The boomerang is regarded as a marvel of aerodynamics and was invented over ten thousand years ago by the Australian Aboriginal. Boomerangs are awesome, but not when they relate to sales. Boomerangs are deadly accurate, whereas boomerang sales can be just simply deadly. Recent statistics for 2023, suggest the retail industry suffered the burden of more than $750 billion in sales returns, reflecting over 14% of the total sales volume. Some of these returns are out of the retailer’s control, but not all.
Several of the top reasons for returns are mistakes made by the vendor, not the purchaser. Whilst returns can be painful for larger businesses, they can be catastrophic for the SMB who has neither the margin, volume nor manpower and systems to handle large volumes of returns. Especially in the post-holiday season when the SMB was just starting to realize the benefits of that larger-than-usual volume of sales helping them support other quieter revenue periods during the year.
Part of the problem is a technology problem. For many years, SMBs have been effectively shut out of the bespoke single platform solutions that cost so much money to develop and have been the domain of the major corporations. Everyone is talking about single platforms and single sources of truth, but the reality is most SMBs still deal with multiple systems, multiple plug-ins and a chaotic data management process which is far from ideal when you seek to deliver a positive, simple online experience for the customer.
There isn’t much issue with buying online, but when the SMB tries to then record, inventory, pick/pack and send the items purchased by their valued customer, they run into data integrity issues and much more. Imagine a garden watering system made up of multiple small hoses, with multiple connectors. Each connection is a potential place you can get a leak, and a similar thing can happen with multiple systems and plug-ins.
What is the solution to both reducing returns and improving profit?
I believe there are three main areas for the SMB to focus on concerning returns.
- Know your customer – all the data you collect as well as every interaction with a customer is a potential point of understanding for you, and an experience for them. Use your data to understand, supplement it with surveys and you’ll be a long way towards offering a better experience, a smoother purchase process, and reducing returns as the customer will be more likely to get what they wanted. You can also use customer understanding such as common questions to build better information on your website so the customer can more easily and more effectively choose their items, also reducing returns.
- Think Customer Commerce – look for a true single platform, single source of truth commerce solution. When you have only one version of customer data in a system that allows you to handle the promotion, purchase, payment, and fulfilment of orders, you run less risk of getting it wrong. True Customer Commerce solutions are now becoming available at a price that SMBs can afford.
- The right system described above will also allow you to provide a more personal and real-time experience for the online customer, again potentially reducing the likelihood of return, and increasing their satisfaction and enjoyment in dealing with you. Imagine being able to prompt a client with sizes they purchased previously, suggesting an upsell or perhaps giving them a timely added value offer. More loyal customers will spend more, even if they do have to return the occasional item. What you lose on the swing, you pick up on the roundabout – or if you prefer, on the boomerang.
SMBs are traditionally known to be closer to their customer. Whilst big companies are often good at competing on the volume and price game, you can win on the experience and the value. Don’t let technology push you further away, because this is your superpower and is one area you can compete effectively with the big corporations. Customers who feel serviced, who feel understood are known to be more loyal, and more interested in dealing with your business. They don’t want to be treated as a cog in the machine or as a number in a queue. Bring back the ‘human’ to your business by getting the right technology to do the mundane stuff, while you and your friendly staff handle the customer service and experience.
I wish you all the best with implementing these three strategies to reduce returns, and then return profitability to your business. I’m certain you’ll see the benefits in both reducing returns and in the margins, you enjoy, both at the customer and company level.
