However, this approach is short-sighted and ignores the clear message that returns are sending us. When a customer purchases something in-store, they have entered a retail environment, engaged in a human interaction with staff, and because of that experience, they have decided to purchase a product. Following this experience, only one-third are likely to return the product as they are an online purchase. 

Build trust and confidence

Retailers confronted with a substantial number of online returns need to approach the problem not from a cost and logistics perspective, but from the vantage point of an end-to-end customer experience. 

Retailers must construct their digital environment as carefully and strategically as they do their physical store locations. You must offer customers assurance that they can expect the same immersive experience online as they would in a store – including the personalised experience that responds to their needs as a human customer rather than simply a data point or revenue figure. 

The shape this takes will depend on the retailer’s target segment, product offering and broader business strategy. For those whose business is fashion or home furnishings, it can mean presenting the customer with opportunities to “try out” their product in a digital environment in a way that’s analogous or superior to how they would interact with it in-store. 

Where online has the edge 

While an online customer cannot lie on a mattress to test its comfort level, there are areas where digital has the edge. Online retailers like Temple & Webster allow customers to view their prospective purchase in a home using AR to see how it interacts with their existing decor. 

Garment retailers can provide personalised fit-testing based on a customer’s own measurements using a three-dimensional avatar with their own body shape and face. This provides them with purchasing confidence approaching that delivered by an in-store change room. Brands like Stitch Fix and Bonobos are leaders in this area. 

Analytics about a customer’s previous purchases and browsing behaviour both within your site and across the internet can be used to deliver suggestions to a customer that are likely to suit their preferences. This personalised experience builds trust and confidence not only in the purchase but in the retailer, who delivered it. 

Convert returns into loyalty 

Your returns process is part of your customer experience. A returns process that has been devised to reduce logistics costs at the expense of customer experience is likely to convert a dubious customer experience into a negative one. 

A holistic view of returns will deliver greater value over the long-term and allow online retailers to capture lifetime value. Start looking at returns not as a negative event but as one step in a variety of different customer journeys. If customer experience can be optimised even at this unfortunate juncture, some of those journeys will lead back to a loyal customer relationship.

With digital infrastructure providing the opportunity for both seamless data collection and rapid processing of refunds, online returns can be a key point to restore customer confidence where it has been lost and discover which part of the customer’s experience should be improved to prevent future returns. 

Data also provides a means to identify the small minority of customer who are habitual “wardrobers” – those who buy and use fashion items with the pre-formed intention of returning them – and to disincentivise this behaviour by, for example, capping the number of returns for which the retailer will cover postage costs. 

The precise nature of the way returns are handled will vary from one retailer to another. But the common factor in successful approaches to returns is their connectedness to the broader business strategy and customer experience curation that the retailer is pursuing. 

Viewing returns simply as a cost to be mitigated is myopic messenger-shooting. Returns contain an important message about your relationship with your customers and how they are experiencing your brand. Listening to this message can build loyalty and unlock lifetime customer value.