Let’s face it. Returns are expensive.
It is estimated that when a product is returned, a seller will touch it 11 times to process that return. The lost sale is just the beginning of a series of costs that mount up: labor and restocking, extra shipping and delivery costs, plus the environmental cost of transportation and replacing the inventory.
It is estimated that at least 30% of all products purchased online are returned. Despite the frequency of returns, many organizations have not optimized their returns processes for efficiency and cost-effectiveness.
If distributors, manufacturers, and retail organizations had their way, they’d never deal with returns again. But they should. No business enjoys returns, but the data they create can lead businesses to invaluable insights. And addressing these issues proactively can lead to improvements in your business.
The Value of Returns Data
Instead of accepting returns and related costs as a necessary expenditure, businesses are better off learning what’s being returned and why. Looking at returns data does more than minimize returns. By analyzing returns, businesses can not only reduce these returns but also build a healthier, more resilient supply chain.
This is where a robust Order Management System (OMS) can be used to gather, share, and analyze historical and real-time returns data. By identifying the products being returned, the reasons behind the returns, and the exact point of the buying journey that the product is being returned, businesses can pinpoint issues that might be impacting items and the customer experience on the whole. Return rationales, unexpected variations, and return rates can also help identify quality control or performance issues and be used in forecasting and planning. For instance:
- Product Performance: By tracking which products have the highest return rates, businesses can identify underperforming products that may require adjustments, redesign, or removal from the product catalog
- Return Reasons: Analyzing the reasons customers give for returning items can help identify repeat problems, such as quality concerns, sizing problems, or damaged items. This information can inform product improvements and quality control processes.
- Return Trends: eCommerce return rates can reveal patterns and trends, such as seasonal variations or spikes in returns after specific promotions or product launches. Understanding these trends can help with inventory planning and marketing strategies.
The real value of an OMS is in giving decision-makers direct access to returns data. It helps businesses recognize what’s impacting their orders and be responsive to change. With the right data points at the right time, you can react fast and rectify the situation to improve the customer experience while driving operational efficiencies. With returns data in hand, business leaders can recognize return trends earlier, take action faster, and forecast smarter. This, in turn, drives continuous improvement while reducing returns costs.
Digging Deeper into Returns Data
Returns management isn’t limited to what’s being returned and why. Once businesses have a handle on return rates and performance, they can perform even finer-grained analysis to generate deeper insights, inform policy decisions, or make targeted business improvements in the following categories.
Customer Experience Enhancements
Customer Behavior: Analyzing the return behavior of individual customers can provide insights into customer preferences and shopping habits. It can also help identify potential return fraud or abuse.
Customer Satisfaction: Tracking the resolution time for returns and customer feedback can help gauge customer satisfaction with the returns process. Businesses can use this information to improve the returns experience.
Inventory Management: Understanding the reasons for returns can help businesses optimize inventory management. For example, if sizing issues are a common reason for returns, businesses can adjust inventory levels for certain sizes.
Return Costs: Returns data can quantify the costs associated with returns, including shipping fees, restocking costs, and potential losses from damaged or unsellable returned items. This information can inform decisions on return policies and shipping methods.
Geographic Insights: Returns data can be mapped to geographical data to show which regions these returns originate from. This information can help tailor marketing strategies, product offerings, and customer service support to specific regions.
Product, Marketing, and Catalog Improvements
Quality Control: Returns data can be used to spot quality control issues in the manufacturing or distribution process. Frequent returns for the same reasons can indicate systemic problems that need addressing.
Marketing and Product Development: Insights from returns data can influence marketing strategies and product development efforts. For example, businesses can prioritize addressing common reasons for returns in marketing messaging or designing more user-friendly products.
Product Descriptions: If returns are related to inaccurate product descriptions, it’s a sign that product data and content needs improvement. This can lead to more accurate and detailed product listings.
Performance and Security Gains
Supplier Performance: Returns data can highlight supplier-related issues, such as frequent returns due to product defects from a specific supplier. This information can inform supplier evaluations and decisions and ensure that supply chain budgets are being allocated appropriately.
Return Fraud Detection: Unusual return patterns, such as frequent returns from the same customer or suspicious return reasons, may indicate return fraud. Businesses can use this data to detect and prevent fraudulent returns.
Leveraging Returns Data to Maximize Business Outcomes
Managing returns can still be a headache and an unwelcome cost burden for businesses. However, the data that these returns produce are valuable indicators of systemic problems within the business. By collecting and processing returns data, an OMS provides valuable data-driven insights that help businesses make improvements to various aspects of their operations.
While an OMS lays the groundwork for effective returns management, achieving greater visibility into this data is paramount. This is where specialized tools like PivotreeTM Control Tower come into play. Going beyond traditional OMS capabilities, Pivotree Control Tower offers businesses real-time visibility of the entire supply chain with insights into eCommerce returns. Real-time and historical data, presented on an intuitive dashboard, enable businesses to react quickly and efficiently and gain a deeper understanding of what items are returned, in what volume, when, and by whom. This enhanced visibility allows for strategic decisions to optimize product mix, improve quality, minimize fraud, and ultimately deliver a superior customer experience.
To learn more about Pivotree supply chain solutions, drop us a line at: [email protected].
About Pivotree: Pivotree designs, builds, and manages frictionless commerce experiences for brands and their customers around the world. We provide end-to-end solutions and services in Commerce, Data Management, and Supply Chain for hundreds of brands globally.