Sunday, 1 December 2013

Product returns: Why it happens and lean ways to reduce them - Part-1

Product returns is one of the main pain points to all e commerce sites. In this blog we will see why it happens,  and what you can do to control it and improve your system. The first and important question is why does customer returns an item at all?
 Lets discuss first root cause - Customer misplaced the order.
It means customer mistakenly placed the order for wrong item.
Examples:
  • Customer's foot size is 12 inch, but placed order for 11 inch shoes.
  • Mistakenly placed the order for French version of the book thinking that it is English
  • Ordered paperback book, thinking that it was Hard cover.
  • Food items are about to expire in two week.
At first it looks like, I can't do any thing, it is customers mistake. We can hardly compensate it by returning the item freely.  Sooner or later you will realize that even it is customers mistake, the loss is for you. So what you can do? What are your actionable things?
  • Your learning comes from CRM - Customer Relation Management portal, where customer care executive address the customer complaints or feedback  Ask the customer only, very politely, why the mistake happened? Enters the details related with returned order. For each and every return check,  can you improve the website or any other process to decrease misplacement of orders. So this direct feedback should help you.
  • Improve the product display. Out of  misplaced Product returns, in books category, 20% of misplacement are due to Hardcover or paper back - then you can add type of the book (HardCover/PaperBack)  in the title  of the book or mention on the webpage with bigger fonts. Mention the size of shoes with bigger fonts.
  • Set up automatic alarms to monitor and intervene misplacement. 
    • Suppose customer's shipping address is within the USA but ordered the French book. Then you can put that order to on-hold status.  This should be handled automatically by your software.  A sweeper program scans all the book orders, and mark the order as on-hold if  the shipping address locale is not matched with language of the book. Call the customer and politely ask about the Language difference. Proceed to the shipment only if the customer confirms. 
    • Well, if the same customer orders another French book - for second time - you can safely ignore the alarm. Ideally you need to improve the software so that it won't alert you.
    • If 10% food items returns is due to close expiry date like two weeks, then better to remove the items from inventory. You should have service to sweep through inventory and remove the items with closer expiry date.
  • Taking the actionable metrics
    • For each category (books/mobile/...) take how much percentage of customer orders are misplaced - monthly.  Try to improve the ratio.
    • For each known problem - (Hardcover-paperBack, Frech books in USA) how much percentage are misplaced orders.

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