COVID-19 has made online shopping the preferred alternative for purchasing. In the third quarter of 2020 alone, according to the German Federal Association of E-Commerce and Mail Order Trade, German citizens made online purchases worth 19,329 million euros. A figure that also directly translates into increasing returns. These pose significant financial, logistical, and organizational challenges for all parties involved - retailers, carriers, and customers - challenges that some providers may find completely overwhelming in the upcoming holiday season. To counteract this, discussions were already held at the end of last year to abolish free returns due to their negative impact on the environment and thus reduce the volume of returns.

Artjom Bruch from Trusted Returns explains why it is worthwhile to invest in an alternative, digital approach and how this leads to a better customer experience.

Returns will increase exponentially

"This year's holiday season is eagerly awaited. It is becoming clear that more than ever, Santa Claus will be shopping for gifts on the internet. While this means a significant boom for all e-commerce retailers, it is also expected that online retailers will have to prepare for unprecedented return numbers in the aftermath.

Specifically, this means that warehouse staff will need to be increased, but due to the still outdated analog return process, they have no insight into when specific items will be returned. With such opaque analog processes, precise planning is nearly impossible. Consequently, costs and risks are difficult to calculate. With internal logistics costs ranging from approximately 8 to 16 euros per return - the actual costs vary greatly depending on the industry and product - the importance of digitally representing the return volume becomes evident.

In addition, delivery services will struggle to handle the increased volume of packages. Waiting times for customers for refunds or return confirmations will lengthen, leading to customer dissatisfaction. This situation is also unsatisfactory for retailers. They have no control over the speed of logistics but are often held responsible by unhappy consumers.

A flat financial contribution is not the right approach

To protect customers and online retailers from these risks, solutions are being sought intensively. The call for a flat financial contribution, for example, through delivery fees from customers, is getting louder. However, this approach is too limited. Customers would only suffer disadvantages as a result. In addition to increased costs on the customer side, the system would remain less transparent and rigid for all parties involved.

The path to a sustainable solution begins with an analysis of the processes. Many retailers have significant optimization potential here. With an IT platform that provides a comprehensive view of operations, return volumes can be better managed, and resources can be scaled. This can lead to cost reductions without alienating customers by shifting the costs onto them. Additionally, customers who have rarely or never made a return would also be disadvantaged. They would have to pay more for returns than was previously common, which could deter them from making purchases and jeopardize positive revenue trends.

Preventing returns is also preventing revenue loss

A contemporary approach, on the other hand, is to address customers and better understand their needs, as is the case with a comprehensive software-based return process. The focus is on the individual wishes of the end customer. For example, they can return or exchange goods, just as in physical retail, without incurring additional costs.

The motto is: An optimal and seamless customer experience does not end with the purchase. To optimize the customer experience, the entire process chain must be transparent and trouble-free for customers. This can be cost-effectively achieved through a software-based approach, where AI ensures a seamless customer service. This not only fosters customer loyalty but also gives online retailers the advantage of getting to know their customers better. For example, they can learn which carrier the customer prefers, whether they want home delivery with an additional charge, whether they seek an exchange of the product, or if they prefer a refund for a returned item, or if they are willing to accept a slight discount to keep slightly damaged goods. All of these are pieces of information that can be very helpful in individual customer communication. A strategic and digitized return management and the associated customer communication thus have significant potential to generate revenue, directly or indirectly, and to differentiate from the competition.

Software-based return management creates advantages for e-commerce and customers

With the help of a holistic return management system like Trusted Returns, where individual customer feedback and information about the contents of returns are collected and evaluated, end consumers become integral to the entire process. Return optimization and targeted customer communication become much easier as a result. Improved customer communication strengthens customer loyalty and satisfaction while significantly improving the return process's efficiency. So, it can be said that it is a win-win situation for both sides. If this insight prevails among a large number of e-commerce retailers, Santa Claus can safely start his shopping."