Improving cash flow with your return solution: 3 tips

Modern e-commerce is significantly more mature than it was a few years ago. With increased competition among online stores, it is becoming increasingly important to differentiate your e-commerce business.

Since 2019, the number of online stores has increased by as much as 134%. In the same period, the number of returns also rose by 431%. Returns are costing more money than ever, but at the same time, they offer the perfect opportunity to set yourself apart from your competitors. 

There are several reasons why there are so many more returns than before:

1. An influx of older and inexperienced online shoppers  
2. Higher sales figures (and therefore returns) during the pandemic
3. Bracketing: buying different sizes online and returning what doesn't fit
4. The rise of buy now, pay later (BNPL) payment options like Klarna

Olivier Muller, co-founder of return platform Returnista, recently discussed the above situation with Kevin Sipin in a webinar for the e-commerce industry hosted by cash flow management platform Agicap. 

What is the effect of your return flow on your cash flow?

Due to the rapidly increasing competition in recent years, the pressure on cash has also risen sharply. Added to this is the fact that in the same period, advertising costs have risen significantly, even though this is an acquisition channel that many e-commerce companies depend on.

Research we conducted among approximately 1,000 online stores shows that a return costs an average of 12 euros per product. 

With the current cutthroat competition in the e-commerce landscape, you can save a lot of costs and ensure a healthier cash flow by improving your return flow.

How to improve your cash flow with your return solution: 3 tips

Many e-commerce companies face the same challenge: maintaining a healthy cash flow amidst growing return pressure. With these 3 practical tips, you can start making a difference today.

1) Lower your return rate

Modern consumers highly value free returns. If you want to see your sales figures grow, you will also need to offer free returns.

However, this does mean that your return rate will increase. To prevent this from getting out of hand, there are a number of actions you can take to lower your return rate.

For instance, using clear and thorough product descriptions helps. This ensures customers know exactly what they are buying beforehand. Using high-resolution photos and videos is also essential. 

Furthermore, it is a good idea to offer an excellent customer service experience. Optimizing the customer experience for mobile users can also make a huge difference in return rates.

Want more tips? You can download our free checklist with 7 handy tips to lower your return rate here.

2) Free up cash through faster turnover

An important aspect of creating a healthy cash flow is making products ready for resale as quickly as possible. 

When a consumer receives a product at home, it often takes a few days before they decide to return it. After that, it often takes another few days for the product to arrive back at the warehouse. 

If you are unlucky, there is also a backlog in processing returns at the warehouse. This way, it can easily take 2 to 3 weeks before a product is back in stock.

You can tackle this problem by taking a number of actions:

• Have customers register returns in advance
• Connect your returns solution to your e-commerce platform
• Add products that are yet to be returned back to stock immediately

The above actions are easy to achieve with a returns solution like Returnista's. For example, users of this returns solution see a 65% decrease in return processing time.

This frees up a significant amount of cash and significantly reduces the pressure on your cash flow. 

3) Turning returns into exchanges

Keeping cash in-house doesn't have to be a problem, as long as you actively facilitate exchanges. The most common reasons for returns have to do with a purchase being too big or too small. By offering a different size immediately during the return process, you can prevent a large number of unnecessary returns.

If you also allow payments for more expensive or cheaper items to take place directly during the return process, you minimize the pressure on your cash flow. 

Proactively offering coupons when customers request a return can also have a significant impact. For example, e-commerce companies that use smart exchanges from Returnista convert up to 40% of their returns into exchanges. 

If you want to watch Olivier Muller's full presentation, you can view the webinar recording below:

Curious about how the right return solution can improve your cash flow?

Do you need help optimizing your return process? We are happy to help.

With Returnista's software, returns are no longer a pain point. Increase customer satisfaction and lower your costs with the help of a beautiful return portal and a complete data dashboard. Do you want to get more value out of your return process like Decathlon, Loavies, and Asos? Then request a demo on our website right away.