10427 The Retailer Autumn 2018_Final Draft Pages
Winning the hearts — and wallets — of UK shoppers with instant refunds
LUKE FLOMO HEAD OF ECOMMERCE trustly
RETURNS ARE A HEADACHE FOR ONLINE RETAILERS, BUT IMPLEMENTING AN AUTOMATED INSTANT REFUND SOLUTION CAN SOOTHE THE PAIN. Traditionally in e-commerce, returns have been a substantial resource drain for online retailers. Shoppers often order several sizes of one item to try at home before deciding which to keep. And as we move into the holiday season, the issue is only magnified. Leading up to Christmas, people often buy a gift, only to return it if they find a better price elsewhere. Once the holiday has passed, we see a deluge of returns from the recipients, who send back hordes of presents in hope of exchanging them for something more — how do I say — to their liking. As a result, online retailers are faced with high return rates. This creates logistical and payment complexities that ultimately eat into margins. It also frustrates impatient shoppers, who are often forced to wait anywhere from 3 to 30 days for their money to be refunded to their credit or debit card. Not to mention, interest can accrue for this period on credit cards. But while managing the process can be a headache — and a very expensive headache, at that — offering a great returns experience can make the retailer stand out in shoppers’ minds and build brand loyalty. Optimizing this trade-off is vital for customer-centric, fast-growing online retailers. While free returns are now commonplace, timely processing of refunds is a key factor affecting shoppers’ experiences. Unfortunately, many companies overlook this and assume that offering free returns is enough. However, 69 percent of shoppers end up waiting four or more days to receive their refund, according to a recent survey by Trustly.
The survey goes on to reveal that shortening this time would have a direct impact on sales, as making shoppers wait for their refunds often delays any additional purchases. Increasing the speed of the refund process could lead to 58 percent of shoppers spending more and 56 percent buying more frequently. That’s an uplift in spend from over half of an online retailer’s existing shopper base. Beyond revenues, the refund process greatly impacts how shoppers feel about a brand, according to the same Trustly survey. Of the UK shoppers surveyed, 54 percent claim the speed and ease of their refund affect where they choose to shop, while 98 percent said they’d be more loyal to an online retailer if they received refunds within one day. Clearly an efficient refunds process can have a positive impact on shopper satisfaction and NPS scores. Issuing more efficient refunds is all well and good, but given the manual complexities required to do so, how can online retailers manage? Alternative payment methods are one solution. Alternative payment methods like online bank payments are growing in popularity among both online retailers and shoppers in part because of how they simplify the return process. For the online retailers, an automated instant refund solution can reduce administrative costs of processing the refunds, which costs them about 8.1 percent of total sales, according to Shopify’s “2018 Holiday Ecommerce Returns Guide.” For the shoppers, getting their money refunded more quickly means they have better control over their finances and don’t need to put off their next purchase. Implementing a simplified refunds solution sounds great in theory, so how does it look in practice? Let’s turn to one large Nordic online fashion retailer that was struggling with its resource-intensive returns process. After integrating with Trustly to offer automated instant refunds, it saw a decrease in the amount of administration required to issue refunds. On top of that, the retailer’s shoppers instantly receive funds into their bank account, allowing the retailer to market new interesting products to the shopper, who can purchase goods straightaway, instead of waiting days or even weeks to receive their refunded money. In fact, of those who were offered instant refunds, 55 percent had higher purchase basket size and 84 percent made more purchases in the past 12 months.
12 | autumn 2018 | the retailer
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