a store, touch, feel and
to $24 billion.”1 try goods or ask for help from sales assistants,
they’re now shopping on the go. They’re being
“With revenue growing year on year, so are the inspired on Instagram and are purchasing directly
number of Aussies shopping online”, explains from within the app. They’re adding to their cart
Ip. “New research shows over 9 million Aussies while researching on a tiny smartphone screen
purchased something online in an average four- (while watching Netflix). Is it any wonder then that
week period, which is an increase of 590,000 in returns are on the rise?
just 12 months.”2
The e-commerce boom doesn’t look set to
slow any time soon. With increasing consumer
engagement also comes increasing consumer
demand. Power Retail research has found that 7
percent of Australian online shoppers returned
the last item that they purchased. In terms of their
annual behaviour, 57 percent of Australian online
shoppers return at least one item per year, 25
percent return two items, and 2 percent return 10 1 https://www.ibisworld.com.au/industry-trends/market-research-reports/
items in a typical year.3 thematic-reports/online-shopping.html
2 http://www.roymorgan.com/findings/7612-whos-shopping-online-near-
Trends out of the UK and US markets indicate ly-9point5-million-australians-201806080733
that returns will only increase.4 So, what is driving 3 https://www.powerretail.com.au/product/returns/
this behaviour? Of course, with increasing spend 4 https://www.powerretail.com.au/product/returns/
comes the inevitable increase in returns. But 5 https://www.nbnco.com.au/blog/connected-homes/on-track-for-over-
30-iot-devices-per-aussie-household-by-2021
there is also a change in how consumers are
6 https://www.thinkwithgoogle.com/intl/en-aunz/advertising-channels/
spending, which is impacting returns. Mobile mobile/au-new-multi-screen-world/
commerce is on the rise as multiscreening and 7 https://www.thinkwithgoogle.com/intl/en-aunz/advertising-channels/
social commerce revolutionise the purchase mobile/au-new-multi-screen-world/
CouriersPlease June 2021“Encouraging returns is good for building So how can retailers leverage returns? First
loyalty; by not taking action it can result in losing and foremost, it’s about understanding why
customers. There is a risk of not competing with a consumers are returning items, and then ensuring
seamless returns process because many retailers that your overall strategy is aligned with consumer
are aiming to perfect this given the leverage it purchase behaviour.
provides,” Ip says. “It may be costly, but it has to
be built into the outbound price or cost of the Are your product images and content adequately
product.” describing your products? Do you have customer
support for shopper queries prior to purchase?
Nearly half (48 percent)8 of the most recent items Once you’ve ticked these off your list, ensure that
returned by Australian online consumers were you’re then optimising the returns experience as
because they didn’t fit or they didn’t like the you would the purchase experience.
colour. Females (56 percent)9 are much more
likely to return their last online purchase because “CP’s own research has found that 55 percent of
it didn’t fit, or they didn’t like the colour compared Aussies say repacking their goods or having to
to males (34 percent).10 CP research found that buy returns packaging is what they dislike most
regardless of the price of the item, 39 percent of about returning a product purchased online,”
Aussies would always return if they need to. explains Ip.
Shoppers also find it much easier to make returns In a time where there are so many online retail
through an online process rather than to a options, those who have a focus on returns in
physical store (as they don’t have to explain their their overall strategy will hold a competitive
reasons for the return to a shop assistant).11 advantage. A good customer-centric returns
policy will promote brand loyalty and repeat
In fact, 70 percent of consumers regard the purchases. “It only makes sense for customers
ease of being able to return items as a factor to have a positive online shopping experience
in determining which retailers they shop from from beginning to end – that is, from the first
online.12 engagement of the website to the checkout
process and all the way back to when you must
What can retailers do? return the item,” explains Ip.
Trends from the UK and US online retail markets “Some retailers are battling with returns –
both indicate that the proportion of returns will many are not sure what to do with it and some
increase, and that providing desirable returns resort to penalising customers as it costs them
policies will become a point of competition money,” adds Ip. “Despite this, retailers will have
between online retailers.13 to incorporate returns in their overall strategy
because it’s becoming a part of the whole
“Having a seamless returns experience is so customer experience. There are two parts to this:
important because it influences purchasing delivery and processing. I believe that both parts
decisions, promotes repurchasing, as well as require more confidence by retailers to offer this.
increasing customer loyalty to a brand,” explains Whether it be partnering up with the right carriers
Ip. “With many online retailers often offering or having excellent customer service for prompt
the same product, returns could be the only responses for shipping queries.”
differentiator when customers decide where to
purchase from.”
8 https://www.powerretail.com.au/product/returns/
9 https://www.powerretail.com.au/product/returns/
10 https://www.bbc.com/news/business-46279638
11 https://blog.retail.org.au/newsandinsights/online-retail-trends-click-col-
lect-starts-to-pay-off
CouriersPlease June 2021Jessica Ip, Chief Transformation Officer, CouriersPlease, shares her top five tips for retailers when
it comes to returns:
1. Eliminate the risk and hassle of returns.
Make it painless by implementing an easy returns process, which may require the customer to only
fill out a simple form with their details. When it comes to repackaging their parcel, consider sending
shoppers their order in a reusable bag, so they won’t have to pay extra for packaging.
2. Extend the returns policy during busy shopping periods.
A good idea is to extend returns during the holiday season when there’s a spike in online shopping.
People are busy during this time and customers will appreciate the flexibility on when they can
make returns. This will also give retailers breathing room to process any returns.
3. Use returns to gain insights about your customers.
If a customer returns a product, it may be worthwhile to gather some feedback. It may be that they
found a better alternative, or they were simply not satisfied. Retailers can also use this opportunity
to improve the business.
4. Encourage shoppers to exchange rather than return.
Retailers can take the opportunity to up-sell other items when a customer returns a product by
offering them a chance to add items in their exchange shipment. For example, ask them if they want
to change their size or for a similar item that’s a different fit or a new arrival.
5. Create clear and simple return policies.
Return polices that are easy to understand will reduce the chances of customers experiencing
delays in getting the returns processed and getting a refund. This especially applies to retailers that
ship overseas – these retailers would also have to think about language barriers and international
customs. It also helps to ensure that your return policies can be found within a few clicks on your
website for quick navigation.
CouriersPlease June 2021Returns
It’s vital for retailers (especially more traditional With the CouriersPlease Returns service, e-tailers
retailers) to understand the true cost of reverse can offer shoppers easy and low-cost returns for
logistics and how to incorporate this into the their customers. Customers can simply request
larger sphere of business. For example, where a CP driver to collect their unsuitable shopping
retailers can process customer returns in store, items from their chosen address or one of 1,700
they must ensure staff are adequately trained to CP drop-off points (which includes a network
service the customer even though the purchase of convenience stores and petrol stations). This
may have occurred online. Retailers with physical will then be delivered directly to the retailer’s
stores have a challenge to ensure their in-store warehouse for processing. CP’s solution helps
experience can replicate the customer’s online retailers reduce the need for their customer
experience and vice versa. Online retailers will service team to process returns because it’s a
have a different challenge to return all goods self-service returns portal. This leaves physical
to a central warehouse within the Australian stores to focus on selling instead of returns
geography. They may have some advantages and ensures a better self-service experience.
compared to a retailer with the cost of a physical Additionally, the speed of the return to the
store presence; however, the cost of returns to a warehouse, and the turnaround time for returns
single warehouse can be costly, especially when where they will be put back online or on the shelf,
trying to offer a consistent returns experience will be quicker.
for Australians living in cities compared to those
living in regional and country areas. Retailers will direct those customers wanting to
return their item to the CouriersPlease Returns
CouriersPlease Returns explained portal, where they will receive full directions and
guidance on how to lodge a return quickly and
Power Retail research found that finding time to easily. All the customer is required to do is repack
return deliveries is a significant issue for many their item, print out the consignment label and
online shoppers and some are prepared to pay apply it to their return for fast identification and
for a courier pick up service.14 This represents tracking. Once lodged, customers can either
a potential competitive advantage for online drop it off at the nearest drop-off point or wait for
retailers. it to be collected by CP from their home/office
and taken back to the retailer’s warehouse for
processing.
14 https://www.powerretail.com.au/product/returns/
CouriersPlease June 2021What mistakes are retailers making?
CouriersPlease explains the dos and don’ts:
DON’T... DO...
Complicate returns policies Factor in cost
A major mistake is very complicated returns Retailers should consider how much they charge
policies. Returns policies need to be easily – if they do – for returns because very few
understood, and the process should be hassle- Aussies will pay more than $10 to return an item
free and affordable. A survey CP conducted they bought online. Precisely 86 percent Aussie
reveals that 53 percent of shoppers said returns shoppers in a recent CP survey said they will only
processes offered by various e-tailers need to return an item if it is free to do so or costs less
be easier. Some of the mistakes include having than $10.
customers organise all the logistics of their
returns, such as the packaging and transport. Allow flexibility
Leave your customer waiting In addition to prices, retailers should also allow
flexibility in how shoppers can return their items.
Leaving your customers waiting too long for their
refund to be processed is also a common mistake. Prioritise speed
With Aussies increasingly wanting their online
shopping delivered at a faster rate, it is key for How quickly the product gets back on the shelf
retailers to accommodate shoppers with quick or online and how fast customers can get a
returns as well as refunds. refund should be considered heavily. The CP
survey shows 29 percent of Aussies say the
Forgetting to include a cross-border returns delay in getting refunds is what they dislike the
policy most about returns. The more efficient a retailer’s
quality check process, the faster customers can
Another common mistake to note is failing to receive their refunds.
place a cross-border returns policy on a retailer’s
website. If a retailer ships overseas, it’s important
that customers can easily find and understand
how they can make a return if they are based in a
different country, as the processes might vary.
53% 86%
of Aussie shoppers in a recent
of shoppers said returns CP survey will only return an
processes offered by various item if it is free to do so of costs
e-tailers need to be easier less than $10
CouriersPlease June 2021Delivering the future
couriersplease.com.auYou can also read
