Even before the recent rise in fuel costs to an all-time high, brands had started taking a closer look at their cost of reverse logistics.
There has always been a “grow-at-all-costs” mentality for many brands, but that mindset has started to shift over the last few quarters to a focus on more sustainable growth. The best brands know they need to do everything in their power to lower friction for their customers, and in most cases that means alleviating the hassle of returns. They’re offering multiple drop-off locations, at-home pickup and paperless QR codes. But for the brands that are focused on growing sustainably, they don’t stop with adding more return options.
Those brands are inspecting their entire profit and loss statement, and know that certain items cost more to return and restock than to simply leave in their customers’ hands. Enabling buyers to keep certain items instead of returning them is a great way for brands to increase customer loyalty, decrease costs and lessen their environmental impact.
When you tell a customer to keep an item or gift it to someone else, you're lowering their burden of dealing with the logistics of a return. The trick is that brands must be careful not to get gamed by fraudulent customers. The best brands will add intelligence such as customer ratings, or limit that benefit to VIP customers or even to specific products such as low-margin or heavy items that are expensive to ship. To do this, you need to work with a platform that has a deep understanding of customer behavior so you can lower your risk of abusers, while ensuring the best possible experience to loyal customers.
Take one cosmetics brand. Its cost of goods might be low, and it might not be able to restock and resell certain items for sanitary reasons. In this case, it would make more sense for the brand to let the customer keep the item instead of paying to have it shipped back, only to then not be able to restock and resell it. Not only is that less of a hassle for the customer, but it also has a major environmental impact, as it avoids a lot of waste.
Shipping costs are indeed a huge factor in all of this, but an arguably even bigger one is that brands are paying to acquire a customer. Whether that be through Facebook or Google advertising, brands put up good money to have a customer “walk through” their virtual doors, so they need to do everything in their power to keep that customer in-house. That means when a customer is coming to your site to return an item, you need to drive them to see all of the options for exchanging. You can do this through a multitude of ways:
Returns are a hassle, and it doesn’t look like the cost of fuel will be going down any time soon. You need the tools and strategies in place to keep your customers satisfied, and minimize those one-time purchases that often end up as returns.
Aaron Schwartz is president of Loop Returns.
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