Return Reduction

Experienced retail leaders have attempted to solve the return problem and have concluded that the problem typically lies with the customer changing their mind and therefore returns are just a cost of doing business.  While this is true in some transactions and a portion of returns are not preventable, there are defects in the purchase process that can be addressed to not only prevent the return but improve the customer experience.

Returns Not a Cost of Doing Business

Experienced retail leaders have attempted to solve the return problem and have concluded that the problem typically lies with the customer changing their mind and therefore returns are just a cost of doing business.  While this is true in some transactions and a portion of returns are not preventable, there are defects in the purchase process that can be addressed to not only prevent the return but improve the customer experience.

The vast majority of customers purchase with the intention of using or consuming the product purchased, and they are disappointed that they must return a product.  By viewing returns as a defect and applying a defect elimination strategy, preventable returns can be eliminated which will improve bottom line profit, improve the customer experience, and reduce waste in the environment.

Ability to Return Is Necessary

Every retailer knows that returns are a necessary part of a retail business.  Customers expect a clear and fair return policy including returns for damaged and defective product.  The ability to return takes away barriers to purchase.  If a customer is uncertain of their purchase—Will this pillow match their couch? Will this TV be big enough? Will I like the feel of the material of this scarf?—knowing they can return it gives them confidence to purchase.  This is especially true with e-commerce purchases, and therefore, given the shift to e-commerce purchasing, returns are even more important to address today.

Returns Are Preventable

Viewing returns through a lens of preventing the return results in creative, customer centric solutions.  Take the case where the customer is uncertain of the correct TV size. A visual tool can be created to show the customer what a TV will look like on their wall, enabling them to determine the size that best fits for their specific situation.  Given most customers research online before they visit a brick and mortar store, these aids can be leveraged by the customer prior to coming into the store.  This example of a solution to a preventable return used data analytics to identify a pattern:  customers who return TV’s usually exchanged it for a larger TV.  Then, through further research, it can be determined that customers are not able to visualize the product in the space, and therefore an sizing aid is helpful for the customer to select the correct product to purchase.

Strategy to Eliminate Preventable Returns

As demonstrated in the TV example the process to eliminate these preventable returns includes:

1. See It: Identify the preventable returns. 

Using advanced analytics and big data mining techniques, issues can be identified through patterns in the data whether that is a product, a vendor, a product category, a customer, a region of the country, or other patterns specific to a given retailer’s situation.  Leveraging sophisticated, accurate tools to identify the most meaningful issues is important so that resources are invested to solve the significant issues.

2. Understand It: Get to root cause.

Aggregating appropriate data and collecting additional meaningful data will pinpoint an actionable root cause.  This additional data may include text analytics of customer reviews on the product page, incremental data collected at the point of return, or information from manufactures.

3. Address It: Take action to eliminate the root cause.

Once the root cause is framed in an appropriate way, the problem becomes solvable.  For example, if the problem is framed as a customer does not like the shade of pink on a sweater, that appears to be a customer preference.  However, if customers are saying this at an excessive rate, and the text analytics say the product is not the shade of pink shown in the online pictures, then that is a solvable problem.  The lighting in the photo may have been incorrect, so new pictures should be taken and the site updated.

Returns of retail purchases can be reduced by eliminating the root cause of preventable returns.  While returns are an expensive and necessary part of a retail business, with new analytic capabilities it is possible to identify problems, determine root cause, and take action to eliminate the issues.  As a result of eliminating these preventable returns, the customer experience is improved, the cost to the manufacturers and retailers is reduced, and the environment is protected due to reduced waste.