Blog: Return and Refund Management - Marello: Open Source ERP
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Return and Refund Management

Dealing with return and refund management is a daily business for many online retailers. Many stores offer cheap or free return policies in order to attract customers. It is a successful strategy that has become very popular as it has proven to increase sales. Yet having these policies also means that many products do indeed get returned. Handling returns results in increased expenses such as costs for return shipping, restocking and inventory management. Nonetheless returns do not necessarily mean trouble: they can also be seen as a chance to improve retailing.

A Sale is not a Sale

“At least 30% of all products ordered online are returned as compared to 8.89% in brick-and mortar stores”

Handeling returns is not the most popular subject in retailing. Processing and managing returns costs a lot of time and money. Nonetheless as one in three items get returned it is inevitable to accept it as a part of daily business.

In order to understand the return process it is important to understand what a return is, or even better, what a sale is in online retailing. Lets look at the fashion business as an example. In a physical store people try clothes on before they buy them. No shop owner would charge their customers for using the fitting room. In online retailing, there is no fitting room. Instead customers buy  clothes and then try them on at home. If clothes do not fit, or do not meet expectations, they are sent back. Not being able to physically see, touch and experience leads to returned products. If you look at returns from this perspective it is obvious why so many items get sent back. Of course fashion is just an example, it goes for many other products as well.

In short it comes down to the fact that an online sale is not a sale until it is certain that it will not be returned. The question for many retailers therefore is how returns may be reduced. In order to answer that question one can start by seeing returns as an opportunity instead of a problem.

Taking Advantage of the Opportunities

Return and refund management can costs quite some time and money. Yet handling returns will aways be a part of retailing and should not be seen as a problem. Instead Marello helps to take advantage of the opportunities that lie within return and refund management.

1.Return Reasons

“Top reasons why consumers return products: 20% received a damaged product, 22% received a products that looks different, 23% received the wrong item, 35% have another reason”

With Marello it is easy to learn more about why products get returned. By collecting return reasons it will become clear why some products get returned more often than others. As 35% of all returns do not have standard reasons to be returned it can be very useful to know the exact reasons. By knowing why items get returned strategies can be altered to lower return rates and the costs accompanying them.

return and refund - reasons

An example of products that have been returned. Take a look at the Hana Flat Charcoal: it came back for same reason twice. To avoid future returns sizes could be reconsidered, or extra information could be provided about the sizes in the product description. In this example the number of returns is low, but you can imagine what could happen if the return numbers were higher.

2. Logistics

A second opportunity is to be found in logistics. Returns should be processed as quickly as possible in order to make them available for sale again. There are a couple of components that contribute to the return process. Returns have to be registered, examined, prepared and go back into the inventory. Also and customers may have to be refunded or their order has to be replaced/repaired and reshipped.

Recording all the individual steps can be time consuming and it is easy to lose track. Marello’s workflows make it easy to manage returns. By setting up return and refund workflows processes can be handled more efficiently and effectively.

Workflow - Marello textual

A textual description of the return workflow. In this case a product that is returned is inspected after which there is a refund or a product replacement.

Workflow Marello

The same workflow in a represented in a diagram.

3.Return and Refund Management: Customer Satisfaction

“92% of customers will buy something again if returns are easy”

Next to improving processes and reducing costs having a solid return and refund workflow also means satisfied customers. Customers want to be able to return products and get their refunds without having to think about it. Positive customer experiences will lead to more sales!

Marello Returns

In order to ensure a positive return and refund experience, information about customers is to be found in one place. All details about orders and returns are easy to find. All activities are recorded in one place, such ordered items, refunded items and email conversations.

In Conclusion

While handling returns can we quite a challenge, it does not mean that it is necessarily a bad thing. Many items get returned, that is a fact. In order to reduce costs and keep customers satisfied it is important to get insights into why products get returned and handle them as quickly as possible. Through its extensive features Marello makes it easy to take advantage of the opportunities in return and refund management.