Cross-border e-commerce returns cause immense logistical stress for international retailers and profitability loss. In fact, sources report that 70% of online shoppers are making purchases from cross-border websites. Plus, in 2020, the average return resulted in reverse logistics costs of 59 percent of the original sales price of the item. It is also predicted that holiday returns may cost retailers up to 59% from last year and that $120 billion in merchandise will be returned between November 2021 and January 2022.
Of course, every online or brick–and–mortar retailer wants to avoid returns. But it’s inevitable that a percentage of sales will be returned right back to the retailer. This process, especially when cross-border, can be particularly stressful and costly during end-of-year holidays, but there are some steps you can take to mitigate the effects of reverse logistics – and their expense – on your business.
The first step is to be armed with the right information. Read on to get a thorough understanding of what returns mean for your cross-border e-commerce business and how to move forward with effective reverse logistics that not only keep your costs under control but encourage better customer loyalty.
Understanding Reverse Logistics and Their Effects
Reverse logistics refers to the lifecycle of a product after it gets to your customer. For example, customers return items for a wide range of reasons. From “too small” to “too large” to “not as described” to “defective,” your business will see an influx of returns after any holiday shopping season. And reverse logistics doesn’t just involve receiving the return. It includes the steps involved in quality-testing the returned item to check for issues, documenting problems with the item, and then either repairing, recycling, or restocking the product.
These processes can affect your entire supply chain. It’s nearly impossible to predict the volume of returns and, therefore, the cost for your business. But while e-commerce sellers need to accept returns as a reality, they don’t have to impact your business over the long term negatively.
How Easy Returns Can Benefit Your Brand
It only takes one negative experience for online shoppers to leave a brand behind forever and search elsewhere. On the flip side, a positive end-to-end shopping experience can entrench a customer’s loyalty for life. That experience includes returns. Research shows that:
- If returns are easy, 92 percent of consumers will buy something again.
- Before making a purchase, 67 percent of shoppers check the returns page.
- Around 79 percent of buyers want free return shipping.
What Does This Information Mean for Your Business?
It’s vital to create a flexible, user-friendly, cost-efficient returns policy to stay competitive in the global market. Especially during the holiday retail season, you have the opportunity to streamline reverse logistics and handle the higher demand. If you are selling cross-border, consider the most important benefit a strong reverse logistics solution can offer: customer retention. If customers aren’t happy with the products, at least they will be happy with the returns process. Here are a few things to consider when setting up a return policy:
- Take into account your country-specific regulations that may apply to cross-border goods or online purchases. Some countries have consumer protection laws that state that consumers have the right to return an order within a specific time frame – regardless of the reason – if they purchased the item online.
- Look into the duties or taxes involved in shipping back goods to the country of origin from certain regions.
- Make sure you account for the additional labor and restocking fees involved in returns when creating your pricing structures.
- You do not have to offer free returns just because others do. In fact, the tides have shifted in the last couple of years as far as brands reconsidering their lenient return policies. As more brands recognize that returns cost them a pretty penny, they’re revising their policies. Research how other cross-border businesses are handling e-commerce returns in your target markets.
- Ultimately, you’ll want to reduce returns across the board, so keep track of data as to why customers are returning goods so you can develop business strategies to mitigate returns in the future.
You’ll want to monitor certain factors as well, including:
- The condition of the returned product. If the product is failing at a certain point within the sales/reverse logistics cycle, you’ll need that data to make decisions about it. This is where quality assurance comes in to correct for potential future problems.
- The volume of returned items. Are certain products being returned over and over again? Keep track of which goods and how many of them are coming back to you.
- The percentage of sales lost to returned items. This factor includes determining how many of your returned products can be reintroduced into your forward logistics supply chain instead of being incinerated or recycled.
A few more tips:
- Leverage technology like cross-border e-commerce platforms that can help you optimize your website – and, therefore, your customer experience. For example, if you sell clothing, you can offer virtual fitting rooms so customers can best evaluate how items will look on them.
- Ensure you provide accurate product descriptions, photos, and sizing charts. And it’s important to personalize this aspect of the customer experience by ensuring sizes are conveyed in their local measurements.
- Use customer shopping history to usher customers along a more effective journey: Technology can help your site automate suggestions to customers who have bought items before in the wrong size and suggest a more appropriate one.
Above all, transparency is key. Your business should have a clearly-stated return policy on your website – using easily-digestible language with as little legal jargon as possible in your target customer’s local language. Be clear about what cannot be returned, how long returns processes will take, the final cost to the customer, and if any other local laws apply. If you have a self-service returns portal, your site should clearly direct users to it.
A note for newer cross-border e-retailers: Consider that experienced international e-retailers actually start preparing their supply chains for the holiday season’s reverse logistics well before the advent of the season. They make changes to relationships with last-mile transport partners, edit their customer-facing return policies to use up-to-date language, and they may even change warehouse or logistics management software to suit their needs better. There’s no harm in preparing well ahead of schedule so your supply chain can run like a well-oiled machine even if your return figures are high post-holiday sales.
How Do You Get Started?
If all the steps involved in the above sound daunting, consider that many cross-border e-commerce retailers aren’t navigating this process alone. They are turning to third-party experts in international retail for help. An expert partner can help you create and execute an effective return strategy for your global market – no matter where those customers are located.
The right partner will have vetted relationships with international carriers to help support your seamless reverse logistics and improve your customers’ experiences. Some partners even offer software that can help sustain your returns policies and experiences – enabling you to offer a self-service return portal on your e-commerce site.
Cross-border e-commerce software can also help you optimize your site to prevent returns. With as accurate-as-possible portrayals of your products on your site, your customers will be less likely to return goods for reasons such as “not as described” or that they didn’t end up liking the style once they saw the product in person.
The goal is to prevent returns, but following the above steps can help you design an effective process for dealing with them, so they don’t put a strain on your supply chain or bottom line.
