How are online returns managed for competitive advantage?

How are online returns managed for competitive advantage?

online returns managed

In this world of electronic commerce, a huge percentage of online sales occur every year. The process of online retail starts from raising in demand for products from the buyer, the retailer initiates the process of delivering the product. Once the product gets delivered, everyone gets their share of profit.

But what if the customer says “I need to return this product”?

That’s where the process of online returns management comes in picture, Yes! There is an entire process of returns management. And learning about it is all it takes to step up and move ahead of the crowd.

The process of return management involves four major activities:
  • Return avoidance is all about controlling the return rate to the maximum extent by looking keenly into the product before delivery.
  • Gatekeeping involves screening of return goods to sort and analyse the product in a systematic manner.
  • Reverse logistics involves all the steps that occur in the process of product return.
  • Value maximization is the process of doing return management in such a way that it contributes to gaining high competitive advancement.

ERIM report series depicts that in many businesses return can be over 20% and can be very costly to the company. But with the right knowledge of return management, you can use it as a competitive advantage.
So before we talk about ways to use it, let’s first understand the reasons that cause high returns.

Reasons contributing to high return

5 D’s– To make the learning a little handy we have combined the major reasons together, now you only have to remember the five D’s and all the reasons can be seen at once. 5 D stands for:

Different Size

Different Colour

Different product

Damaged Product

Don’t need anymore

It is seen that there are high chances of delivering a different product be it in size, color or altogether another product.

Studies on E-commerce says that 20% out of all the returns are due to damage in product 23% of returns are due to difference in size and color, 23% received wrong product and remaining percentage counts in others category.

So now it is pretty clear that there are many reasons contributing to the return of the product and there is a huge percentage of sales that get returned every year, and therefore it is quite important to contemplate the management of product return.

How to manage product return?

The online returns management is considered to be a hectic task but it is true that the way you deal with all the process of returning the product affects your brand, if done in a positive way, it can also end up by providing your brand an additional competitive advantage.

But the interesting part is, by following a few steps you can manage your product return in an optimum way.

So here we go!

  • Research and analyze: The first part of management involves understanding the reason of return, because management is always about involving a process in such a way that we receive the maximum output.
  • So if you are an online retailer, make a habit of analyzing the product that has maximum return, with time invested in understanding and analyzing the reason of return, you can save your time and money in shipping and return of that product.
  • product with the order before shipping, a look in the product can save your efforts. This will help you to diminish the controllable returns like different sizes, colors, or if the product is damaged.
  • Recheck: Another remark is to recheck the Handle uncontrolled returns: It is true, that we can only control things that are in our hands.

So what about, uncontrollable returns?

Since the product has already reached your buyer and buyer wants to return it, so there is no way you can do anything but work on the return process.

And this is where return management comes to the picture.

This is the time to play smart, the time to create an image, and time for you to use it as a competitive advantage and save the financial impact on your business.

What financial impact does Product returns have on business?

There was a time when free delivery and return was a nice and additional offer to have for customers, but nowadays it is something that is expected by all the buyers.

A study reflected that out of all online retailers 57% of retailers said return management has a high impact in dealing with their day to day business.

33% revealed that they offer free return services but charge to delivery, and so try to offset the cost, however, 20% of online retailers prefer increasing the price of their product to cover these expenses.

The additional expenses that occur due to an order return are the cost of processing the return that includes the cost of resources, staff, shipment etc.

Along with that, there is always a risk that a returned product will not be resold easily leading to high impact in finance.

Return management for competitive advancement

online returns managed2

As we have already discussed, a return management done in the right way can promise a competitive advancement for your brand.

So what are you waiting for!

Learn about the ways and make it a competitive advancement now, allow your business to grow with these simple hacks.

  • Easy return policies: Never ever miss that “Customers satisfaction is most important”. And one way to win the heart of your customers is to provide them easy and convenient return policies.

For this, the best way is to add a direct link for return and refund in your website and application, also add the option for returning the product.
In this way, the customers can easily reach you without facing any hassles in the process.

To make it more feasible for you and customers, highlight the policies of return in your website and application like days valid for return.

Also make the acceptance policies clear along with the name of products for which you do not accept return, and don’t forget to add the criteria to credit refund.

  • Provide service: Always try providing the best services to your customers, especially the service related to pick up of product and refund must be “on-time”.
  • Acknowledge return: So now, since you got the product back. Is the return process complete now?

The answer is “NO”. Once you receive the product acknowledge the return reason and try working on it. You can even try interacting with your customers to understand their needs and provide them the best.

This will surely enhance your reputation in the market.

  • Attract customers by providing weekends return: Do not restrict your customers only to weekdays.

Let’s give them a little more!

You can provide them with a weekend return too, this will make the return process convenient for them.

  • Follow product return process: To channelize the management in the right path you can simply make a thumb rule to follow a product return process and stick to its management.

The process starts as soon as you receive the product back from the customer, now you have to sort the product into categories and analyze the reason for return.

Once done all you need to do is to make a decision to rather put the product back into store or back to stock.

The entire process demands high management and tracking of products that you need to look upon.

And by following these simple tips you can use return of product in creating competitive advancement, and there are many big companies following different return methods for the return management.

What successful companies do ?

Every company today has their own strategy to deal with online returns , here are some of them and their way to do so.

  • Myntra: A fashion shopping e-Commerce platform, stands number as they are found to receive the least number of returns every year, Myntra believes in checking the product before they ship.

Their policies say that any customer can return an order within the time period of 30 days, with free delivery and return policy, however the product must not have the tag removed or used by the user.

  • Amazon: One of the largest E-commerce platforms provides opportunities to customers to file a return within 30 days of purchase and take 2 days business days to refund the amount of buyers.
  • Exclusivelane: A home decor and craft-based E-commerce site has something different with their return policy, they offer to send the address and details of the retail seller along with the product and along with the product put a slip stating “in case of any issue or query contact”.

In this way the buyer directly contacts the retail seller and proceeds the return process accordingly.

  • Phuljhadi: A jewelry based E-commerce platform, it only offers a return if the product is damaged and is informed to the company within 24 hours of delivery. And the company will process the return in 48 business hours.

Something for you

This is for all the retailers out there planning to build their return policies different from others, always give preference to your customers convenience. Because this could only bring a customers’ purchase back to you all over again.

Also the return management requires high tracking of product and this could be a real problem, being an online retailer. For the process, you can use some ESP software that can keep the management process simple for you.

You could come up with some interesting policies that are product friendly, i.e. making policies as per your products and use it as a strategy to be different.

As customers appreciate and count your efforts in making their shopping experience wonderful, so invest your time in making easily understandable policies for your customers, never confuse your customers as they will always like it simple!

Remember, the most important work to do after return is management.

Yes, I agree, that is the most confusing and creates hassles in day to day business.

But for you we made it simple, now eVanik is here to manage all your returns systematically and provide you a clear vision of return.

With eVanik you can easily track your return at once, we also provide you a platform you claim to return and manage them. All your problems related to returns and be solved at one go.

We will help you to keep a detailed outline of returns so that you can work on your product accordingly. Try understanding the reason for returning and don’t miss to work on it.

Let’s work together to achieve this milestone!

Conclusion

Return management is the need of the hour today and if you are an online retailer the task is even hard for you, but a few steps towards the right direction can change the entire story.

You will not only get your customers attracted but can also boost your business by gaining a competitive edge.

However, the process needs high attention and tracking but it will eventually help you to understand the mindset of your buyers and you can act accordingly.

So here is a take away for you, if you are a online retailer:

“Understand and invest your time in creating the right return policy, and once done that we can promise to manage them for you” – eVanik

Importance of inventory management for small businesses

Importance of inventory management for small businesses

inventory management for small

“Stock, level, place, time and cost should be right” that’s all it takes to manage inventory.

Sounds simple right!

Let’s think about Danish who is an online retailer and has been selling his fashion wear products in one online marketplace.

He is hardworking and wants to grow his business. So, he registered at 4 more online marketplaces and started selling his products on all of them.

It was simple to list products in all the marketplaces.

And Danish was initially able to manage the orders coming from all these marketplaces manually.

But once the orders started increasing, things started moving out of hands.

His products and inventory were common across all the 5 marketplaces, but the orders were coming in individually.

Gradually, he started facing many challenges like updating inventory for every single product manually for each marketplace and ensuring that there is no loss of sale because of not updating the inventory.

Another challenging situation was when product stocks went out, still, he was getting an order for the products as he did not reduce the inventory to zero at all the marketplaces.

The problem becomes more challenging with thousands of products selling across so many different marketplaces.

Danish thought it would be fine soon.

But with the growth of the business, the complexities started growing more.

Danish now spends more time and effort in getting his stocks right, throughout the day, for all his products.

He also went to the extent of hiring 5 people (one for each marketplace) just to update the inventory tens of times every day.

And yes, this was all done manually!

His daily routine was to download the sales from each marketplace and update spreadsheets, containing the inventory of the products 5-10 times a day and share it to his team.

His team would then manually update the stock at the marketplace for each product one by one.

This cyclical process gave him no option but to stay where he was and quit the objective of business growth.

Despite hiring a large team to manage the inventory manually.

He was now confronted with more order cancellations leading to penalties, sale loss, long wasteful hours of manual work and no time to focus on growing the business.

More cancellations lead to lower seller-rating and tarnishing the brand image.

All I want to tell you is, “managing inventory is the key to a profitable business”.

Experienced business owners spend most of their time and efforts in automating the inventory and supply chain process.

The right inventory at the right time at the right price in the right place is the key, and there is serious science behind that.

Stock shortages or aging inventory have crashed many businesses. And when it comes to managing the inventory on e-commerce marketplaces, the challenges multiply geometrically.

Let’s take the around, in this part Danish invested in automation software for his online inventory management.

And he realized that the cost of this automation is a fraction of the 5 resources which he had hired.

More than massive savings on cost, his business started growing!

Now, there were zero order cancellations and his average inventory count reduced dramatically, reordering got more organized.

Now, he could find all the time to think about growing his business.

The above story was to reflect the importance of inventory management for your business.

But how does this concept start?

Evolution of the inventory management process

inventory management for small2

Everything in this universe is evolved i.e. gradually developed with the time, and so does the process of inventory management.

The process started even before the introduction of technology or the invention of computers. 

However, the process is believed to be started before the industrial revolution when merchants had to do the inventory management process manually, understanding the needs of customers.

With the manual process, merchants were not able to manage inventory accurately, leading to loss.

At the time of the industrial revolution, the demand for mass production rose and the businesses grew leading to a better inventory.

Finally, in the 1930s Harvard University designed the first modern checkout system. The system used a punch card in the catalog that was inserted into the device that read them.

And data was stored, the same checkout system was used for inventory management.

With time and the introduction of fine technologies, the process turned out to be more refined. The barcode and scanner brought a drastic acceptance of the process making it very simple and convenient for retailers.

The technology is still moving ahead and coming up with more surprises in the future!

What is inventory management?

Mayank Kumar quotes, “Inventory management is the process of exposing the right inventory to all available demand channels and maximizing throughputs profitably without losing a single opportunity”.

Inventory management involves tracking and managing the lifecycle of stock and includes ordering, handling, and storage.

In the e-commerce scenario, it is the process that involves managing returns, multi-warehouse movements, managing damaged inventory, warehouse management and lots more.

Large companies invest huge finance into inventory and warehouse management systems especially to address these key questions.

  • Is this product available in the warehouse?
  • Where is this product stored in the warehouse?
  • How much to reorder?
  • When to reorder?

Right inventory management is helpful in optimizing your stock management process and to work in a more cost-efficient manner.

It is quite obvious, that inventory management provides you a detailed outline of every product when it enters or leaves the warehouse and it addresses the following requirements

  • Centralized view of stock- Managing inventory gives you an overview of your entire business, you can now have an accurate track of your inventory as they are centralized at one hub.
  • Planning and forecasting- Imagine knowing what your customers demand and how much stock you require for the coming time.

Isn’t it all you need as a perfect business plan!

With the right management of inventory, you can easily make reports to analyze your stock.

It helps you in making a smart business decision and gives you information on what is demanded more.

  • Time-efficient- Inventory management is one of the most time-efficient methods to work with, it not only helps you to work fast and accurately.

But also helps you to complete the inventory process with improved delivery and getting high customer satisfaction.

For every business, it is important to keep track of their work. It helps them to understand the direction they are moving, and inventory management provides you that opportunity.

Basically, inventory management solves all your queries related to stock and its management.

Remember, in today’s competitive world you have to be ahead of the crowd.

How to manage inventory in an e-commerce marketplace scenario?

As we now know the importance of managing inventory for any business, let’s see how we can do that when selling on e-commerce marketplaces.

  • Search and research  – Planning is really crucial to make your move smooth.

For successful inventory management, you can use data and reports such as product sales velocity, profit calculator, sales comparison, channel-wise movement, etc.

It will help you to deep dive into past trends and plan for the future.

Do you know, marketplaces such as Amazon provide business reports on their seller central dashboard.

Do not overlook stuck or stranded inventory and stock in transit.

Remember, people tend to order more stocks without seeing that there is existing inventory in the system which is either not active/utilized/published or stored at the right place.

  • Focus on profitability – Margins & profits through sales on e-commerce marketplaces are more than just sales and purchase.

There are dynamic costs such as commissions, shipping, packing, advertising, storage, etc.

And they get loaded to your product.

For example:

Your purchase cost of a pair of Jeans is Rs. 200/- and you are selling it at Rs. 400/- on Amazon.

This may look to be a gross margin of Rs. 200/-, but here are some of the real costs which may simply change the picture

  • Average shipping cost = Rs. 50/-
    • The commission charged by Amazon (15% on selling price) = Rs. 60/-
    • Packing, storage, fixed fee, etc = Rs. 50/-
    • Average Returns (20% and 10% of these are damaged) = Rs. 8/-
    • Net GST payable (Input on purchase and fees and output on sales) ~ Rs. 5/- (assuming that the product is on 18% GST category)
    • Total costs – Rs. 173/-. Add a TCS cash-flow block of 1% = Rs. 4/-

The net realization from the marketplace on a product being sold at Rs. 400/- and the purchase cost being Rs. 200/- is just Rs. 23/-.

Now think about your internal costs – salaries, warehousing, procurement, bank interest, etc.

As I said, “it is more than just sales and purchase”.

  • Use a warehouse management system – On-time delivery of online orders is the key to growth and reduction in cancellations.

When you get multiple orders and your inventory is not well organized, it will lead to delays in picking, packing, and shipping, leading to more cancellations and returns from customers.

Therefore, a scientific and agile warehouse management system ensures automated, timely and well-structured movement of stocks.

  • Monitor aging inventory – A product that has spent a huge time in your inventory is known as aging inventory.

In inventory management, you have to keep an eye on the stock or product that is in your inventory for 12 months or more.

It is very important to manage aging inventory as it is consuming your inventory space, hampering the management of your inventory.

  • Manage returns in real-time – Returns are a hard reality in e-commerce.

You can control some of the returns by keeping a habit of rechecking before you ship the product.

However, this helps to only some extent, so at that point, you are left with nothing but to handle return in a smarter way.

As for any industry, average returns are in the range of 25-30%. With such high ratios of return orders, it becomes even more important to manage inventory more intelligently.

To make it easy you can do is to track returns and keep them at the top of inventory management.

  • Keep a habit of audit- A habit of auditing every six months or annually can be a great support.

This will help you to know what you have in your stock and what you can add more to grow your business.

Moreover, the process of auditing helps you to check over the quality of products and monitor the machinery of your inventory.

  • Track product information- The most important part of managing inventory is tracking the product information especially barcode data, SKU, suppliers’ information, etc.

All these processes can be really hectic and time-consuming.

Additionally, manual tracking can lead to lots of errors.

What to do?

To ensure an optimize inventory management, you can integrate your inventory with inventory management software.

With the integration process, the system of your company gets integrated, not only with the back end of your company but also with suppliers and 3PLs, making the tracking process more accurate.

Integrating inventory will help you to integrate financial activities like logistics, HR,  sales and financial production solving problems of reconciliation. 

It will connect the demand channels for offline sales, and will also connect with discovery engines through digital payment acceptance.

With integrated inventory system software, you can easily make local sellers and stores digital and discoverable.

Connecting to the global market with Indian economic merchants.

Therefore, importance of inventory management for small businesses isn’t just limited to stocks but also provides you all accurate financial reports including tax returns that are important for your investors and government.

So, If you are looking to integrate your inventory, eVanik can help you!