Online retail is booming, and not just since the Corona pandemic. Last year, sales in e-commerce (B2C) in Germany alone amounted to 59.2 billion euros. However, as a downside of the higher order volume, the number of returns also increases for shipping retailers. Since this process is often associated with high costs, many retailers look for cheaper solutions.

Returns offer customer contact and insights into customer wishes and behavior

Almost half a billion items are returned in Germany every year. This was the estimate of the Returns Management Research Group at the University of Bamberg's Chair of Business Administration. To financially cope with this mountain of returns, efficient return management is needed.

The recent decision by the Otto Group to have the last third of all returns processed in Poland and the Czech Republic, rather than directly at Hermes Fulfilment in Hamburg, is an indicator of the increased cost pressure and intensifying competitive situation among shipping retailers. And the Otto Group is not an isolated case. Amazon and Zalando have also been processing their returns in Eastern Europe for some time. They are trying to meet the internationalization of their business and higher requirements for destination-dependent control of goods flows, and also to get their costs for customer returns under control.

What many shippers often lack is a holistic approach to resource management and questioning existing processes and objectives. Return management should be more than just retrieving goods. It's also a point of contact with the customer and a source of data – and thus also influences future sales.

End of the outdated insert return

For most e-commerce companies, especially in the fashion industry, the insert return, i.e., the included shipping documents for a convenient and quick return to the sender, is still standard. "Many companies are reluctant to explore new ways of handling returns. They fear that new processes could lead to supposedly worse customer service," explains Artjom Bruch, CEO of Trusted Returns, a provider of an IT platform for return management.

However, this type of return often means rigid and opaque processes. In addition to adverse effects on customer satisfaction and the creation of high costs, it also negatively impacts the sustainability of online retail. Moreover, the retailer often doesn't even know that a return is on its way and has to physically unpack and check the goods using the insert after receipt. Only then can the customer expect a refund – which is complicated and, in light of digitally available options, seems like a relic from the catalog mail-order era. From a sustainability perspective, the insert return often also negatively impacts due to unnecessary transport routes, as the returned goods cannot be sent directly to their actual destination, often depending on the reason for the return. Moreover, alternatives to return shipping are not even considered here.

Advantages of a software-based return process

Software platforms already offer flexible and customer-friendly approaches for handling complaints or return cases. The focus is on the individual wishes of the end customer, which positively strengthens the consumer experience.

"Who says that the customer really wants to send everything back and is not, for example, willing to keep the slightly, but not visibly damaged item for a small discount? Or why does a coffee machine have to be elaborately packed and completely returned if a handle on the water tank is broken?" Artjom Bruch points out.

In the interest of sustainable logistics, especially given the growing volumes in the shipping business, the insert return should quickly become a thing of the past. Returns could often be avoided by conducting a software-supported dialogue with the consumer.

Transparency in the process, in the transportation, exchange, or credit, creates trust and loyalty for the future. These insights are also increasingly benefiting the retailer. Through the platform-based approach, he learns more about his goods and gets to know his customers better, to be able to make better customer-oriented decisions in the future.

Return management and the associated communication with the customer contain enormous potential for generating sales – be it through direct communication or the insights into data collected in connection with this process. Many e-commerce companies still struggle to tap into and utilize this treasure.