News of the big online retailers revisiting their return policy has made headlines in all the leading business newspapers. And why not, one out of five shipments end up in the return bucket! There is considerable cost associated with returned products and the last three years have seen a very liberal return policy.

Let’s rewind a little and look at what is online return. Any product which is returned by the customer post placing the order & the shipment leaving the source location is a return.

The biggest concern is when the customer returns the product after receiving it.

The cost of bringing the product back and the ability to put it back as “good inventory” is a nightmare for online retailers. Retailers in general are not alien to the concept of “returns” but the modus operandi of online retail makes return look like a little monster. In offline apparel retail, we have the concept of “Trial room” and the dresses which lie outside the trial room are a type of return. When the same is extrapolated to online returns, the customer’s home becomes the trial room and to return the product, it needs to be sent back to the online retailers. This is where it  becomes tricky.

Return policy for many online retailers is like a seesaw. On one side are the retailers themselves and on other are the customers. It is either perceived as a hassle for the retailer or the customer. A liberal return policy can seem to be a hassle for the retailer whereas a stringent return policy can make the life of a customer difficult. Any tool that is built for the retailer’s convenience at the expense of the customer is bound to fail. Thankfully unlike the egg and chicken situation, we have a silver bullet to nail it.t

Returns can be classified as avoidable and unavoidable returns.

Cases like size issue, item not matching will fall under the category of avoidable returns and it makes perfect sense to minimize the avoidable returns, as their existence will have a negative impact on the customer experience. This can be reduced using analytics, improved website experience and disciplined supply chain processes.  

It is in handling unavoidable returns like fit issues, defective products, is where an organization’s return policy plays a vital role. It is wise to give the benefit of doubt to the customer, though it would be prudent to have category specific return policy in place. The entire return experience should be hassle free, right from placing the return request to the refund /replacement/exchange and returned product reutilization.

It is worth mentioning that return policy can be an effective marketing tool in itself and to a good extent reflects an organization’s customer obsession. Whatever the policy, retailers who understand that return is an inherent characteristic of the online retail business, will walk away with the best return gift from the online birthday party.

By: Asish Neogy

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