What’s the problem?

Reverse logistics is complicated. It is lengthy, involves multiple resources that compound the complexity of the process and is very expensive. In terms of e-commerce returns, sometimes the reverse logistics costs will be more expensive than the purchase itself. This is especially true if the original purchase was a lower ticket item in the first place, or if the potential for the resale of the item is very low. When evaluating the true financial cost of the return, penny-to-penny, it is simply not worthwhile to begin the process.

Enabling shoppers to keep their returns?

Retail brands are examining this paradigm from all angles and considering what the most viable and cost-efficient methodology for dealing with these returns. One option that is being bandied about is the possibility of shoppers keeping their returns. For shoppers this is a “twofer” scenario – get your refund and keep your product. It may surprise some of us, that this scenario is economically more beneficial for the brand, than the reverse logistics. But for those of us who are in the thick of the returns experience (especially those of us who are optimizing the innovation and technology around the end-to-end returns challenges), it comes as no surprise at all.  I’d like to say just one thing to all those retailers considering this: resist the urge with all your might. And here’s why:

8 reasons why enabling customers to keep their returns should be shelved

  1. It affects the bottom line. When you enable your shoppers to keep their returns and get a refund, you are cutting into your bottom line. While it is true that the reverse logistics may be economically more expensive than the alternative, the fact is there are alternatives to this intentional revenue leakage
  2. It encourages problematic consumerism. This is a euphemistic way to say that you are sending a problematic message to your shoppers that they can have their cake and eat it too. Or, to put it bluntly, if this is the outcome of the returns process, there will undoubtably be customers who take advantage of this fact and will begin to intentionally purchase and return knowing that they will be told to keep the item. On an individual level, this may be a small price to pay, but should real fraudulent elements get wind, it can lead to abuse of a mass scale.
  3. It proliferates returns. If there is no consequence to a return: repackaging, shipping, sending off the item, dealing with couriers, waiting for a refund, etc. whether intentionally or not, it becomes a no brainer to purchase as much as possible online, because the return is beyond easy. The return is no return. What could be simpler then that?
  4. There are innovative alternatives. If the weak point in the supply chain is the reverse logistics, then logic has it that finding local alternatives that enable the handling and resale of the return is really the best solution. Shameless plug: OtailO is one such solution that does precisely that using circular economy paradigms and retailtech innovation.
  5. What about donation? A shopper who has initiated a return has made a definitive decision about that item. If we listen to that determination, a natural conclusion would be to move this item on to somebody else. Donation – with an emphasis on local donation – is a strong alternative to under-cutting the reverse logistics costs AND enabling the brand and the shoppers to do good along the way
  6. The customer doesn’t want it or need it. It is a mistake to assume that all shoppers will be glad to keep their return and to get a refund. This methodology may be perceived as the brand being lazy or dumping their items on unwitting shoppers. This can damage the brand image and leave the impression that purchases are disposable and low quality. Looking at this from another angle, if the return reason is that the item is faulty or if the item is an item that is difficult to transfer from place to place (like a mattress), the shopper may in fact be enraged at the decision. Retailers know that a stellar returns experience is key to customer conversion. “Keeping returns” as a policy will backfire and affect conversions of the customers are not happy with the “gift” that they are receiving.
  7. It’s a short-term patch. No matter how you look at it, this is a practice that doesn’t make sense. It is a temporary, short-term solution for a gaping challenge that needs to be systematically examined, analyzed and solved. Returns are an opportunity for retail brands to engage directly with shoppers. The long term solution should take into account customer conversion, loyalty, economical and sustainability indices. To keep returns is to ignore the real issue: that returns are here to stay and we need to start investing in doing it right.
  8. It’s not sustainable. In this day of age of climate change, social impact and conscious consumerism, brands have an opportunity to be a part of the solution. Brands have a unique window to educate without being punitive, to enable sustainable routes instead of diverting all returns de facto to the returns warehouse.