A customer focused returns policy is a core component behind many successful online retailers. Consumers today have an endless choice of online merchants and the ease to return a product can be a key deciding factor before purchase. In Asia Pacific, the majority of eCommerce sites are not yet as liberal with returns as their global counterparts but there are significant benefits to be gained with the right approach. From boosting sales to creating brand advocates, this article offers six best practices eCommerce retailers can adopt to significantly improve their customer experience with returns.

Why is a returns policy important for eCommerce?

Online shoppers are often reluctant to click ‘buy’ as they do not know how a product looks and feels before purchase. According to a research study in 2012, 62% of online shoppers had returned a product. Despite this significant figure, 97% of eCommerce stores within Southeast Asia still did not offer free returns as of May 2014. Businesses need a simple and effective returns policy to impress customers and turn them into brand ambassadors. Increased global competition is leading the transition to customer-centric returns management with more consumers expecting free returns as a standard service offering.

How does a returns policy boost sales?

Much of the risk with online shopping is eliminated when customers know they can conveniently return a product. This lowers abandoned shopping carts, builds customer loyalty and demonstrates a true understanding of consumer needs. For certain retailers, returns have even become a fundamental part of their business model. Zappos, a US-based online shoe and clothing shop, was one of the first retailers to provide a highly customer-centric, end-to-end online shopping experience. This is reflected in their very flexible return policy, which encourages ordering multiple sizes of an outfit for shoppers to try on each piece in the comfort of their own homes. Unsuitable items could then be returned free of charge, within a year. Other retailers have followed suit; major retailers Nordstrom and Macy’s have both established a no-deadline product returns policy, while others readily hand out prepaid shipping vouchers to expedite the returns process.

But wait, aren’t returns a bad thing?

Retailers are forgiven for considering product returns to be a negative cost of doing business because in the short run, they definitely are. According to a study by Internet Retailer in 2013, on average 4.96% and up to 30% of all products were returned, costing not only resources to investigate every case, but also incurring expenses for processing returns, product replacement and shipping. However, even more important than cost is the customer experience. A dissatisfied customer can be a great opportunity to create a brand champion – if their complaint is resolved quickly and effectively. Shoppers today aren’t just looking for the lowest price, they seek convenience with retailers they can trust.

6 Best Practices for your eCommerce Returns Policy

1. Provide customers with straightforward guidelines which are easy to find

Visitors to an eCommerce store must be immediately aware of the returns policy. Returns procedures strongly influence the purchase decision, especially when a customer is not yet 100% ready to buy. Offering hassle-free returns and covering the shipping costs eliminate barriers to making the sale. The goal is to eliminate any confusion on how to return a product, so customers seeking answers can quickly find them. If a customer is after a return, they are already unhappy with a product, so leverage the interaction to give a favourable impression of your service levels and help restore the customer experience.

2. Offer free shipping for returns

Free shipping on returns is a cost, which makes it important to track the extra conversions this generous policy creates, as well as the boost to customer retention levels. Despite the short term expense, the goodwill generated through free shipping is significant. Research in 2012 discovered that offering free returns led to customer recommendations in 29% of respondents. Large companies like Barneys and Saks Fifth Avenue recognise this and already offer free returns.

3. Make your returns policy part of your omni-channel strategy

Traditionally, retailers did the opposite by implementing rules and restrictions to reduce short-term return rates. However, this was done at the expense of frustrating customers to the point they never again made a purchase. Today, the trend has shifted and many eCommerce businesses are going out of their way to make returns as simple as possible. With 42% of consumers still looking to retailers to further simplify product returns, companies must prioritise creating an omni-channel returns policy for greater convenience and flexibility for customers. Prepaid shipping labels can be very useful to expedite the returns process, in addition to clearly stating the return policy online. In-store returns should be offered to all customers for brick and mortar retailers so that unhappy customers have as many channels as possible to reach a solution and have a positive customer experience.

4. Don’t get caught up in enforcing your returns policy to the letter

It’s not worth the damage to your brand if you hassle customers on every returned item. There are many reasons products come back to the warehouse, and yes, a handful of people will take advantage and return ‘faulty’ products they broke themselves. If you discover individuals repeatedly taking advantage of your returns policy, you can take steps on a case by case basis but in general accept every product sent in. Remember your goal – focus on the customer relationship and provide them with a phenomenal customer experience, which does sometimes means bearing short term costs.

5. Build a standardized customer-centric returns process

Building a standardized process increases the scalability of your returns framework and reduces overall costs. This in turn ensures that a customer can expect a certain level of consistency and efficiency for each return made. Implementing a fixed return policy internally will minimize the cost incurred and increase the speed in processing returns as you give your teams clear guidelines on managing customer returns. However, one cannot neglect creating a good customer experience and should still leave room for personalization when required.

6. Develop a capability for effective ‘cross-border’ returns

Offering an international returns policy within Asia Pacific relies on a brand understanding the local regulations across a number of countries, being able to handle multiple currencies and managing a highly complex process. With 55% of all online shopping in Singapore and 40% of all Malaysian online shopping being cross border, it’s critical for eCommerce stores within the region to develop guidelines for customers to return products cross-border.

Final thoughts

The booming eCommerce trend has created a marketplace full of competition. Businesses need to continually develop their differentiators to stay ahead of the pack. In Asia Pacific, eCommerce operators are rapidly developing new processes and technologies to offer an improved customer experience, but where existing online businesses in the region are lacking most compared to their global counterparts are their returns policies. To stay competitive and keep up with rapidly rising customer expectations, focus on doing returns right and drive your business to success.

Sources: Accenture, Aftership Blog, Apparel, BCG Perspectives, Comscore, eCommerce Best Practices, Econsultancy, G2M Blog, Internet Retailer, JLL, Payvision