Returns are no longer just a cost of doing business - The Entrepreneurial Way with A.I.


Monday, November 21, 2022

Returns are no longer just a cost of doing business


It’s no secret that returns are a growing concern for U.S. retailers. Results of the State of the Industry: Returns as an Engagement Strategy survey published by Incisiv and sponsored by Appriss® Retail reveal that 91 percent of respondents report that returns grew faster than revenue during the last year. Yet just 29 percent of retailers have an end-to-end returns strategy in place. Even more concerning, only 23 percent are using returns intelligence to make smart customer experience decisions.

Why are so many retailers treating returns as simply a cost of doing business? What should they be doing instead to take advantage of shopper returns as an opportunity to engage and delight their consumers? Let’s dive in.

Start by looking at returns strategically

Although 64 percent of retailers recognize that returns need to be addressed, there is a lack of executive ownership of the problem. In fact, only 27 percent of the survey respondents have an assigned executive responsible for the overall impact of returns. What’s more, 69 percent of respondents report a lack of understanding about the root causes for their returns. An effective returns strategy begins with establishing clear responsibility for the process combined with a firm grasp of the reasons consumers are making returns.

Make the returns experience as rewarding as the purchase experience (if not more so)

Shoppers making returns are already familiar with and, at least somewhat, invested in the retailer’s brand. The returns experience can make or break that relationship. A bad experience won’t just cost the revenue from the current purchase; the value of any future purchases could be lost as well. Adding to the damage is the acquisition cost to earn another customer to replace the one lost. All in all, it just makes better financial sense for retailers to retain the customers they already have by making the returns process as seamless as possible.

However, there’s a caveat: Generic, one-size-fits-all returns policies are becoming too costly – and risky – for most retailers. While standardized return policies protect the retailer, they also tend to penalize and alienate high-value shoppers who request exceptions. The better option is to develop a flexible returns policy that uses artificial intelligence to examine prior shopper behaviors and make recommendations about returns transactions, additional offers, or incentives.  Unfortunately, the survey found that only 14 percent of respondents are currently employing a flexible, artificial-intelligence-assisted returns strategy, although 59 percent aspire to put one in place in the future.

Use technology to engage customers during the returns process

Today’s AI-assisted intelligent technology allows retailers to analyze shopper transaction data in real time to offer customized returns policies that help to engage - rather than alienate -  consumers. For example, when a shopper initiates an online return, the retailer can minimize the impact by offering incentives, discounts, or one-time-only deals to induce the consumer to make the return in-store instead. Research shows that consumers are more likely to spend their return refund while in the store, but more importantly, the retailer eliminates the bulk of the return logistics costs. The in-store transaction is a win-win for the shopper and the retailer.

Better yet, use pre-sale tactics to minimize returns

Seamless, personalized returns processes are one thing, but consumers – and retailers for that matter – would be happier if they didn’t have to make the return at all. In addition to offering real-time, point-of-return incentives, technology like Appriss® Engage can also be used to customize the purchase process to minimize returns. Offering incentives to encourage consumers to visit a nearby store to try on an item in their cart rather than buying multiple sizes only to return the ones that don’t fit is just one example that can help cut down on returns. The software can also detect and intercept high-risk purchase anomalies, like outlier item quantities, and apply customized order and return policies and incentives to reduce the returns risk without impeding the shopper journey.

Learn more

Download the full State of the Industry: Returns as an Engagement Strategy report to review the full survey results and analysis and get more ideas for building an effective returns strategy.


, Khareem Sudlow