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How Retailers Can Reduce Returns in 6 Steps

After years of considering product returns “the cost of doing business,” retailers are realizing the light at the end of the tunnel is a train—and it’s not slowing down. As eCommerce sales have skyrocketed in the last decade, so too have returns, with some product categories spiking up to a 30% return rate or more.

In the age where retail bankruptcies are daily news, returns reduction presents a significant opportunity for retailers to enhance their bottom lines. Our estimates show that every $1 M reduction in returns adds $0.5 M to the bottom line—Nothing to turn your nose at if you’re trying to recoup costs anywhere you can.

The 6 Steps to Returns Reduction

  • Monitor Performance: Products need to be monitored consistently in order to identify return rate spikes. Customer service calls and online reviews also serve the important purpose of providing meaningful feedback.
  • Identify the Problem: Charles Kettering said: “a problem well-stated is half-solved.” You can’t take action without fully understanding the problem products and the root cause of the returns.
  • Analyze the Data: All returns-relevant data should be collected and analyzed in one central repository. Returns-relevant data can come from PIM, PLM, Merch, Planning, OMS, WMS, CRM, and Voice of the Customer data.
  • Take Corrective Action: Once you’ve identified the problem and the root cause, take corrective action to reduce returns. Example: Customers say the product runs small? Put a note on the website that indicates they should size-up.
  • Collaborate Across Teams: A successful Returns Reduction team can’t work in a silo. A task force may include employees from Merchandising, Operations, Fulfillment, Marketing, Quality, and others.
  • Measure the Results: Once you’ve taken corrective action, record it and monitor the change in return rates to ensure a positive downward trend.

There you have it. The 6 steps necessary for returns reduction. These steps may sound simple enough, but we know first-hand that returns reduction by brute force is a labor-intensive endeavor. That’s why we built Chief Returns Officer® with each of these steps in mind. With Chief Returns Officer, all 6 steps are automated and the power of AI ensures ongoing success.