Return Process Optimization: What You Need to Know

Returns are an inevitable part of online retail. In most cases, online shoppers don't see their product until it arrives, which makes the likelihood of a return significantly higher than with an offline purchase. 

How should your online store handle these returns or cancellations? Why is a returns policy so important, how do you optimize your returns process and how do you ensure you limit the number of returns? 

In this article, you will read about: 

• The regulations that Dutch online stores must follow
• Why items are returned and what you can do about it
• How the e-commerce industry and the returns process have evolved over the past few years 
• Why a good returns policy is so important 
• What the main benefits are of optimizing your returns process
• How to optimize your returns process with smart software

The returns process: How does it work? 

As an online store, you enter into a so-called distance sale with your customers. This refers to a purchase made via the internet or telephone that takes place before a customer has held a product in their hands or been able to try out a service. 

To protect both the customer and the seller in this situation, Dutch law provides several rules that regulate distance sales as much as possible. 

As an online store, you need to keep the following in mind: 

1. Customers are legally entitled to a cooling-off period of at least 14 days, during which they can return (or cancel) a product or service without providing a reason. Online stores are, of course, free to extend this period. We will return to this later in this article. 
2. You must refund the purchase price for a return within 14 days of the customer notifying you that they no longer wish to purchase the product or service. 
3. You may withhold the refund until you have received the returned items or have received proof of shipment. 
4. You must inform your customers about the cooling-off period and your return policy. If you fail to do so, the cooling-off period is automatically extended to 12 months. 
   

Naturally, there are exceptions to the rules above. For instance, the cooling-off period does not apply to travel, certain food items, flowers, or digital products.
Want to know more? This article from the Consumentenbond provides a detailed explanation of the rules that apply to returns.

Why are items returned?

Why are items actually returned? This varies slightly by industry. However, various studies and our own experience show that the following reasons are common across most industries: 

1. The customer ordered the wrong size

Online stores that sell clothing or products in various sizes often deal with customers whose items do not fit. Generally, there are two types of customers: 

• The customer who carefully ordered one product in their size, but it doesn't fit. There is a chance this customer will return the product or exchange it for a larger or smaller size. 
• The customer who orders multiple sizes in advance and keeps only the correct one, provided one of the products fits well. 
  

The first category usually does not cause major problems. By including a size chart on the website, for example, customers in this category can often make a good estimate of the sizes, which will reduce the number of returns. 

The second category, however, causes greater problems. Sometimes customers order as many as three or four different sizes, which guarantees a return. Some companies therefore choose to block customers who habitually engage in such behavior. This is, of course, purely for self-protection, as the enormous number of returns in this category can in some cases even lead to losses for the online store. 

2. The product doesn't look like the images in the webshop 

It isn't always easy to represent a product (or service) realistically on a website. It happens that customers are disappointed upon receipt and decide not to keep the purchase after all. 

To prevent this as much as possible, it is recommended to add high-quality photos to your webshop. Pay attention to the visibility of color, material, and fit (if applicable), and ensure you have photos from different angles and distances. It can also help to add videos of a product, as these often provide an even more realistic view of a product or service. 

The more information you provide upfront, the smaller the chance of disappointment upon receipt. 

3. Delivery issues 

Is the customer not at home and a shipment cannot be delivered? Or does something go wrong with the mail and a shipment takes too long? In that case, the customer may lose interest or have already made a purchase elsewhere. 

Such problems unfortunately occur, but fortunately, there are several methods to reduce the risk. For example, work with reliable carriers, use track & trace , and ensure clarity regarding the shipping process and associated timelines.

Is there a special circumstance and do you expect a delay? If so, state this clearly on the website and during the ordering process. Think, for example, of longer shipping times around the holidays or during a lockdown. 

4. Purchased as a gift during the holidays

The holiday season is known for high sales, but also for a huge increase in the number of returns. In the fashion industry, as much as 50% of orders can be returned during this period. In most industries, this percentage is around 30%. 

Why are so many products returned during the holiday months? This is mainly because many products are ordered as gifts, and gifts come with more risks than personal purchases. There is a relatively high chance that the giver will misjudge the clothing size or the taste of the gift recipient. 

Does this return frenzy mean a loss for webshops? Fortunately, that doesn't have to be the case. By, for example, optimizing the return process, digitizing the return form and promoting exchanges, the holidays can be stress-free and deliver the results you were hoping for.

See our blog on optimizing the return process for the holidays for more helpful tips. 

The return process then and now

The e-commerce industry, with all its associated services and possibilities, has seen enormous growth over the past 10 years. According to a report by Shopify global e-commerce revenue was around $1.3T in 2014 and rose to a staggering $4.1T in 2020. 

For consumers, online shopping is now just as common as visiting a store. In fact, over the past year, many consumers have preferred to skip physical stores and are ordering more and more products online.

Most webshops have also significantly expanded their shipping zones over the past decade. International shipping is now the norm, whereas years ago it was far from common. Are you only shipping domestically in 2020? Then you are likely falling behind the competition.

What does this development mean for the return process? 

First of all, this rapid growth in the popularity of online shopping shows that e-commerce services are still relatively new. Ten years ago, webshops already existed, but customer expectations in this area were much lower than they are now. 

If a product wasn't to the customer's liking, they had to take action themselves. The return form had to be printed and filled out, and the package had to be dropped off at the post office. This was the standard procedure, and there wasn't much variation to it. 

Only in recent years, during the explosion of online shopping, have the possibilities for return process optimization (and consumer expectations in this area) increased enormously. Webshops now offer a wide variety of services, and carriers are fully equipped to handle the large number of e-commerce packages that travel the world every day.

Everything is about convenience these days. Customers expect lightning-fast processing of returns, and everything can be done automatically and online. Printing is a thing of the past, and in many cases, dropping off a package yourself is no longer necessary. 

A great advantage of this new online way of working is that the underlying reasons for return can be better analyzed. With the right software, you as a webshop get this data in a single overview on a dashboard. Ten years ago, this was not common at all.

What does the future of the returns process look like? In our view, it is fully automated and extremely flexible. Take a look at our Why Returnista page for some great features that we hope to see in more and more webshops in the coming years.

The importance of a good returns policy 

Before we look at returns process optimization, first a brief introduction to the returns policy. 

What is a returns policy and why is it important to pay attention to it? 

A returns policy consists of rules that determine how consumers can return and exchange their items or services at a store. This policy includes, for example, rules regarding timeframes, reasons for returns, and refunds.  

The main purpose of a returns policy is to protect the store. If the customer is not bound by any rules, they could return a product for any reason, at any time. If all products were to come back to the store in poor condition months (or even years) after purchase, it would lead to major losses for the seller. 

The better thought-out and clearer the rules in a returns policy, the better a webshop is able to regulate returns in a cost-effective way. 

What is returns process optimization? 

Returnista's specialty, and an action that is closely linked to the returns policy, is returns process optimization. What exactly does this entail? 

Returns process optimization means setting up the returns process in such a way that it is as beneficial as possible for all parties involved. 

Think of: 

• Actions that make the returns process for webshops as cost-effective as possible, such as automated forms, data analysis platforms, and data-driven advice that reduces the number of returns. 
• Actions that make the return process for the customer as convenient as possible, such as an online return form and the option to have returns picked up at home or work by a carrier of their choice. 
• Actions that involve the right parties , such as carriers, return platforms, and drop-off points. 

Why optimize the return process?

Optimizing the return process offers a huge number of benefits for an online store. Some examples of key benefits include: 

Increased customer satisfaction

Customer satisfaction is essential to the success of an online store. The more positive the customer experience, the greater the chance that a customer will return and even spend more than they did on their first purchase. 

Moreover, satisfied customers play an important role in promoting an online store. If your return policy makes a good impression, there is a high chance you will be rewarded with a positive review or a recommendation to friends. Such actions have a strong positive influence on a company's long-term growth. 

Did you know that research shows that returning customers spend an average of 67% more than new customers? 

Reduce the number of returns

By setting up your return process consciously—and therefore optimizing it—you reduce the number of returns. We recommend that online stores consider which actions are necessary to reduce the number of returns when developing a strategy. Examples of such actions include: 

• Promoting exchanges instead of returns
• Offering a generous cooling-off period 
• Performing analyses (what is frequently returned and what is not) to then adjust your website's offerings accordingly
• Clarifying product information on the website (such as realistic photos and size charts)
• Data collection

As we described earlier, data collection is an essential part of optimizing the returns process and a powerful method for reducing the number of returns. 

By setting up a functional data dashboard and linking it to an online returns portal, you gain insight into, among other things:

• How many returns you receive on average per (for example) day, week, or month 
• Which products or services are frequently returned and which are kept
• The reasons for returning (or keeping) certain products or services 
• What the customer would like to see improved or changed
  

With the right online returns portal, you can easily link the information a customer leaves on the return form to your data dashboard. This gives you real-time insight into all the data you need to continuously improve your ordering and returns process. 

Save time & money

A simple but valuable benefit and perhaps very obvious: returns process optimization saves time and money. 

If you automate your forms, handle your registrations online, and find smart ways to reduce returns or convert them into exchanges, you will see the results directly in your scheduling and revenue.

Save paper

Last but not least, by optimizing your return process, there is a good chance you will save paper. After all, optimization usually also means digitization. 

While it used to be common to have to print return forms , that is no longer necessary. Everything is done online, automatically, and a return shipment is recorded directly in the webshop's system instead of first on a form and only then in the system. And, in a world where more and more companies are going paperless, as a webshop, you can hardly afford to ignore digital workflows. 

Return process optimization with Returnista

Do you need help optimizing your return process? With our return solution, you save time and costs, reduce the number of returns, and increase customer satisfaction. 

With our platform, you can set up a return portal in no time that perfectly matches the style of your website. You can then easily link this to an extensive data dashboard and have the ability to fully customize your return process to your and your customers' preferences. For example, do you want products to be picked up at the customer's home? Do you want to offer discounts to customers who exchange instead of return? Or do you want to offer flexibility in the choice of different carriers? This, and much more, is all possible.   

Returns are no longer a pain point with Returnista. Do you want a return portal in the style of your webshop, just like Decathlon, Loavies, and Asos? Then request a demo on our website and get advice from one of our return consultants.