Logistics

Customer Order Returns: The Cost of Fulfillment Errors and How To Avoid Them

A guide to creating and implementing a sound returns management process and measures needed to reduce order returns by eliminating fulfillment errors.

Team Hopstack
September 13, 2022
Customer Order Returns: The Cost of Fulfillment Errors and How To Avoid Them

If you run an e-commerce business, you most likely know that managing order return rates are always a challenge. Customers are more than two times as likely to return their online purchases as compared to in-store purchases. That’s not all, almost 48% of online consumers reported that they returned their orders in 2020, adding up to $428 billion lost in sales in the United States alone. Hence, it becomes extremely critical that you keep your order return rate in check. Doing so, not only helps to maximize profits but also helps scale your business to a whole new level. 

Customer expectations change frequently. Their needs and preferences evolve with market trends, and it becomes paramount to have a fool-proof return policy to keep up with these changes in customer shopping behavior. Over 90% of consumers are most likely to place a repeat order if the return process is simpler and 67% of consumers check the return policy before placing an order. This means, having a solid return policy and a comprehensive return management process ensures customer satisfaction and improves customer retention. 

Return Management: Stages and Steps Involved

When it comes to implementing an effective return management process, there are a few key points to keep in mind. Different customers expect different things from their return orders. Some might prefer getting a replacement, while some might want a full refund. Regardless of their choice, it is crucial to get it right every time to make sure our customers are happy. 

The Steps Involved in a Smooth Return Process

Drafting a clear return policy

This is a very important step when it comes to Return management. Having a policy that outlines the terms and conditions of your business’ return process not only reduces the overall return rate but also avoids customer confusion if they choose to return their order. A good return policy should include the deadline to return a product, along with instructions and the timeline of the return process.

That being said, it is also equally important to have a return policy that is easily accessible on your e-commerce platform. As you may recall, a great majority of shoppers check for the return policy before they place an order. We recommend consulting an industry expert while drafting a return policy, this ensures you are covered on all fronts. 

Implementing free return shipping

Customers expect free shipping when they place an order online. This is also true when they choose to return their orders online. It is crucial to make sure that the pick-up and shipping charges of the returns are not borne by the customer. Charging the customer for the shipping would indeed save you from losses, but it will cost you customer retention that could have brought repeat orders in the future.

Easy return label printing

Customers do not enjoy the complex process of preparing their return orders for pick-up. The return label needs to be easily generated so that customers can print it and paste it on their package without much hassle. This translates into a faster and more effective return process, which could also mean the product is suitable for resale when it reaches you. 

Another benefit of having an easy label printing process is that you can reduce return fraud. There are chances that some customers might misuse the return facility to claim that everything in the order exists in the return package, while in reality, it isn’t. 

Illustrating the return process and timeline

Customers expect transparency when they order or return a purchase. They want to know the steps that are required to return a product. They also want to know when they can expect a replacement or a refund. Hence, it is very important to illustrate the return process and give them a timeline on when they can expect these things. The customer should be able to understand the process and should also find it easy to reach out to the return management team in case they need more assistance. 

Returning an order can be overwhelming for most customers, so putting their minds at ease and showing them that you are with them through the entire process is the best way to win their loyalty towards your brand. 

How can a Warehouse Management System reduce order returns?

If you have a warehouse, you might already be familiar with the complex challenges it brings to the table. Old-school techniques of manual warehouse management can get very chaotic, which makes order fulfillment slower and more prone to error. In today’s world, customers expect faster deliveries, and it becomes crucial for e-commerce business owners to adapt to these expectations. When everything is about speed and you haven’t equipped your warehouse with the right tools, the wrong order fulfillment rate is most likely to increase, resulting in an increased order return rate and low customer satisfaction. 

Let’s understand this with an example. Consider a warehouse that uses the old-school warehousing technique. When you receive an order, you need to manually locate the inventory associated with that order, initiate the picking process, and then process it to the packing and shipping stages of the warehouse. Because a robust Warehouse Management System is missing in this warehouse, there are chances that the wrong item could be picked and processed without even realizing it. According to research, about 23% of orders get returned because customers receive the wrong item. In the e-commerce industry, this is a huge number. Meaning, one in four customers are dissatisfied with the service and are most likely to not buy from you again. 

Now, let’s consider another warehouse, that uses a fully automated Warehouse Management System. Because of the nature of the system, even in conditions where there exist different variations of the same item, the Warehouse Management System directs the warehouse staff to the right location, ensuring accurate picking takes place every time. Not just that, certain items may require specific packaging instructions, and because the Warehouse Management System gives recommendations to use the right materials for packaging depending on the nature of the item, damages during shipping can be significantly reduced, in turn reducing the overall order return rate. Hence, implementing a fully automated Warehouse Management System is very beneficial. 

Benefits don’t just end there, when you use a Warehouse Management System your inventory is stored in optimal locations. Meaning, product damages during warehousing can be significantly reduced. You also gain complete visibility of the inventory, which can help you plan ahead and avoid stock-outs. All of this translates into customers getting exactly what they have ordered, as quickly as possible, resulting in a significant reduction in order return rate and improved customer satisfaction. 

Bottom Line

To summarize, in an e-commerce business, it is essential to implement a streamlined return process. Customers buying on e-commerce platforms want to know they have the option to return their orders in situations where they are not happy with their purchase. It is clear that having a solid return policy is an investment towards earning customers’ loyalty and maximizing profits. But at the same time, it is also important to keep the order return rate in check so e-commerce business owners can cut down on their losses. That’s where a robust Warehouse Management System comes into the picture, which not only reduces the overall order return rate by reducing incorrect order fulfillments but also eliminates inventory damages during storage and handling.

Implementing a powerful Warehouse Management System helps streamline the entire order fulfillment process in an e-commerce business, where efficiency and speed are essential. Old school techniques of warehousing rely heavily on human involvement at every step, which can be labor-intensive and as mentioned earlier, prone to error. Adopting an optimized setup with a powerful Warehouse Management System helps eliminate these challenges and gives maximum visibility and control to Warehouse Managers and e-commerce  Business Owners. Meaning, you can increase your profits and your business can scale to a whole new level. 

If you want to know more about the best practices to reduce order return rates and improve the return management process, get in touch with one of our industry experts. 

Team Hopstack Author
ABOUT THE AUTHOR
Team Hopstack

Hopstack brings you the latest articles, guides and long-form explainers on topics relating to warehousing technology and automation, supply chain and robotics