Product returns is one of the major pain areas for all e-commerce sellers in India. Depending on the category of the product sold, the returns vary from 5 % to sometime even as high as 25 % (primarily for apparels). Below are the 3 major reasons for product returns:
- Buyer not available - The buyer might not pick up the phone, might not be available at the mentioned address, might not open the door, etc. This is seen especially when the order contains low value items and the deliveries are made during working hours. In this scenario, the product never gets delivered to the buyer and the forward and reverse logistics costs are borne by the seller / market-place without the transaction even happening. For obvious reasons this is observed more in Cash on Delivery orders as compared to prepaid orders.
- Buyer doesn't like the product - This is seen primarily in apparels where the buyer returns the product after accepting it. The reasons for return could be issues with fitting, size differences, color differences, etc. It is also observed that products like leggings which are defined just by a size & color hardly get returned while products like Denim pants which have waist width, length, cut, design, etc have higher returns.
- Broken product or product not working - This is primarily observed in categories like kitchenware, bathroom fittings, etc. where the packing & filler materials are critical for a problem free transport. This problem is also observed in electronics where the product might be received in good condition but might over-heat or hang on first use.
When a return occurs, the seller suffers in the following ways:
- Market-place penalties - To ensure a high quality of catalogs & consequently high customer satisfaction, the market-places substantially penalize the seller in case the return happens due to a faulty or wrong product. The penalties are levied even for cases where the correct apparel is shipped but the size, color, cut, etc are wrong.
- Forward & reverse shipping costs - For seller-shipped orders, the seller has to completely bear the logistics costs while for market-place shipped orders (i.e. market-place assigned courier partner picks the product from seller's warehouse), the seller bears the reverse logistics cost if the return is due to a seller's fault.
- Delay/change in remittances - Normally the market-places remit the money to the seller (collected from the buyer) only at the end of the time-period mentioned in the return policy. So, if the buyer can return a product for up to 30 days, then the remittance to the seller will happen only after 30 days. Here also, in case the product stops working after the return period & the buyer raises a complaint, then depending on the seriousness of the problem & the popularity of the product, the market-place might agree for a return. In that case, the seller will get a debit note against the already remitted order and the deductions will happen in the subsequent remittance cycle.
- Delay in receiving the returned product - For forward logistics, the number of pick-up points is less (market-place / seller warehouses) and number of delivery points are high (buyer addresses). It is the opposite for reverse logistics. Reverse logistics is still a maturing business in India and most logistics partners have a smaller coverage for it as compared to forward logistics. So, picking up a returned product and delivering it to the warehouse inherently takes a long time. This leads to scenarios, where the market-place penalizes the seller for a return and the seller receives the return only after some days. This is even more exasperating for the seller in case the returned product is of a good quality (i.e. re-sellable) and got returned only due to fitting issues.
- Product damage during return - The product might be damaged when it is returned and it is difficult to pin-point the party responsible for the damage (buyer or logistics team). In such cases, the seller suffers a double whammy as the sale is nullified and the returned product is also useless.
Below are some good practices that the seller can incorporate in her fulfillment operations to reduce returns:
- Providing maximum details on the product page - While listing the product with the market-place, the seller should provide all possible details instead of just the mandatory ones. This ensures that the buyer has sufficient information to make an informed decision & reduces cases of buyer remorse.
- Contacting the buyer for unique / high value orders - In case of high value items which also incur a high transport cost (such as TVs, washing machines fridges, laptops, etc) it is a good practice for the seller to contact the buyer & confirm the details (esp. the color, size/capacity, etc.) before dispatching the product. This eliminates product return due to shipping of wrong product.
- Stringent quality check & physical verification during dispatch - This is particularly useful for apparels orders, where the color, size, fit, etc play a crucial role in product rejections. Many apparels sellers I work with do a physical verification of the picked product with a picture of the ordered product before packing it. This ensures that errors if any are detected & rectified right upfront, thereby reducing expensive returns & replacements.
- Appropriate packaging & packing material - Depending on the dimensions & nature of product being shipped, the seller should use the correct packing & packaging material. Materials could be polybag (apparels), corrugated boxes with bubble wrap (electronics & other breakable items), corrugated boxes with air filled plastic bags, etc.
