Retail Returns Pivot From Costly Problem to Customer Loyalty Play

It’s been said that the first step toward solving a problem is acknowledging you have one. 

But in the case of retail returns, the industry’s acceptance of this large and growing predicament is often geared more towards “selling their way out of it” by growing sales rather than actually addressing it. This is doubly true for eCommerce, where the outsized rate of returned items runs above 20%. 

Given that some level of returns will always exist in both online and in-store retail, a growing number of merchants are pivoting toward solutions that at least reduce the pain of the inevitable and make the experience better for buyer and seller alike.

“We are always looking at those pain points where customers are struggling or frustrated and trying to remove the barriers before they contact us,” Amy Williamson, Voice of the Customer Supervisor at Orvis, the Vermont-based outdoor and sporting goods retailer, told PYMNTS.

By taking a holistic approach that automates as much of the multi-faceted returns process as possible, she said Orvis has been able to reduce its “WISMR” (where is my refund?) queries by 42% versus the prior fully phone-based system.

“If customers are purchasing online, they should be able to complete the transaction online — including that exchange,” Williamson added, noting the reduction in administrative burdens that the company has also realized.

Manage It

For Orvis, and dozens of other brands like it, minimizing the pain of the problem has meant bringing in an outside firm to manage it — in this case Narvar, a California-based company that specializes in post-purchase retail solutions, including its recently launched Home Pickup service that it is currently expanding to 100 U.S. cities after a successful Q4 pilot in 10 locations.

“Retailers are seeing this as an opportunity to build loyalty with their customers,” Narvar’s newly hired Chief Customer Officer Anisa Kumar told PYMNTS. “When we measure loyalty, 97% of consumers we surveyed said if the return experience is easy, they’re likely to return,” said the industry veteran who spent the past 20 years working at Levi’s, Walmart and Target. 

With a mix of services ranging from customer-facing solutions such as home pickup or the ability to offer financial incentives on behalf of a retailer, as well as logistical management that directs returns to the closest distribution center rather than a single location serving the entire country, she said has proven to be a money and relationship saver.

“The time it takes a retailer [to get returned merchandise] back into their warehouse and available to sell has been cut by 25%,” Kumar said, noting the improvement begins from the time a customer first initiates the return.

Multi-Pronged Approach

Whether it’s better imagery, descriptions or videos or the use of better digital fitting technology that uses augmented reality to give customers a better feel for the size and look of apparel online, retailers of all sizes are investing in ways to reduce the need for returns before they happen. 

In addition to the financial and customer experience incentives involved in doing so, Kumar said these improvements also cut down on fraudulent return activity and carry significant environmental benefits as well at a time when customers and retailers are increasingly demanding them. 

“We also have to do it with an eye on sustainability,” Kumar said. “We talk [about] sustainability and packaging all the time,” she added, pointing to the emerging use of boxless solutions as an example of the “top of mind” future solutions that will be implemented.

With eCommerce and omnichannel sales expected to account for a large slice of the overall retail, the pressure to address the many aspects of the return process is only set to rise, as well as the demand for solutions that work for both buyer and seller.

“My belief is there is a lot of opportunity in the post purchase space both to optimize the consumer experience as well as the P&L,” Kumar concluded.