23 July 2020

Simple Ways to Avoid the Hidden Costs of Returns

A seamless returns procedure is key to any retailer’s success and plays an important part in the overall sales experience. However, returns are expensive and can be a loss-making practice if the process is not optimized.  

Read on to learn how some areas of the reverse logistics flow are prone to hidden costs. Plus, how they can be avoided. 

Person Holding 10 and 10 Banknotes

Source: Cottonbro, www.pexels.com


Contact Management and Communication 

To secure returning customers and encourage repurchasing, it is important for your brand to generate a positive experience for customers. This is achieved through optimizing all contact points that you have with your customer.  

Throughout the returns process, your customers should feel that they are in direct contact with you as a brand. Whether this is when they are using an online portal to submit returns, reading through their returns label or accessing parcel drop-off locations determined by postal carriers. Each step of the way, your customer should feel that they are being supported and communicated with effectively.  

By optimizing the returns process with clear guidelines and transparent communication channels, not only are you securing customer satisfaction, but also saving costs for your business in the long-run.  

For example, a seamless returns process for your customer will diminish the desire for them to call your customer service center for help. This will take care that expenses are not being poured into the maintenance of a busy call-center. In turn, this will free up time and money for outbound and other operations.  


Returns Policy and Brand Image 

A flexible yet secure returns policy will also help to avoid hidden costs associated with consumer returns. A policy that is overly flexible may encourage behaviors that could be costly to your business. For example, fraudulent returns or serial returners. By clearly communicating your returns policy to customers, these behaviors can be reduced or avoided.  

However, offering a returns policy that is not flexible or convenient for the consumer may also increase the risk of exposure to hidden costs. They may, for example, be discouraged from repurchasing in the future as a result of a less positive customer experience. By failing to secure future business, your brand could be missing out on the opportunity to accrue future revenue from a loyal and returning customer base. A transparent and structured, yet flexible, returns policy is a safe middle road. 

Increasing your brand image through the marketing of your services will also help to attract new customers to shop. It will also encourage returning customers to repurchase – if impressed by the service and returns policy they previously experienced.  

In short, using a solid returns policy to build your brand image with customers can discourage losses made through returns. Instead, it can go a long way to maintaining profit margins, protecting your bottom line and  securing future sales. 

White Long Sleeves Shirts on Brown Wooden Clothes Hanger

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Although it may be costly to invest in, and implement digital tools that will help to automize your returns operation – the expense very often pays-off.  

For example, online systems aimed at both consumers and retailers, will help to speed up and optimize the returns procedure by providing essential data and insights that will make your returns flow more efficient on all levels. For example, in the case of sorting or redeploying returns, or in determining where returns should be stored and whether they need reconditioning.  

By investing in, and utilizing, automated and smart tools, you’re securing efficiency within your returns flow. Improvements that will save you time and money by making sure that these returns are not left to depreciate.  


In short, there’s no denying that returns is an expensive, and often complex, operation for brands and retailers. However, by understanding which areas can be optimized in order to save costs, you can take action to retain the value of your sales.  


References  Thomaidis, Spyridon, ‘The Hidden Costs of Reverse Logistics’, Rotterdam University, NL