Increasing efficiency for eCommerce returns

By Natalie Joy

August 31, 2021

I have been fortunate to develop my career through a wide variety of experiences in different industries including eCommerce, partnership management, telecom, sports technology, and now back to eCommerce technology. Driving efficiency is one of the common threads that has been woven through each experience. Whether that be efficiency in the way we use internal resources and technology, communication, or within the post purchase experience.

But what exactly is efficiency? Efficiency is a measurement of the ratio between inputs and outputs. So the higher your revenue is and the lower your cost is to generate that revenue, the more efficient your business is. Returns management is arguably the most crucial component of running an eCommerce business so efficiency is not an option, it’s mandatory. Not convinced? At least 30% of all products ordered online are returned, so streamlining your returns management software isn’t just a ‘nice-to-have’, it’s necessary.

A focus on efficiency should result in one of four potential outcomes:

1. Hold revenue constant, but reduce costs

2. Hold costs constant, but increase revenue

3. Increase costs, but increase revenue more

4. Reduce costs while increasing revenue

Most business operators would agree that we typically aim for outcomes two through four!

When it comes to returns, efficiency can look a bit different. There’s a reason why returns are so often seen as the cost center of eCommerce. With returns, the average brand usually loses money through: product development, manufacturing, warehousing, merchandising, marketing, fulfillment, return processing, return shipping, and finally, refunds.

When does the money usually come in? When you win an order.

But it doesn’t have to be that way. Your post purchase experience for returns could look like this:

Activity Impact
Automated Return Processing
Return Shipping
Fewer Refunds + More Exchanges
Better Customer Satisfaction
Less Money Out
Avoided Or Reduced In Some Cases
Less Money Out & More Money In If Exchanging For Higher Priced Products
More Money In & Less Marketing Money Out

 

 

 

Returns can be a profit driver for your eCommerce business if you have the right software. That’s the problem we’re solving here at Return Rabbit. We help you be more capital efficient by using automation to save labor hours required to manage a returns program, and by providing returns insights to help with related business decisions. We also help you improve your customer retention rate and avoid revenue loss by converting refunds into exchanges. Request a free trial and see it in action!

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