How online retailers keep return cost low

by | May 23, 2024 | Data Management, Retailer Requirements, Suppliers

An estimated 30 percent of all products ordered online are returned—that’s three to four times the return rate of products bought in-store. In 2023, consumers returned $817 billion worth of products—that’s over 16% of total retail sales for the year.

Returns may be inevitable, but unnecessary return costs are not. So, how do retail leaders make returns less expensive for themselves, their trading partners and consumers?

Clearer item data can prevent returns

To reduce return costs, it’s essential to understand the reasons customers return online purchases.

Common reasons include:

  • Product dissatisfaction
  • Incorrect sizing
  • Discrepancies between the product and its online description

With mismatched product details being a big driver of returns, getting more detailed with item data can be a big help. This involves collecting and sharing strong product attributes, complete details and pictures. For example, apparel retailers include attributes about fit, showing if an item is true to size or runs big/small to help consumers make a more informed decision.

What you can do to stay ahead

To avoid returns, experts at SPS Commerce have put together some best practices to help your business handle the item data that’s at the core of the challenge.

To start, begin with item quality. Source high-quality ingredients, components and raw materials to ensure high-quality finished products that customers are less likely to return.

When products are ready for sale, ensure your item data is accurate and complete so customers know exactly what they’re buying. Clarity before the sale minimizes the chance that the product won’t meet the customer’s expectations and can reduce returns.

To get that clarity, it’s critical to employ technology to make storing and sharing item data across teams less of a lift. If your brand sells eCommerce products through your own website, ensure that complete and consistent item data is presented across all your products. If you sell through an online retailer or marketplace, ensure all item data requirements are met. It’s best to automate these processes with trusted partners to prevent oversight.

When everything’s running, updating your return management policy and automating the exchange of information about your returns process can also remove some of the headaches. Once implemented, you can create a cohesive global strategy that allows customers to return through their preferred channels and handles the process efficiently to minimize costs.

Seamless data exchanges between buying organizations and their suppliers can streamline the process. Reducing the need for returns by providing clear and accurate item data, automated data sharing and a streamlined returns process not only saves time and money but also improves the consumer experience.

Looking for expert advice on managing the cost of returns? Talk to one of our supply chain experts.

Jenya Lawson
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