Before 2020, people started online shopping largely out of curiosity or convenience. But this year, necessity has driven many to make their first forays into the world of e-commerce as social distancing measures and lockdowns keep many of us housebound.

Despite all the benefits presented by e-commerce, both veteran and new-to-the-game e-shoppers will likely have run up against the “experience gap” while buying online the little comforts that they used to enjoy from visiting a physical store.

One of these comforts? The ability to see, touch, and feel a product. No matter how many product specifications you put up in an online store, this tangibility is a difficult thing to replicate.

Until the day we have holographic projectors in our lounge rooms, one of the best ways to close this experience gap is actually deceptively simple: product returns. Returns are often an afterthought for businesses, but they shouldn’t be.

According to UPS’s most recent Pulse of the Online Shopper survey, 42 per cent of all shoppers in Asia Pacific will check an online store’s return policy before making a purchase.

But outside of the statistics, the truth is that well-orchestrated returns have the capacity to close the experience gap with the brick-and-mortar retail experience, by allowing the customer to receive their product, experience it “in person”, and if it’s not suitable, to send it back to the merchant.

It’s roughly the equivalent of a customer in a shop picking up a product, trying it on, and then putting it back on the rack. However, robust e-commerce returns require more than just a return address on your website.

Also Read: A comprehensive guide to handling product returns carefully without upsetting customers

Convenience is crucial

Our survey of online shoppers revealed that APAC is the least satisfied region in the world when it comes to the e-commerce returns experience. Significantly, nine in ten shoppers will consider a merchant’s return policy at some point in the purchasing process.

This presents an opportunity for online retailers to differentiate themselves by having a returns policy that is easy to find, clearly worded and understands the customers’ needs.

But here lies the first challenge: how do you craft a returns policy that meets these customer needs but that also sets clear boundaries and conditions on how to prevent the returns mechanism from being overused and placing undue burden on the business. Some retailers may accept returns for any reason at all, which can lead to shoppers buying many items.

In fact, research shows that 41 per cent of shoppers buy multiple versions of the same product, with the intention of returning all but the one that fits their needs. At the other end of the spectrum, some stores don’t readily offer a returns policy at all.

While most businesses would lean on the side of generosity when it comes to returns, getting the balance right can be complicated. Having a clearly defined list of conditions where a product can be returned—such as for damage, wrong colour, inaccurate description might help—and retailers can make this list more or less expansive depending on how much flexibility you want to give.

Something for nothing?

Free returns are a very attractive proposition to buyers, which is why they’re becoming increasingly common amongst online retailers—but this does mean weighing the additional cost burden on businesses against the desire to retain customers.

Also Read: How Pomelo tackles the problem of high product return with its O2O retail experience

Given that the online space is already incredibly competitive on price, passing the cost of returns on to all your customers by increasing product margins is essentially a non-starter.

When it comes to return services, e-commerce operators have a range of options at their fingertips, depending on which delivery partner they choose to work with. Service providers may offer pre-printed labels, electronic labels and return labels which are shipped separate to the item itself, all of which offer varying degrees of convenience for different costs.

Businesses can also employ returns services dedicated specifically to handling sensitive and delicate items, such as photography equipment or electronics, thus ensuring the returned item is able to be resold. But a smart, cost efficient returns strategy can involve much more than an address label on a box.

For instance, businesses can determine whether there are alternative locations where returned items can be shipped to and stored—a potentially substantial cost saving, particularly if you have many customers outside your country or region.

E-commerce businesses can use their international offices or employ warehousing facilities to form part of a more localised network of return locations, which can then be used to ship returned products to new buyers nearby.

When current costs become future revenues

When it comes to returns, it’s important for e-tailers to take the long view. Superficially, returns could be seen as another cost burden—but as with many costs of doing business, they should be thought about as an investment in customers and future growth.

Given the dissatisfaction with the existing returns experience in Asia, a retailer could build customer loyalty through offering returns that are truly seamless, thus generating long-term revenues.

Also Read: “The challenge for new startups lies in how to commercialise and commoditise products”

A returned product shouldn’t be considered the end of the story. Oftentimes, a product will be returned simply because of a single attribute, such as size or colour. It’s relatively simple to set up a mechanism in an online store that offers customers similar products, which could lead to an exchange rather than a monetary refund.

Additionally, giving customers the option of receiving store credit—often a faster process than transferring money back to a bank account—can keep customers browsing your items.

This approach also helps to guard against “serial returners”, as it forces these customers to be more careful in how they buy, while allowing shops to keep revenues from multiple returned purchases.

Returns also offer businesses a chance to learn and mature. Simply inquiring why a customer returned an item can provide invaluable information: perhaps the quality of certain items from a supplier isn’t up to scratch, or maybe a product’s images or description weren’t sufficient.

These are important dialogues and can show a real commitment to doing the right thing by customers, rather than simply being a box-ticking exercise.

While it’s an overlooked part of business strategies, returns should be considered as important as other key facets of running an online business, such as SEO, social media presence or pricing strategies.

With more businesses shifting online, competition is only going to become more intense, and will occur at a greater variety of points on the customer journey. The businesses who are most likely to succeed are those that provide customer service which is holistic, encompassing every stage of the shopping process—including those that occur after the cart has been filled, paid for and delivered.

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