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Returns Account for $369 Billion In Lost Sales

Published on 12 October 2019 by in ecommerce returns 

In a survey by the National Retail Federation consumers ranked return policy as more important than a brand's customer service. 

To stay competitive, brands are spending tons of money to make returns hassle-free for consumers. Increasing the ease of returns is a great way to increase customer loyalty and retention. 

However, recently, brands have gotten so good at making returns hassle-free for consumers that the number of returns has skyrocketed. According to the NRF, total merchandise returns account for $369 Billion in lost sales for US Retailers. 

The effects are even more significant with omnichannel brands. The money omnichannel retailers are spending on returns grows as their online sales become a larger part of their overall sales. Steve Dennis, President & Founder of SageBerry Consulting, calls this phenomenon the "omnichannel migration dilemma."

If they aren’t already, brands should be paying close attention to the number of returns and the costs associated with them.

As Peter Drucker would say, “If you can’t measure it, you can’t improve it.” 

The Returns Epidemic 

“Online shoppers want the same level of choice, control and convenience making their returns as they do making their purchases,” - Teresa Finley, CMO for UPS.

First and foremost, consumers want returns and exchanges to be free. According to a report by Walker-Sands, 54% of consumers said that free returns and exchanges made them more likely to shop online. The only factor that ranked higher was free shipping. 

Unfortunately for brands, free returns are not free for the business. Returns increase costs in a multitude of ways. From shipping costs to increased labor costs (inspection and restocking). Not to mention that some of the returned inventory will no longer be in good enough condition to sell at full price (or at all). 

Fraud & Abuse are Making Matters Worse

Unfortunately, good-intentioned policies are being taken advantage of by individuals who want the dressing room experience at home and criminal groups alike. 

No, we aren’t suggesting that Jessica who is unsure about the perfect dress for her date is as bad as groups who are deliberately committing fraud.  But both are sucking profits out of companies whose only crime is trying to take care of customers who aren’t pleased with their purchase. 

According to Appris, for every $100 in returns, $5.00 is lost to return fraud. 

Just let that sink in for a moment. 

The same study estimates that the retail industry loses just under $24 Billion per year to returns fraud and abuse.

Every brand in the world strives to provide a great customer experience. But every brand can’t afford to hemorrhage money from returns. 

Finding a Balance Between Customer Experience and Your Return Policy

Brands are in a dilemma: 

1. Should they provide a liberal return/exchange policy? 100% satisfaction guarantee, no questions asked, etc.

OR

2. Should they provide a more stringent policy? Restricts the amount of product a customer can return, the period in which they can return, etc. 

Similar to most issues, the answer is in the middle.

Lenient return policies are a great way to win the hearts, minds, and dollars of consumers. Companies like Land’s End and Zappos have built their companies on the backs of generous returns policies. This bet on building relationships with their customers has paid dividends and is inseparable from their brand's image. 

Despite all the positives of a lenient return policy, the risk of abuse can not be ignored. L.L. Bean is probably the most famous example of a brand changing its return policy. Last year, the company decided to end its 100% satisfaction guaranteed policy instituted by the company’s founder. Making this decision after they observed a significant amount of abuse from their customer base. 

The abuse was so widespread that Company Chairman, Shawn Gorman, had his own donated shirt returned for a refund. L.L. Bean reported that the policy cost them $250 million over 5 years. Even so, the decision to change the policy was met with backlash from customers like the one below:

 

Some customers felt so betrayed by the brand’s decision that they even filed lawsuits

Here are two more examples of companies who were known for having very generous policies who felt like they need to make changes:

- Costco - In 2007 the company restricted returns of electronics. 

- REI - The company’s return policy was so lenient and return abuse was so rampant it earned nicknames like Rental Equipment Inc. 

Have you considered changing your return policy?

Is return abuse a widespread issue for your company? Is it putting your company under immense financial pressure? It may be time to make sweeping changes to your return policy. 

Here are the 4 main ways that brands alter their return policies: 

- Require proof of purchase

- Require an item to be in its original packaging 

- Reduce the amount of time customers have to return the item. 

- Give customers store credit for returns

Worried about the cost of returns?

Don’t be! Ok, maybe you should just a little. Some of the biggest names in e-commerce are taking action against excessive returns. Amazon and Zappos have both suspended customers they identified as serial returners. 

There isn’t a definitive best policy for deterring serial returns. But using data to target individuals who you know are pushing the limits of your return policy is a great alternative to making sweeping changes to your return policy. Sweeping changes punish your entire customer base for the actions of a few. 

Reducing Returns with Zenkraft Dashboards

Zenkraft’s solution collects data on returns and packages them into easily digestible dashboards. These dashboards can be a valuable weapon in your efforts to crack down on return fraud and abuse.  

Zenkraft’s dashboards will empower your team to make an informed decision to protect your margins. When analyzing the data you will be able to identify product categories, specific products, the reason for the return, and which customers are making the most returns. 

After reviewing the data you can then determine what course of action to take. Whether that means, making wholesale changes to your return policy, changing your policy for a specific product category, or warning/banning customers who are testing the limits of your policy.

Conclusion

We can all agree that you’d rather your brand be on the first page of Google when you search “Generous return policies” instead of “Stingy return policies”. But just because your brand is perceived to have a less generous policy doesn’t mean it was a mistake. 

Brands, especially those whose online stores are driving a large percentage of sales, need to be wary of the rising expenses associated with returns. And keep a close eye out for serial returners. It may be necessary to tweak your return policy to preserve the financial health of your company. 

Brands span industries and sell completely different products. So why would there be a one size fits all return policy for every brand? I would look ridiculous in Shaq’s suit, but that doesn’t mean I won’t look good in a tailored suit. 

Your return policy should be tailored to fit the nature of your product. Books and video games that can be completed in a week should have shorter return policies than refrigerators.  
If 85% of L.L. Bean’s customers were ok with the controversial decision to change from lifetime returns to 1-year returns. It’s certainly possible for your brand to strike a balance that is both customer-friendly and bottom-line friendly.

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5 Ways to Improve the Post-Purchase Customer Experience

Published on 24 September 2019 by in b2bcommerce commerce-cloud returns 

Are you putting enough emphasis on post-purchase experience? 

There’s a time lag for online retailers between purchase and package arrival that even Amazon Prime can’t eliminate. Unfortunately, customer experience during this time is often overlooked by brands. 

It makes sense.

According to Retail Learning, retail brands spend almost 80% of their budget on attracting new visitors to their website, leaving a much smaller percentage to dedicate to the post-purchase experience. This often results in the brand passing the baton to shipping carriers whose expertise is in delivering packages, not providing a seamless digital experience.

However, the post-purchase experience shouldn’t be an afterthought. Ultimately, these are real customers, not potential customers. They thought enough of your brand to spend their hard-earned money with you. And don’t forget what you learned in Intro to Business: it’s more cost-effective to retain a customer than to convert a new one.

Does this sound like your brand? You are not alone. According to a CMO Council study, over 55% of consumers are not pleased with their online experience. Luckily, it’s not too late to improve how you interact with customers post purchase.


Here are 5 improvements you can make using the Zenkraft Post-Purchase platform:

1) Increase ease of returns

According to a survey by Slice Intelligence, return expenses and return effort are number 2 and 3 on the list of online shopper frustrations. Although brands are aware that consumers value a great return experience, over 50% of e-commerce sites still have a returns interface with substantial usability Issues. Even more concerning for brands with poor return processes is that 20% of users would never or are very unlikely to buy again from a company who has disappointed them with their site’s return experience. 
The nature of e-commerce lends itself to a higher level of returns than traditional stores, where a customer can physically experience the product and establish a higher level of certainty that it meets their needs.

Processing returns can be costly for a business. RSR Research retail analyst, Paula Rosenblum, estimates that retailers lose a third of their revenue to returns, but losing repeat customers due to a difficult returns experience can end up costing your brand even more. According to the Adobe Digital Index, 40% of US e-commerce revenue comes from repeat customers.

To make your customer’s return experience as stress-free as possible, you can implement self-service returns using our post-purchase platform. This feature allows dissatisfied customers to generate a return label, save it, and print it off at home without having to speak with members of your customer service team.

You might have skimmed past the part about saving shipping labels. At first glance, it doesn’t seem like a big deal, but 67% of users want to print off their label at a later date and 65% of sites DO NOT have an easily identifiable way to save the label. This can significantly reduce stress for those customers who are in a rush or those without a printer in the home. We also recently started supporting QR codes, which eliminates the need for a printer.

Our post purchase platform also allows you to gather data on why items are being returned. For example, a shoe retailer could add a question about shoe fit to determine if a particular shoe runs small or large.  This data can then be used to generate reports in Salesforce to identify your most returned products, serial returners, and reasons for returns that can be used to reduce returns, and, ultimately, improve customer experience. 

 

Image from Baymard.com

 

2) Make tracking experience seamless

Confusing, disorienting, clunky, difficult. These are not the words that you want to be associated with your online user experience. But the fact is: sending customers to a shipping carriers landing page can be all of those words.

Despite the clear disadvantages of trusting carriers with this aspect of the customer experience, 21% of e-commerce sites outsource this vital function.  

Zenkraft allows you to easily create a branded tracking page hosted on your domain instead of sending your customers to the shipping carrier’s site for tracking information. 

 

 

Tracking pages built using our Commerce Cloud Cartridge can be quickly customized in accordance with your brand’s style guide, leaving no doubt in the consumer’s mind whose site they are on.

Additional tracking page features will be covered in each of the next 3 sections. 


3) Tailor product offerings 

With what seems like endless options, shoppers want a little bit of help. Consumers want the same tailored experience they get on Amazon and Netflix on your site.  When it’s not tailored, consumers notice.

Customization has become such an integral part of a modern shoppers experience that “50% of consumers say they’re likely to switch brands if a company doesn’t anticipate their needs.”

And when brands DO customize each individual shopping experience with recommendations the results speak for themselves. According to a recent Salesforce study, “Visits where the shopper clicked a recommendation created 26% of ecommerce revenue.”
You might be thinking, “Customizing ads like Amazon sounds great. We will get to that after we build our second company headquarters.” It’s not as out of reach as you think. With Einstein recommendations, you can have this Amazon-like capability up and running in less than 10 minutes. Einstein recommendations is an AI-driven Salesforce feature that constantly studies visitor behavior to discover their likes and dislikes to learn which products individuals will be most interested in purchasing.

While most companies will talk about the value of these AI-driven recommendations on your product details page, we suggest using Einstein recommendations on your tracking page to boost revenue post-purchase. Using your tracking page as a marketing tool might seem weird at first, but Zenkraft believes tracking pages are a tool that brands can use to produce significant results. Just ask Icebreaker, which increased clicks by 40% and revenue by 28% by adding Einstein recommendations to their Commerce Cloud site.

 

4) Keep customers in the know

Consumers understand that delays can be unavoidable, but they don’t like being left in the dark. They are busy, after all. They have jobs, doctor’s appointments, and soccer games to get to. Receiving a package is just one of many items on their to-do list, and they don’t want to be stuck by their front door waiting for a delivery.

A bad experience between buying and unboxing can leave a blemish on the customer experience that has nothing to do with the quality of your product. This is especially true if your product is an inexpensive item because the hassle can quickly exceed the perceived value of the product being delivered.

To avoid a poor customer experience overshadowing your product, we suggest keeping your customers in the know early and often. According to Retail Learning, 40% of e-commerce shoppers check their shipping status one or more times per day after ordering.

It’s easy to keep your customers informed with our Commerce Cloud integration, which will automatically update the tracking page with the latest data from the carrier. Users will be able to see more significant shipping milestones such as: in transit, out for delivery, delivered, as well as a complete travel history of their delivery.

Additionally, your brand will be able to keep customers in the know by sending them notifications via their favorite messaging app or smart speaker. For more information on Zenkraft’s ecommerce shipping notifications, see our recent blog by clicking here

 

5) Increase shipping options

The Baymard Institute found that the #1 reason for abandoning an online shopping cart is extra fees related to shipping, taxes, & fees. To counter this, brands must offer as many low cost/free options to customers as possible.

We know that’s easier said than done. That’s why we recommend adding a buy online pick up in-store (BOPIS) option to your tracking page! BOPIS, also known as “Click and Collect,” can be a cost-effective way to provide your customers with another free shipping option.

BOPIS has become very popular with online shoppers and they expect to see this option during checkout. According to Business Insider, the absence of in store pick up can cost you money, 50% of shoppers have determined where to shop based on the absence of BOPIS alone.
Brands like Home Depot, Walmart, and Target are doubling down on this trend, and it’s driving growth!

According to Target's COO, John Mulligan, investments in diversifying shipping options for their customers (via in-store pickup, drive up, and Shipt) accounted for nearly three-quarters of it’s 34% digital sales growth in Q2 of 2019. 

 

Image from Target.com

 

Consumers love having choices, and BOPIS is definitely a choice your brand should provide to consumers because it can help you as much as it helps them.

BOPIS can help reduce shipping costs, shipping times, and drive customers into your brick and mortar stores, where 85% of BOPIS shoppers admit to giving in to the urge to impulse buy.

Zenkraft builds upon the standard BOPIS functionality in Commerce Cloud, which creates a smooth process where:

- Our platform automatically allocates a store to fulfill the inventory.

- Store staff claim the shipping order, and it's added to the fulfillment queue.

- Zenkraft notifies the customer that the shipment is ready for pickup.

You will also be able to customize your tracking page to provide a flawless experience for your customers who choose the BOPIS option. Rather than force the standard shipping process steps to “fit” BOPIS, we provide you with standard steps for this process (Order Placed, Store Preparing Order, & Ready for Pickup). Additionally, you can add specific store contact information, map functionality, and collect pickup feedback.


Conclusion

The period between the buy button and delivery is crucial for your business. Please don't overlook the importance of the post-purchase customer experience, and always remember that your responsibility to your customer doesn’t end when they hit “Place Order.”
 

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Returns in Europe - using postal services to save $1.1m per year (and increase conversions)

Published on 22 August 2019 by in europe salesforce commerce-cloud returns 

US based retailers will find it challenging to establish B2C reverse logistics (RMA/Warranty/Exchanges) in the European market. Europe had 50 countries, 25 official languages and 28 different currencies. There are also many more postal providers and consolidators providing more options compared to the US.

But making returns easy, and cost-effective will have a profound impact on the success in this market.

To help retailers setup for success, we’ve outlined a 8 step process to build out the most cost-effective returns network within Europe. The model below has the following benefits:

  1. It’s best for the consumer as it takes advantage of many countries local postal providers. 
  2. It’s best for the retailer since many postal providers are as low as 30% of the cost of a local vendor.

Here is an overview of the model:

 

 

It’s worth noting that this most is more suited to retailers who ship smaller packages weighing under 1 KG. 

The financial model to achieve the below ended up saving the retailer $1.1m/year in logistics costs. If you'd like us to share this Excel model, please contact us.

The steps to setup a European-based network are outlined below: 

1. Analyse your existing returns data

Before overhauling your returns model in Europe we’d encourage you to look at your existing returns data, if available. Which countries in Europe have the highest number of returns but also the highest return rates? It doesn’t make sense to setup a consolidator warehouse in a country with low returns volume. Also, are there areas where you can reduce the return rate ahead of this project? For consumer electronics companies a report by Accenture found that a staggering 95% of returns are unconnected to product defects! Perhaps setting up extra product documentation, better images, an omnichannel customer service experience might be the first step before embarking on the below. 

2. Engage with consolidator warehouses

Initially we’d recommend just starting with 2-3 consolidator warehouses. Typically we see these being based in the UK, Germany and France or the Nordics. A problem retailers will face is that the vast majority of 3PLs won’t want to work with them. Fulfillment centers make money by taking a cut of the shipment cost and charging a picking fee. Handling inbound returns from postal vendors means that a large percentage of their profit goes away. There are companies that are prepared to help though. Once a retailer finds a vendor that is prepared to work with them - they should analyse their capabilities and costs. Some questions a retailer should ask are as follows:

  1. What is your inbound handling fee? Typically we see €2-3/item
  2. What are your IT setup costs? Typically we see €1500-3000 one-time setup
  3. What is the daily pallet storage rate? Typically we see €0.1-0.3/day

Consumer electronics companies may want to ask if they offer a service to analyse whether they can offer a service for No Trouble Found “NTF” shipments. The faster they identify this the faster the item can be restocked and resold. The consolidator can also sort the goods before they’re transferred to a 3PL. E.g. they could send 2 pallets per week - 1 for restocking and 1 for liquidation. 

3. Decide upon your returns software platform 

A retailer will need a centralized platform to handle the returns data that integrates with their e-commerce platform and helpdesk tool. 

Zenkraft can handle this for the Salesforce platform but there are other platforms that handle this outside of the Salesforce ecosystem. Here is a quick checklist of capabilities to look for in a returns solution:

  • Carrier integration - postal vendors are notorious for providing bad APIs, does the solution integrate with the postal services in the countries with the highest returns? 
  • Integration - what does integration look like with your Service tool, CRM, e-commerce platform and OMS/ERP? 
  • Reporting - what are the reporting capabilities? Can you schedule reports, create dashboards? Can you automatically share them across other departments e.g. “Return reasons” reports to merchandising? 
     

4. Select returns channels

Will a retailer accept returns directly from their e-commerce store or will require their customer contact their call center first? Or both? The experience will be slightly different for each company: 

On a retailers e-commerce store

A retailer should include workflow that asks product-specific questions about why something is being returned. This should then potentially generate a label with an RMA number embedded. This will help the 3PL scan the shipment for identification which can update your system notifying the consumer that the package has been received. Once a return label has been generated the retailer should show DOPU “Drop Off Pick Up” locations nearest to their customers address for the convenience. DOPU data accessibility varies by country. Some carriers have a really nice API such as PostNord in Sweden: https://developer.postnord.com/api/docs/location
 

In your Service Center

Service agents should be able to email a shipping label to the retailer's customer. They may also want to include a dynamic script to for their call center agents to ask questions about why the item was returned. The email with the label attached should be branded and show the customer the nearest 3-5 locations for dropping the parcel off. 


 

5. Collect data about why returns are happening

How can you improve if you don’t know is going wrong? We worked with an apparel retailer that used Zenkraft reporting to highlight a single garment had a return rate of 60% and 75% of the returns were due to the item being too small. This data was passed back to the merchandising team who subsequently suggested to the manufacturer that the garments size should be increased.

 


6. Have your consolidator send a single pallet back to a single facility each week 

Depending on your volume and restocking requirements, retailers may want to send the pallet back to your centralized 3PL weekly. They could even ask the consolidator to send 1 pallet back to the 3PL for restocking and the other to a liquidator for disposal as below:

 

7. Provide Real-time visibility to your customer

Retailers should provide tracking notifications and status on their website to show the status of the return. Often consumers are left in the dark about the status of their return and have to check their credit card bill daily to see when and if the refund occurs. Providing real-time status updates along with email notifications provides transparency to customers: 

 

 

8. Provide real-time reports and dashboards

Once the system is up and running retailers should monitor its performance. Zenkraft’s customers are using Salesforce’s built-in reports and dashboards to create Control tower-like visibility of their operations. This enables them to identify problems and respond quickly.

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Using Email templates for Returns

Published on 14 May 2019 by in salesforce ecommerce returns 

 

As you know, thousands of users every day use Zenkraft to manage returns in service cloud. From Multi-carrier version 1.42, you are now able to use Salesforce email templates to send return labels. This means you can:

  • Add merge fields into the email template to include extra information such as order information, account information.
  • Add your branding to the email, you can even include upsell promotions to the email too. This will enable you to provide a consistent brand experience with our branded tracking add-on.


To learn more, checkout the documentation or watch our release overview video from 8m 42.

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