The cost of returns to retailers globally is substantial, costing nearly $550 billion a year, not including restocking expenses or inventory losses (National Retail Federation, 2021).
Returns are an inevitable part of eCommerce, but they are costly for your business.
The UK market has seen a surge in online shopping and the COVID-19 pandemic certainly accelerated the shift towards buying online.
In the UK specifically, online retail sales grew to account for more than 30% of total retail sales during the peak of the pandemic (Office for National Statistics, 2021).
There are ways to reduce the number of returns and save costs. The right technology can help reduce the number of returns, decrease costs, free up cash flow and improve customer satisfaction.
Adopting the right order management and warehouse management system is crucial for companies engaging in Multi-Channel retail.
Here are Five Top Tips to Minimise eCommerce Returns and Boost your Bottom Line…
1. Implement an Order Management and Warehouse Management System (OMS & WMS)
An order management and warehouse management system can dramatically reduce your returns by automating the process and moving away from paper base or spreadsheet systems, which are prone to errors. Implementing this software ensures the correct items are picked, packed & dispatched, reducing the likelihood of customer returns due to receiving incorrect items from human error.
Automation and accurate inventory management can decrease the return rate by as much as 25% by ensuring the correct items are picked and shipped (Software Advice, 2021).
2. Improve your Pick Accuracy with Barcode Scanning
By using barcode scanning, you can ensure that the right product is picked from the warehouse. This reduces the likelihood of shipping the wrong product or quantity to the customer – a common cause of returns.
Studies have shown that implementing barcode scanning in order fulfilment processes can increase accuracy rates to 99.9%, effectively minimizing the incidence of returns due to incorrect picking (Journal of Business Logistics, 2020).
3. Improve your Pack Accuracy with Barcode Scanning
By scanning each product as it is packed, you can ensure that the right products are included in each shipment. This reduces missing items or shipping incorrect products, which can ultimately lead to returns.
Using a barcode scanning system reduces pick and pack errors to less than 1%
4. Improve your Product Information Management
One of the main reasons for high rates of returns is inadequate product information on websites’ product descriptions. Customers need to know exactly what they’re buying. If they are unsure they will be more likely to return the item. By improving your product information management, you can provide customers with detailed descriptions, high-quality images and accurate sizing & fit information. This will help reduce the number of returns due to incorrect or incomplete product information.
Websites with enhanced product information have reported up to a 40% decrease in return rates (E-commerce Foundation, 2021).
5. Real-Time Analytics and Reporting
Real-time analytics can help you track inventory levels and identify which products are selling well and which are not. Data can be shared between departments as to the reasons why products have been sent back resulting in better purchasing/buying decisions. This can highlight, for example, poor quality products and the returning frequency of other products. This all feedbacks and enables you to have a better understanding of the buying patterns of your customers. Informed decisions can then be made when it comes to stocking the right products.
Companies that actively use data analytics report a 15-20% reduction in return rates (McKinsey & Company, 2021).
Adopting an order management and warehouse management system is key to reducing eCommerce returns. By automating order processing, enhancing pick and pack accuracy with barcode scanning and providing real-time analytics, such a system helps minimise errors and improve inventory management. This not only reduces costs associated with returns but also enhances customer satisfaction, driving efficiency and growth within your business.
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Author: Iain Coplans CEO Stok.ly