*A Lesson from the Nosto Ultimate Ecommerce Q1 Survival Guide* The season to eat, drink and merry is unfortunately over. And a lot of us are feeling the effects. Clothes a little tighter, bank accounts a little emptier and, if you are a merchant, a flurry of returned gifts coming back to your store.

Let’s face it – with the seasonal sales of December being predominantly driven by the purchasing of gifts, customers are more likely than normal to have got it wrong. The domestic issues caused by this are, no doubt, significant- but the repercussions for you as merchants are even bigger; not only does it take a big chunk out of the revenue you thought you had made but further losses are incurred due to postage and packaging (particularly if you offered free packaging originally), as well as precious storage space and man hours being consumed.

You can’t turn back the hands of time and tell that well-meaning grandmother that porcelain cats were not on her teenage grandsons wishlist. So what can you do?

Well, there are two things to consider: how might you turn the present situation (undesirable as it is) to your advantage? And how do you prevent it happening again?

 

1. Making returns a gift rather than a burden

Any contact with a customer, for whatever reason, is a chance to make an impression. In fact it is less about why they come to you but what you do once they do. And on this occasion what you should do is make sure that the returns process is as smooth as possible. If done right, what they will remember is not having to return the item in the first place, but what a positive experience it was doing it. Think of this a branding and customer service exercise- if it’s a good one then it will be shoppers, rather than items, that return to your store.

How to do it;

  • Make sure your returns policy is both easy to find and clear to understand.
  • Rory Sutherland of Ogilvy states that “the single best improvement in passenger satisfaction on the London Underground per pound spent came when they […] put dot matrix display board on the platforms.” Why? Because whatever the situation, even if undesirable (such as waiting for a train), people are happier when they are informed. The same applies to retail – if there is transparency allowing a customer to fully understand the terms under which they buy a product, then there are less barriers to purchase. Consider not only the language you use in your policy (jargon is nobody’s friend) but also where on the page it is placed.

 

Nosto Client, Paul Evans are a good example of this done well with a concise, fair returns policy, displayed clearly. 

 

 

  • Offer a fair timeframe for them to return the item and, if you can, either free or reasonably priced postage.  Charging people for returns may seem like a good way to discourage them, not to mention a way to scrape back some cash in a financially undesirable situation, but be warned- it is could leave a bad taste in your customers’ mouths. And what is a few pounds back in the bank compared to the cost of a potentially lost customer? In fact, some companies are now using their returns policy as an upfront marketing tactic showing just how important an aspect of online shopping this has become. Zappos for example group their “fast returns” with their delivery as a selling point on their homepage.

 

Zappos mention returns at the top of their homepage

 

  • If you’re a multichannel retailer allow people to return items to local stores if that is their preference. 

    Another point that can be taken from Rory Sutherland, is that people are always happier with options, however limited. This is particularly applicable to a situation they may not want to be in (such as returning unwanted items) as it allows them to feel that they are regaining some control of it. While returns are a pain for your business, they are also time and effort out of the shoppers day – providing them with multiple channels to return an item means they are able to do so in a way that best fits with their lifestyle and schedule. Not only that, but having them come in store you also bring them back into contact with your products and increase the chance of them leaving empty handed. Halfords are a great example of this, offering three options for returns (in store, by post and by courier) and clear instructions for each.

Halfords’ return page is clear and gives plenty of options.

    • Reach out to people who have made a return, encouraging them to buy again. 

      If all else if lost, the one positive thing you can get from a returned product is insight into your customer. While the product they bought might not have been exactly right, you have learnt valuable information as to what they are seeking out. And if it was bought with other items that weren’t returned then you are even more able to build a picture of their buying behaviour. What can you do with this information? Use it to provide personalized recommendations to lure them back to your store! Personalization technology allows you to have tracked previous browsing and buying behavior, turning it into product recommendations to be used onsite, in your advertising efforts, or in email marke
      ting efforts. For example, if a shopper has focused strongly on moisturising products and was only unhappy with their most recent purchase, it is likely that they are a regular buyer of this type of product and so should still be reccomended them.

Nosto Client, Organic Surge use information gathered in previous
transactions when making recommendations in their newsletters.

 

And if you need any more convincing that making returns a positive experience is in your best interest, consider this – Zappos have been previously quoted as saying that their most frequent returners (with a 50% return rate) are also some of their best customers. The fact is, prolific shoppers often bulk buy with the intention to return some items, but most importantly they also return, and frequently! Not a group you want to treat badly.

 

2. Attack is the best form of defence

Ok, so you’ve dealt with the problem at hand, turning a negative into a positive where possible, but committing time and effort to prevent returns happening is equally as important. In fact, research has shown that reducing returns by 1% increases net profit by 1%. Here’s how…

  • Identify troublesome products in advance. 

    To do this, analyze your returns data to identify your ‘toxic items’- those pieces which drive the highest amount of returns. Research has found that as little as 7% of products could be driving up to 50% of returns. This is particularly dangerous when these items have been to shown to have a domino effect, their inclusion in an order making it more likely that the whole order will be returned.

In a recent article by ecommerce week it was revealed that M&Co announced £415,000 worth of savings after identifying the top 10% of frequently returned items, then going on to remove them from active promotion. At Nosto, we have a Blacklist feature which enables retailers to automatically prevent certain items from being included in product recommendations.


M&Co concentrate on promoting those items that have been found not to drive returns.

  • Give your customers as much information as possible. 

    The more informed your shoppers are on exactly what they’re buying, the less likely they are to make a purchase that they will regret and then return. Make sure you give as much information as possible in the product description, as well having clear and detailed product photos. But also consider going one step further and enabling customer reviews, this will allow shoppers to discuss issues that may normally drive returns, as well as giving you insight into the type of information they want to know about your products.

Nosto client, Country Dreams does a great job with their product photography, providing multiple detailed photos for each product.


Bonus tip: A key issue in the fashion industry is inconsistent or unusual product sizing. Reviews will help this to some extent, as will stating the models height and size worn. But for a more extensive solution consider using technology such as Virtusize, which tells shoppers the exact dimensions of the clothes and allows them to compare the fit to previously purchased items.

Virtusize gives exact information on the dimensions of clothing, as well as comparing new items to pieces already bought. 

 

So, there we have it! How to deal with returns and how to prevent them. Hopefully that has gone someway to getting rid of your January blues.

But, as we all know, the first quarter can be a struggle in the life of a merchant and it isn’t all down to the fact that people often don’t know what to buy their loved ones! In fact, according to our data, online retailers see a 40% drop in revenue from the dizzying heights of the festive season, with this figure sinking even further during February, when revenue sits at 20% less than the yearly average. Which is why we have created “The Ultimate Q1 Survival Guide”-

  • An exploration of the season’s 10 most common revenue damaging issues.
  • Tried and tested recommendations to deal with them.
  • Real-life examples of these solutions in practice.



Download today and make sure you set out to conquer 2016!