How can Retailers Optimize Returns as a Growth Strategy?

Technology | 5 minutes to read

22nd Feb, 2022

Product returns, though an operational overhead for retailers, is a crucial component in the customer satisfaction journey. Savvy customers today expect doorstep return facilities from brands, especially while buying products online. Retailers need a smart strategy to iron out their returns processes to maximize customer loyalty and sales in an otherwise dwindling market environment.


    • Returns are often perceived as a source of lost revenue, overheads, and added work for retailers

    • However, in the era of curbside pickups and doorstep delivery, returns are an intrinsic part of customer confidence and loyalty factor in the entire shopping journey

    • Retailers can optimize their returns strategy using a few smart techniques and win over customer loyalty in a competitive marketplace

    The holiday shopping hysteria is usually followed by a tidal wave of returned products, a long-time source of lost revenue, and added work for retail businesses. However, by making the return process seamless, transparent, and visible, retailers can eliminate the ‘return anxiety’ from the customer’s shopping experiences and also from their own. Returns are no longer an operational overheads issue. They are part of the customer confidence and loyalty factor in the entire buying journey. Returns are a crucial part of the buying decision, especially in online retail solutions where customers don’t have the ability to touch, try, or see a product up close.

    According to a recent study, around 25% of shoppers buy products with the intention of sending them back. With purchase returns as high as 30%, it can take a big chunk out of any sales growth retailers may hope to get from stores during these challenging times.

    Changing customer demands 

    The sense of urgency driven by today’s digital-driven need for instant gratification has created a demanding customer reaction. They are now looking for free shipping on returns and prepaid return labels in the product box with online orders. Also, they choose whom they will buy from based on retailers who make returns the easiest.

    Rushing to meet these customer demands and vying for the buyer’s loyalty has increased fulfillment costs by 18%. Where 86% of customers reveal that they want a retailer to offer them a prepaid return label for online purchases, only 14% of retailers offer a return label of any kind.

    The reality is that product returns are quite expensive. Apart from the loss of retail value for a product comes shipping cost, repackaging cost, processing cost, and in worst cases, expenses for destruction, recycling, or reduced value retention during liquidation. So, how can retailers find the balance and optimize their return strategies to delight customers and earn their loyalty without losing revenue?

    Let’s look at the best-fit techniques to optimize customer experiences with returns:

    Begin with a failproof overall strategy: Returns should be a key component of the retailer’s customer satisfaction strategy. Building a solid strategy requires visibility into return rates, high-return categories, trends by store, seasons, market, or channel. It also depends on cost-per-return and returns policies that a retailer can afford realistically. They must keep in mind that the fulfillment and return costs/challenges are different online than in-store. In the absence of a clear strategy, rushing into the market with an exaggerated and hyper-progressive customer satisfaction strategy will cost retailers more than they make in the long run.

    Using retail analytics solutions to get a unified view of returns across all channels: Retailers must track processing, shipping, transportation, and delivery of returns across all channels. A clear and unified view of data points provides in-depth visibility of all the returns and helps in better decision-making. Using data analytics for retail, brands can monitor, adjust, and evolve their tactics and adapt their strategy as the marketplace changes. Also, brands can greatly enrich their insights about customer demands by inviting detailed feedback, capturing the smallest observations about returned products, and applying retail analytics solutions to that data.

    Make the return process seamless: Brands must make their return process as easy as the purchase. Around 92% of customers say that they will buy again from a brand if its returns are easy. Retailers must process the refunds speedily or offer return customers an additional discount on their next purchase to add value to a customer’s overall shopping experience. Easy returns and refunds also help boost the brand value at the store level and wins customer loyalty in the long run.

    Leverage returns data to inform visual merchandising decisions: Retailers must pay close attention to information on seasonal overstocks, return reasons, damage data, and more. Real-time information on product category, SKUs, and store performance can make a huge difference in building a cost-effective return strategy. Retailers can also use the return data across products for better inventory management and prioritizing products that are in high demand among consumers. 

    Better visual merchandising descriptions: In an experience-driven economy, retailers must prioritize 3D visual merchandising to offer an immersive shopping experience. Accurate and detailed product specifications are also key for customers to make an informed choice. Improving product merchandising will give buyers a better understanding of products and help minimize returns. Using online retail solutions, brands can leverage AR/VR-powered fitting tools to give customers a real-life look and feel of products on their smartphones. This technology can also alleviate returns concerns for retailers.

      Additionally, read our blog “How Virtual Fitting is Changing the E-retail Landscape” to get more insight into the benefits, limitations, and scope of AR/VR-powered and digital try-on tools.


      Customer expectations have changed drastically with the rapid rise in e-commerce and virtual retail solutions making doorstep return and exchange a normal retail practice. Returns have become a crucial component of the buyer satisfaction journey. Retailers must streamline their processes quickly to minimize operational costs at the same time offering easy return and exchange facilities to consumers.

      Contact us for in-depth insights into our analytics-driven retail solutions or to book a free consultation with our experts.

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