Sep 18 2019

Returns: a core theme in the online retail trade

Dealing with returns is a central aspect for success in the online retail trade. New tools and concepts offer the furniture industry good chances in this regard.

Every fifth consumer already plans for a return in advance when online shopping, a current study shows. This proves that e-commerce traders must in any case give some thought to the return shipment of their goods. This is ultimately not only important for the financial result in the online segment, but also has an impact on the brand of the company and the satisfaction of customers on the whole. 

"Returns are of great relevance when the goal is to design the online retail trade to be profitable", says Kai Hudetz, Managing Director of the Research and Consultation Unit of of IFH Köln and one of the most well-known e-commerce experts in Germany. All of the big players are currently working actively to lower the return share.

The background: there is more of a focus on efficiency than previously. It is quite apparent that a reconsideration has taken place: in certain industries, especially in the fashion segment, a too casual manner of dealing with returns led to high expenditures and a certain laissez-faire attitude on the part of consumers: orders were placed and returned without consideration. However, even today, some of the major suppliers have a casual return policy. "Customers in the online retail trade are very spoiled, because providers like Amazon make it easy for them to return goods", Hudetz reports. 

Big differences can be observed when it comes to return shares in the online retail trade: while in some areas, like in the already mentioned fashion industry, there are quotas of up to 75 percent, there are low, single-digit percentages elsewhere.

There are currently no valid figures for large furniture in the furniture trade, also due to the on the whole still relatively negligible importance of online sales, while the share of return shipments for small furniture can reach up to ten percent. However, the following is undisputed in the furniture industry: a low return quota has a positive effect on the overall satisfaction of customers. 

Individual service brings advantages

The rule of thumb: the more precise information the customer has about the product, the lower the risk that it will be sent back. This is shown by the example of the Austrian mattress manufacturer Hongi, which has a return share of around six percent.

This provider offers individually configurable mattresses; the customers enter their data into an online tool, and algorithms then calculate the specifications for the required materials and their composition. These are then produced in Upper Austria.

"This means that every mattress is tailored to the respective person", says Hongi project manager Jan Sobek. The customers can test the product for 100 days at home and exchange layers of the mattress at no charge as necessary; even a return is possible at no charge within this period. "Addressing customer wishes precisely is the big chance in e-commerce", Sobek is certain. 

Technology supports online traders

Not every product can be customised. So, what can furniture companies still do to keep the share of returns low? First, there needs to be a principle understanding that returns have a big impact; building on this, the appropriate strategy must be developed, and this at an early enough stage.

Traders can profit from technological development here. "There is an increasing number of possibilities for reducing the number of returns: these extend from high quality product images through augmented reality to the systematic registration of the reasons for returns", Kai Hudetz reports. 

Technology can help, but it isn't everything. Of decisive importance are hard facts like the time required for delivery. "Speed is a central aspect in the online retail trade: the longer customers have to wait, the greater the risk that goods will be purchased elsewhere or the decision reconsidered", warns Kai Hudetz.

However, also important is the quality of the delivery service – especially for furniture, this can be decisive. When the goods are simply thrown carelessly into the corner, this can really darken the mood of customers. Also conceivable are bonus systems according to the principle that there will be an attractive discount for the next order after a certain number of deliveries without returns.

However, creativity is also called for: the delivery could be accompanied by a motivational letter to customers ("Thank you for your purchase...") or small gifts in keeping with the product – for example, care products for furniture. 

Showrooms as connecting links

Especially the linking of the stationary trade and online business can also be helpful. Home24 might serve as an example here: stationary showrooms help with the selection of products, thus reducing the risk of a return. Mattress specialist Hongi is also considering such a showroom in the meantime. "We are thinking in this direction", says Sobek. 

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