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3 ways to reduce the impact returns have on your bottom line

It’s critical that today’s retailers master the art of the return quickly to reduce the impact on their bottom line.

Online shopping is convenient and easy, which is why so many consumers today love to do it. But it's also easy to make a purchasing mistake – orders that include the wrong size, color or item happen all the time.

This fact is why so many people check the return policy before making a purchase; 67 percent of online shoppers do this, according to Business 2 Community. Further, more than 90 percent of people said they're more likely to shop at a store again if the returns process was easy.

Fifteen percent of retailers told Multichannel Merchant that their return rates were between 10 and 14 percent in 2015, up from 8.3 percent in 2014. These trends also demonstrate why it's so important for retailers to take control of their reverse logistics.

As any online retailer knows, returns are pricey. Between the cost to ship a package there and back, plus the cost of the item itself, the expenses add up.

"Many people won't go back to an online shop that made a return difficult."

It's critical that retailers master the art of the return quickly to reduce the impact on their bottom lines. Here are three ways to get started:

Make the return process easy

First and foremost, the retailer must focus on the return process itself. It should be a cinch for consumers to send an item back and get a refund.

Though no retailer wants to accept already sold merchandise back to the warehouse, in today's ecommerce environment this step can have major implications down the line: Many people won't go back to an online shop that made a return difficult.

If you can, make shipping free or at least inexpensive. Include the return label in the initial package so it's easy for the consumer to prepare the box for shipment. Finally, be clear and honest about when and how the consumer's money will be refunded.

Don't write off returned merchandise

What happens to the goods that online shoppers send back? Chances are, they wind up lonely and forgotten on a warehouse shelf. Don't let this happen. As Reverse Logistics Magazine pointed out, merchandise on the shelf is like money on the table – don't leave it there.

If there's nothing wrong with the item – say it's a dress one size too big, or a pair of shoes that were accidentally ordered in tan instead of black – simply re-add it to your inventory and sell it again.

If there's a small defect in the item, consider reaching out to someone who is able to refurbish it so it works like new. Then, you can resell the item. Even if you sell it at a discount, some profit is better than no profit at all.

Items can be sold again once any defects are addressed.Repair returned items so they can be sold again.

The key to being able to resell your returned merchandise is ensuring products stay protected throughout the delivery process to the customer and the return process back to your facility. This means investing in high-quality protective packaging that can last during long, drawn-out journeys.

Avoid returns in the first place

There's no way to completely eliminate the need for returns. However, there are ways to decrease return rates, which would in turn benefit your business's bottom line.

Retail company Donna Salyer's Fabulous Furs was able to reduce its return rate from 22 percent to 16 percent in four years by making a few key strategic adjustments, according to Multichannel Merchant. Many of the company's changes revolved around ensuring that consumers knew exactly what they were purchasing.

Here's what Donna Salyer's Fabulous Furs did to accomplish this:

  • Added more product photos from multiple viewpoints to the website.
  • Made continual updates about product fit to the enterprise resource planning system.
  • Implemented merchandising software to make sure product specs were consistent.
  • Updated size charts to achieve consistency between the company's website and catalogue.

The company also trained call center representatives so they knew how to address specific problems, as well as provide excellent service to callers.

One-fifth of returns are sent back to online retailers because they arrived broken. This can be avoided when the right protective packaging is used. Make sure the box or enclosure the product is shipped in is the right size; a too-large box allows items to shift and exposes them to more risk.

Also, identify what packaging needs your merchandise has. Does it need cushioning to mute vibrations? Block and brace? A protective screen cover? Closely evaluate each of your items and be sure the packaging strategy is sufficient.

To gain insight into how you can improve your operation to reduce the impact returns have on your bottom line, reach out to the packaging experts at Pregis.