Getting goods out is only half the e-tailers’ job

Online retailers are anxious to ensure orders arrive by Christmas. But how will they cope, when the returns start to flood in?

Last year, e-tailers failed to fulfil 20 per cent of Christmas orders within the promised time.

To prevent the same thing happening this year, the savvier companies are investing very large sums of money in hardware, software and personnel – despite their renewed focus on profitability and cash burn.

But while many e-tailers focus on ensuring their websites stay up during this heavy e-commerce period, and that orders are processed in a timely fashion, they must realise that customer satisfaction goes beyond delivery of the goods. Once they have mastered sales and doorstep delivery, aftersales customer care becomes the differentiator.

I forecast that there will be plenty of returns come the New Year: 25-30 per cent of orders will be sent back to retailers. This rate can go as high as 45 per cent on high fashion goods, when the payment method is ‘on account’ – a credit account, rather than a credit card purchase.

This means a retailer’s own returns department could be the biggest single supplier to the business. Yet many players have neglected this part of the operation and don’t understand the costs involved. Nor do they appreciate the longer-term impact of poor performance.

The real test will be how well e-tailers meet customer expectations when handling returns. Will replacements be found when stocks are low? What does the retailer do with returned stock? Will customers be reimbursed? What kind of monitoring exists to ensure the same item is not returned several times? And will a high percentage of returns mean the difference between profit and loss?

Internal research performed by Tagmanet.com highlights that poor handling of returns erodes customer satisfaction and retention, which affects profitability. Our analysis of Web retailer business plans shows that many don’t allow for the “return factor” in financial forecasts and operational plans. Which is one reason why they are not succeeding.

It’s one thing attracting customers to your site and selling to them, but they will only come back if you treat them right.

Failure to deal with complaints and returns in line with customer expectations is the single biggest reason why customers don’t come back.

And for immature e-tail operations, that could be fatal.

Andy Thorpe is chief operating officer of Tagmanet.com, an online service designed to bring buyers and sellers of logistics and customer relationship management services closer together

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