It’s estimated that in 5-10 years, consumers will be shopping online more than they do in stores. This is probably not surprising, given that in 2019 the UK had more empty shops than ever before , while eCommerce continues to grow at around 20% each year – and this trend has only accelerated in recent months as lockdown left shoppers with no choice but to buy online.

But as eCommerce continues to flourish, so too does one of retail’s biggest bugbears – RETURNS.

There’s no getting around it, returns are massively important to consumers. In fact, 78% of all consumers look at the returns policy before making a purchase and 42% of shoppers have returned something in the last 6 months . And this makes sense, a good returns service gives customers the confidence to buy a product they haven’t physically seen, touched or tried on, and if consumers are unsure about a returns policy they’re unlikely to take a risk and will shop elsewhere.

But returns can have a huge impact on the bottom line, which is why it’s critical to balance the customer experience, with the cost and operational impact.

The operational challenge

Returns cost UK retailers a whopping £60bn a year, and when 35% of shoppers deliberately over-order, returns can seriously affect the bottom line .

The problem is that typically retailers have little visibility or control around what’s being returned, why, and when. Consumers can send back a return, and retailers don’t know what products will be returned, the condition they’ll be or the cost of delivery – until the return has already happened.

This makes it difficult to plan and manage the reverse supply chain, and retailers often end up playing ‘catch up’ with their returns. This means it can take time to get resaleable goods back in stock for other customers to buy, so retailers miss out on future sales.

These challenges around returns are amplified when it comes to international returns. Customs documentation, Duties & Taxes, as well as differences in local customer expectations and preferences, can make returns a very complex and expensive endeavour.

The customer experience challenge

Returns can have a direct impact on conversion rates and repeat purchases, especially as consumers now expect the same convenience with returns as they do with delivery, with next day and even same day delivery continuing to grow in popularity.

Whether it’s the returns policy on the website, or a previous returns experience, returns are a key deciding factor when a consumer is choosing where to shop.

What’s important to consumers when it comes to returns?

• How long do they have to submit a return – how quickly do they have to decide?
• The range of options on offer – are they convenient? Can they drop a parcel at their preferred store location or can they arrange a courier collection?
• How much will it cost?
• Can they exchange for a different size or colour?
• How quickly will they receive a refund?
• How do I know if my parcel has been received – what if it gets lost? Consumers say tracking and receipt of return is the most important aspect of the returns process .

Above all, returns need to be easy, convenient – and fast. Customers need peace of mind that they can easily return goods and get their money back quickly.

This is what will give them the confidence to buy, even if they’re not sure about a product, and this trust can convert a first-time customer into a loyal customer.

The international challenge

Returns are even more critical to your international customers – especially when buying online from overseas already feels like a bit of a risk. But the challenges around returns are magnified when it comes to cross-border logistics.

Every country has its own preferences and expectations when it comes to shopping online, delivery and returns – so it’s important to tailor your returns to each local market.

For example:

• Germany has a real ‘returns culture’ – up to 70% of fashion purchases are returned
• More than half of consumers in France choose to drop a return at a Drop Off location
• Parcel lockers are more popular in China than any other nation
• The Spanish and Chinese are most likely to abandon a cart if the returns policy is unsatisfactory
  (IMRG Returns Review 2020)

With cross-border returns, also comes the added challenge of Duties and Taxes. 68% of all consumers worldwide check to see if there will be any additional taxes to be paid . Using a DDP (Duty Paid) option is a way to remove this sales barrier, but this can be more time-consuming and costly for retailers – with many choosing to leave it up to the consumer to resolve themselves, which doesn’t make for a positive shopping experience.

Returns can no longer be an after-thought

Choice, flexibility, convenience, speed, visibility – this is what shoppers expect from a returns service, and this is mostly because this is what they get when shopping with a Tier 1 retailer. But businesses like these have huge budgets, sophisticated technology, robust infrastructures and access to an endless number of services – something that is out of reach for many growing businesses. It’s vital, therefore, that businesses find affordable solutions to deliver a returns solution that can compete and provide a flexible and seamless full-loop outbound and inbound shopping experience.

That’s why GFS is launching Global Returns Pro, the first choice for expanding eCommerce businesses wanting a fast and affordable solution to simplify global returns and give customers a high-end experience, without the high-end cost.

Click here to find out more and take advantage of our early-bird launch offer!

i – https://www.bbc.co.uk/news/business-49349703

ii – https://www.statista.com/statistics/288487/forecast-of-global-b2c-e-commerce-growth/

iii – GFS/IMRG Consumer Home Delivery Report 2019/20

iv – ZigZag 2020

v – ZigZag 2020

vi – GFS/IMRG Consumer Home Delivery Report 2019/20

vii – IMRG Returns Review 2020

As more businesses begin to re-open their doors, life is edging its way back to some kind of normal, but the reality is we don’t know what “normal” will look like in 1 month, 6 months or even 12 months’ time – what we do know is that businesses are likely to feel the impact of COVID-19 for quite some time.

It’s clear that eCommerce has experienced a surge in demand. As the country battened down the hatches back in March, consumer habits shifted dramatically, with 37% of us shopping online more than ever before*.

In fact, eCommerce sales soared to a massive 10-year high, as consumers were forced to do the majority of their shopping online for the first time ever.

How Did Retailers Cope?

The hike in demand put many retailers in a delicate situation, having to balance unplanned peak-level order volumes, with social distancing in the warehouse, as well as delays in the supply chain and carrier capacity issues. 

Many businesses either had to reduce staff numbers quickly or pause trading altogether. Even household names like Next and TK Maxx took the decision to completely cease selling online until they could guarantee the safety of their staff – a completely unprecedented move.

Even retailers that were able to continue “business as usual” were forced to advise delays of up to 10 days or more for delivery – timeframes that have really been unheard of in the UK this side of the 21^st Century.

Some companies looked for inventive ways to continue to connect with customers and recreate the in-store shopping experience. John Lewis launched a ‘virtual services’ hub so that shoppers could book one-on-one video appointments with retail experts, who could help with setting up nurseries, interior design and personal styling. Curry’s PC World launched a video service so they can help online customers make informed choices when buying electronics. Retailers who didn’t sell online before also turned to delivering to keep their businesses afloat.

The businesses that have managed to maintain consistent service levels and sales, have been those that allowed for some flexibility to pivot their business model and adapt to change quickly.

What’s the outlook for eCommerce Post-COVID?

We saw shops open on 15^th June and thousands of shoppers rushed back to the high street, with mile-long queues and waiting times of up to 2 hours. But let’s not jump to conclusions. While people may be quite happy queuing in sunshine at the moment – will they do the same in the rain? The likelihood is the novelty will wear off quickly!

While many jumped at the chance to get out and hit the high street, others are still more apprehensive. We also can’t forget that many people will be recovering financially from being on furlough and may be nervous to spend – May saw a slight dip in the rate of growth for eCommerce compared to April (96% vs 83%), perhaps down to the fact that shoppers stopped panic buying and became more cautious of their spending. But these are still massive numbers regardless.

eCommerce has been growing steadily for the last 3 years, hovering at around +20% YoY. The COVID crisis has simply accelerated the rate of growth ahead of time, a trend that we see continuing as consumer habits have shifted.

We will probably find that key verticals traditionally considered as instore purchases, such as food, flowers and wine, health and beauty, may find that shoppers continue to buy online which could result in a permanent shift of business model for sectors such as these.

And as retail continues to lean online, e-fulfilment will become a core focus, with many businesses re-prioritising the purpose of their store estates and delivery strategy – especially considering that the value and importance of delivery has now been brought front of mind.

As Andy Mulcahy, Strategy and Insight Director at IMRG said recently: “We are also starting to see a differential by retail tier, with mid-market losing out to budget retailers, a trend to watch as consumers seek value for money in uncertainty, however, on the other hand we are likely to see consumers looking for brand trust and quality. This can result in a squeeze in the mid-tier where appealing to both needs has been traditionally harder to balance. Retailers will need to listen to their customers, and find new ways to become increasingly transparent, flexible and innovative in order to navigate the rocky and uncertain road ahead.”

How Can Retailers Adapt For The Future?

Whatever happens, it’s clear that we are in a constant state of flux and uncertainty – making it difficult for businesses to plan and forecast as they typically would. And soon we’ll be facing PEAK and BREXIT. Logically the businesses that have the flexibility and agility to react fast, with a focus on contingency and cost control will be the ones most likely to not only survive, but thrive.

This is no different to how businesses should be looking at delivery. Delivery is one of the most important parts of the customer experience and multi-carrier delivery not only gives retailers the ability to switch carriers, but also strike the right balance between performance, service and cost. By expanding delivery, it makes it possible to offer customers wider choice of delivery and service consistency – which will especially be important in this competitive climate. While customers may have been more tolerant over the last few months – don’t be fooled, a good customer experience will always be a huge sales motivator.

At GFS, we give retailers flexibility and contingency by offering single access to the widest range of global multi-carrier services for delivery and returns with a seamless customer experience – no matter what happens.

Make sure you always have a Plan B – Watch this video to find out how!

Or contact us to see how GFS can help prepare your eCommerce business for every eventuality.