So What Can You Do To Keep Return Shipping Costs From Eating Into Your Profits?
If you do choose to offer free return shipping, factor the cost into your Cost of Goods Sold (COGS). Thanks to an economic principle called the “the pain of paying,” shoppers are willing to pay more for an item as long as they don’t have to pay for shipping and the same will hold true for returns.
If you determine that you can’t offer free return shipping, be crystal clear with your customers that a shipping fee will apply to their return. Shoppers appreciate transparency, and it might help stop them from purchasing items with the intention of returning them, saving you restocking or disposal costs.
Returns are part of any eCommerce business, but not tightly managing the process is a costly mistake. Understanding the data surrounding both your outbound and inbound shipping is the first step to making the right decisions on how to handle return shipping.
Want to know about some other ways you might be paying too much for shipping? Surcharges have a huge impact on your shipping spend, but there are ways to reduce the cost. Check out our newest eBook, 5 Budget-Busting Surcharges & How to Lower Them.
FAQs:
Q: What strategies can retailers implement to streamline the return shipping process and minimize costs, beyond just offering free return shipping?
A: Strategies to streamline the return shipping process and minimize costs could include implementing a centralized returns management system to efficiently handle returns, optimizing packaging to reduce dimensional weight and shipping costs, leveraging data analytics to identify trends and patterns in return reasons to address underlying issues, and partnering with carriers or third-party logistics providers who offer discounted return shipping rates.
Q: Are there any emerging technologies or innovations in the shipping industry specifically focused on improving the efficiency and cost-effectiveness of return shipping operations?
A: Emerging technologies and innovations in the shipping industry aimed at improving the efficiency and cost-effectiveness of return shipping include automation and robotics for processing returned items, blockchain technology for enhanced supply chain visibility and traceability, AI-powered predictive analytics for optimizing inventory management and return routing, and virtual reality/augmented reality for enhancing the customer experience during the returns process. Additionally, there are ongoing developments in sustainable packaging solutions to reduce environmental impact and costs associated with return shipping.
Q: Are there any industry best practices or benchmarks for return shipping costs as a percentage of overall sales, and how does one determine if their costs are within acceptable ranges?
A: Industry benchmarks for return shipping costs as a percentage of overall sales can vary depending on factors such as the type of products being sold, the target market, and the retailer’s specific business model. Generally, retailers aim to keep return shipping costs as low as possible while still providing a satisfactory customer experience. Analyzing return shipping costs in relation to total sales and comparing them against industry averages or competitors’ performance can help retailers assess whether their costs are within acceptable ranges.
