Why should e. businesses improve their return processes?
Comment to the media 2022 11 22 Vytautas Oleškevičius, Head of Neopay
A look at the future of e-commerce – why should e. businesses improve their return processes
It is predicted that in 2022 global e-commerce growth will reach 9.7 percent by the end of the year, and sales will reach 5.7 trillion. US dollars. You can better feel the ever-accelerating pulse of e-commerce by looking at the forecasts three years from now – according to Statista.com, in 2025 the predicted growth of e-commerce will reach 24.5 percent – 2.5 times more than this year, and the amount of sales – 8.1 trillion US dollars. This is good news for e-businesses, but it is worth noting that not only e-commerce sales will grow, but the number of product returns will also increase.
Consumer shopping habits e. for businesses – not everywhere is favorable
Growing returns for online purchases can cut into a business’s bottom line, especially if e-commerce’s store offers free shipping. The inspection, administration, and repacking process of returned goods also consumes a lot of resources. It is estimated that due to product returns in 2021 businesses worldwide lost more than 218 billion US dollars. It is likely to lose more and more, as consumer shopping habits have recently revealed not only favorable trends for e-businesses. About 30 percent of all goods purchased online are returned, while the amount of returns in physical stores is only 8.89 percent (Investp, 2022). The more frequent return of goods online is largely (80%) determined by the condition of the goods – it is not uncommon for buyers to find damaged goods after unpacking the package, as well as about 64% returns occur because the product did not match the description online and in reality the customer was not satisfied.
Again, recently, COVID-19 has been a major reason for the boom in e-commerce, which has also led to a concomitant increase in returns, which are not only for serious reasons such as product damage or inconsistency with the description – consumers are increasingly bold in sending larger quantities of goods without having yet decided to buy them – tries on several different shoe sizes at home, and immediately returns the ones that do not fit. There are also quite a few cases where the product is only used for a short time.
You’d be surprised how much TV returns go up after the World Cup. The return of goods is increasingly becoming not only a technical possibility to recover money for a defective or unsuitable product, but more like an additional option for customers to choose freely, to make sure of the quality of the product by downloading it, inspecting it live and only then making a decision to buy – to keep or return the product. As a result, surveys show that returns are becoming an increasingly important aspect of people’s e-commerce choices. In 2021, in England, a public opinion survey conducted by Klarna.com showed that as many as 84 percent consumers would no longer shop online after a bad return experience. The importance of convenient return is indicated by the fact that even 67 percent respondents are reluctant to check the store’s return policy before clicking to buy.
Scandinavian and Baltic countries – an example for the whole of Europe?
Northern and Western European countries are characterized by a higher standard of living, residents have more money, so they buy impulsively more often, so they return more purchases later. The average income of the inhabitants of Southern and Eastern Europe is lower, most of the people live more difficultly, so when buying goods they consider longer, compare, look for discounts and return fewer goods. Postnord.se in 2021 the study showed that, on average, residents of Germany (41%), the Netherlands (36%) and the United Kingdom (32%) return the most goods. However, among them, the Netherlands is the only one that pays more attention to this problem. Scandinavian and Baltic countries, although not among the most returned goods, fintech are highly advanced in the field and are rapidly developing return functionality. For example, the automatic return of goods, the value of which will continue to grow in the future, is currently the most popular in this region.
The role of the return management system in e-commerce will become more and more important for businesses in the future, because having an efficient return system means more satisfied users, more users, and more returns automatically. In order to control and optimize them, you will have to find solutions that would help prevent loss of income. The return management system is one of the most complex e-commerce systems. These are all the policies, rules, processes for customer returns, and the systems a retailer uses to accept, evaluate, and complete returns. Tracking back communication with each customer, alerting the team about the status of each return and manual entry of records and data costs not only a lot of time, money, but also human error, which often negatively affects the reputation of the brand. The majority of the market still uses the usual method of manual returns, but in Scandinavia and the Baltic countries automated returns are already rapidly gaining popularity. You can understand the change and the benefits for business by taking a simple example: a store that uses the manual return method must manually make each return to the customer. In case of automated refunds, the store will be able to process all returns accumulated over a period of time with the click of a few buttons. If there are 100 returns per day, it would mean 100 times more time saving and efficiency than manually.
Automated refunding functionality is growing in popularity and demand as businesses, seeing global e-commerce trends, are already rapidly looking for ways to optimize operations and processes, reduce operational costs and increase profitability. In general, with the automation of more and more processes in the market, returns and refunds are no exception, which will likely come to every business. Automation in the future will help reduce manual work and save human resources time. And the saved time can be used for the creation of added value and business development.