We’ve all been there: To save time, we shopped online, yet our shirt wound up being too big (or the earrings arrived too late) and the hassle of sending it back took longer to complete than retailers would have you think. So much for time savings.
Now sprinkle in the chaos of a global pandemic, shuttered storefronts and malls, consumer anxiety over visiting reopened brick-and-mortar stores, and the resulting mountain of returned merchandise. It’s clear that product returns have grown more complex and costly for retailers, brands, and consumers this year.
We’ll look at the retail supply chain’s urgent need to re-engineer their returns process to prepare for the flood of returns and keep operations running smoothly.
Why product returns are a big deal in 2020
For many retailers and brands, online shopping was the only option to connect consumers to their merchandise as COVID-19 spread across the globe. Online shopping has soared this year, as total U.S. online sales exceeded $73 billion in June, up 76% year-over-year – and May online spending was even higher at $82 million.1 Evans, Katie. As pandemic pushes on, online sales grow 76% in June. Digital Commerce 360. July 13, 2020.
Yet, as e-commerce sales have risen, so have product returns, leading to a backlog of unprocessed merchandise that piled up because stores remained shut for months. Consider how product returns affect the customer experience:
- 42% of shoppers had returned an item they bought online within the previous six months, according to a pre-pandemic study.2Connecting with Shoppers in the Age of Choice. Narvar. 2018.
- 56% of pre-pandemic e-commerce returns involved apparel and shoes, and electronics (48%).3Thomas, Lauren. Retailers face another challenge during coronavirus: Handling returns. CNBC. April 14, 2020.
- 25% of all e-commerce purchases are sent back and 30% of consumers deliberately over-purchase then return unwanted items.4 Returns Come Back To Haunt eCommerce Amid Pandemic. PYMNTS.com. May 5, 2020.
- 70% of U.S. online shoppers said their most recent return experience was “easy” or “very easy,” and 96% would buy from that retailer again based on that experience.5Connecting with Shoppers in the Age of Choice. Narvar. 2018.
- 42% of retailers paused their pickup in-store and return in-store services due to the pandemic, and 40% percent relaxed their return policies.6Returns Come Back To Haunt eCommerce Amid Pandemic. PYMNTS.com. May 5, 2020.
Now that stores have reopened, retailers and brands need to solve this reverse supply chain issue. Effective returns practices, including a buy online, return in-store (BORIS) strategy, can support efficient operations, cost savings, and hassle-free customer experiences.
Returns test consumer patience and loyalty
Due to product return backlogs, shoppers faced extensive wait times, unanswered online chats, and unreturned calls and emails. Shipping companies struggled to manage demand, creating long wait times for deliveries. The high volume of returns delayed refunds, and consumers who had returned products weeks or months earlier called to demand their money back.7Terlep, Sharon. Please Hold. Shoppers Wait and Wait to Reach Lululemon, Best Buy. The Wall Street Journal. June 12, 2020.
Online shoppers have come to expect an easy, hassle-free returns process, which impacts customer satisfaction, loyalty, and repeat sales. Now more than ever, retailers and brands need to deliver a simple and seamless e-commerce experience, including product returns and exchanges.
“Customers will no longer tolerate sub-par digital shopping experiences like they may have before the crisis” – including returns.8 Lee Yohn, Denise. The Pandemic Is Rewriting the Rules of Retail. Harvard Business Review. July 6, 2020.
~ Harvard Business Review
Retail companies also face issues with finding enough workers to process the returns that have piled up in distribution centers. Warehouses are particularly understaffed among department store chains and apparel retailers. 9Thomas, Lauren. Retailers face another challenge during coronavirus: Handling returns. CNBC. April 14, 2020.
Adapting to rising returns
To offer relief to stressed-out consumers, retailers like Macy’s and Gap have adjusted their return windows. These companies extended their grace periods for giving shoppers their money back when they return their online purchases.10Thomas, Lauren. Retailers face another challenge during coronavirus: Handling returns. CNBC. April 14, 2020.
When consumers make returns to stores, it saves companies money on shipping and transportation costs, especially when they offer free returns to online shoppers. Alternatively, consumers can drop off returns at their local post office, FedEx, or UPS store.11 Thomas, Lauren. Retailers face another challenge during coronavirus: Handling returns. CNBC. April 14, 2020.
To decrease the rate of product returns, more retailers and brands are investing in augmented reality (AR) mobile apps. AR technology lets consumers “try before you buy,” to get a sense of whether apparel, cosmetics and eyeglasses are a good fit by using their smartphones and computers. AR can make consumers more willing to buy and less likely to make a return. Yet data privacy experts warn the technology could also collect consumers’ real-time personal and biometric information.12 Bhattarai, Abha. Virtual try-ons are replacing fitting rooms during the pandemic. The Washington Post. July 9, 2020.
Suppliers and retailers, as well as their logistics and tech solution providers can also collaborate more closely, through an informal arrangement or a strategic partnership. Suppliers can identify their top-selling SKUs among their top retail partners to know which products to prioritize and which items to remove to minimize returns. Meanwhile, retailers can update their competitive analysis to identify whether they have an assortment gap for suppliers to fill to prevent product returns by adapting to evolving consumer expectations.13 Manly, Justin, Jimmy Royston and Morgan Sonntag. CPG Companies Face an E-Commerce Tsunami. Boston Consulting Group. July 9, 2020.
How companies adapted to COVID-19 and returns
Here are some ways retail companies changed their processes to accommodate consumers’ needs with extra empathy.
- Walmart: The retail giant’s stores remained open throughout the entire pandemic, as it offers essential goods and its stores are standalone rather than located within malls.14 Bomey, Nathan and Kelly Tyko. Can shopping malls survive the coronavirus pandemic and a new slate of permanent store closings? USA Today. July 14, 2020. For consumers wary of visiting physical stores, they can start the return process on the Walmart app or website, and the company extended its return period by six weeks.15 Tyko, Kelly. Store return policies have changed due to COVID-19 with some retailers suspending returns. USA Today. June 1, 2020.
- Sephora: The makeup retailer now accepts returns over a longer period. For online returns, its standard 30-day window has doubled to 60 days.16 Thomas, Lauren. Retailers face another challenge during coronavirus: Handling returns. CNBC. April 14, 2020. Sephora also vowed to destroy all product returns to protect the health and safety of workers and consumers.17 Tyko, Kelly. Store return policies have changed due to COVID-19 with some retailers suspending returns. USA Today. June 1, 2020.
- Kohl’s extended its generous return policy of 180 days by 30 days due to COVID-19 closings. The company also keeps all returned merchandise off the sales floor for 48 hours.18 Tyko, Kelly. Store return policies have changed due to COVID-19 with some retailers suspending returns. USA Today. June 1, 2020.
- Lululemon: The activewear maker’s call center volumes rose two to three times their normal levels due to a spike in e-commerce sales and a high volume of mailed returns. In response, the company extended its return-processing time to 15 to 20 days, up from 10 to 15 days.19 Terlep, Sharon. Please Hold. Shoppers Wait and Wait to Reach Lululemon, Best Buy. The Wall Street Journal. June 12, 2020.
In addition, many retailers and brands have redeployed sales associates to handle products returns to manage the increase in volume.
Overall, in response to a rise in online shopping during the pandemic, retailers and brands are rethinking their returns strategies to make them simple, transparent and customer-friendly. Companies are also collaborating with supply chain partners to remain flexible during this most unusual year so consumers – not products – keep coming back.