How a PIM can reduce your returns
Product Information MANAGEMENT
Christmas – the perfect example of returns. At no other time of the year are returns as high as after Christmas. Unpleasant gifts are returned to the seller. But returns are also part of everyday life for online retailers during the rest of the year. They would like to avoid returns altogether, because returns cause additional work and costs. We will show you below how a PIM system can help to reduce returns.
Why do I have to return goods?
The competitive pressure among online retailers is high. And although avoiding returns is a top priority, free returns and generous return periods are often the order of the day and are therefore gratefully accepted by customers. According to an estimate by the Returns Management Research Group at the Otto Friedrich University in Bamberg, it is therefore not surprising that almost one in four parcels will be returned in 2022. But let’s take a closer look at the reasons for returns:
- No real image to hand: in the truest sense of the word. In online business, the potential customer simply does not have the opportunity to pick up the chosen product and weigh it up thoroughly. Instead, texts and images must convey the feeling of not making a bad purchase. Only when the product is delivered and unpacked is the actual impression made. This is where it is decided whether the product stays or goes back.
- Several variants for the selection process: Especially in the fashion sector, buyers cannot estimate the actual size and color of the items. Out of this uncertainty, several variants are simply ordered. After unpacking, the product is tried on and examined more closely in daylight. If one of the variants fits, it can stay. If not, all items will be returned to the seller.
- Business model of online retailers: It is part of the business model of online retailers that customers can order several variants of an item. This tolerated approach therefore also tempts you to order several variants. In addition, there are return conditions. In most cases, sellers even cover the shipping costs incurred for returns, making returns easier.
- Protection for distance selling contracts: Unlike when buying in a local store, online shoppers enjoy special protection for distance selling contracts – Section 312b of the German Civil Code (BGB). You can therefore return the items within 14 days without giving reasons and receive a full refund. At Christmas time, some online retailers even extend this deadline to further accommodate their customers. In local stores, however, returns depend on the goodwill of the retailer and whether the customer receives their money or a voucher instead, as they are not entitled to a cash refund. This risk avoidance tempts some people to buy online. But beware: According to Section 312d of the German Civil Code (BGB), the right of withdrawal does not apply to goods that have been manufactured according to customer specifications, that are not suitable for return due to their nature, that can spoil quickly or whose expiration date has been exceeded.
Nothing can be done about the law. In order to remain competitive, the business model of many online retailers will not change. This is also shown by the EHI study Shipping and returns management in e-commerce 2021: 75 percent of respondents would generally cover the return costs and will continue to offer this service for competitive reasons. The leverage lies in a clear presentation of the products. Only if potential customers get the best possible impression of a product can the idea presented and the reality received come closer together. A realistic impression not only increases customer satisfaction, it also has a direct influence on the returns rate. After all, it is not only the shipping costs that are expensive. The processing of returns also causes costs and effort.
The costs of returns and the reusability of returns
Returned items generate costs. Upon receipt, the online retailer must sift through them, check them, prepare them for resale and store them again until the next sale. According to the EHI study “Shipping and returns management in e-commerce 2021”, the online retailers surveyed share this view. Almost two thirds (65 percent) cite the inspection, sorting and quality control of goods as the biggest cost driver in the returns business. Quite apart from all the processes involved and the lost sales, the goods also suffer a loss in value as a result of a return. For 39 percent of those surveyed, this is a serious cost factor if products can no longer be resold as A goods. In most cases, it is even easier for online retailers to simply dispose of the returned goods. Unfortunately, this is not sustainable and is not in line with the EU’s climate targets.
How to: Avoiding returns
Returns can generally be divided into the following groups:
- Return due to the wrong item
- Return due to damage
- Returns due to the selection process
- Return because you just don’t like it
Depending on the reason for the return, appropriate countermeasures can be taken. If a product is returned because the wrong item was sent, then the customer has the full right to do so. The fault lies in the company’s own goods dispatch. If items are returned because they arrive damaged, the packaging will have to be even more secure in future. If items are returned due to the choice between several variants, which is very often the case in the fashion sector, then detailed product information is needed, i.e. realistic images and precise descriptions of the items in the online store, so that customers can better weigh up whether the product meets their own requirements and wishes so that they don’t have to wait until they get home to find out. For the most part, this also prevents the goods simply no longer being liked on receipt. I will now show you how a PIM system can help you to minimize orders for multiple variants or incorrect purchases by customers.
How do I get detailed product information with a PIM system?
Product information is directly related to returns management. If you make these available in detail in order to reduce incorrect purchases or the ordering of multiple variants, then you can create a decisive measure to reduce your returns rate. But beware. Details mean not only a sufficient breadth of information (many properties), but also a depth of information (detailed description of the respective property). Since the online business has no space restrictions, you can provide as much product information as you like. In theory. The practice looks different. Providing product information is a balancing act between detailed and general information. In order not to overwhelm your customers, you must not neglect a clear presentation of detailed product information.
Fortunately, in an online store you can use category pages, product descriptions and product detail pages to separate necessary information from one another and thus present it well. In addition, there are other elements for sectors such as fashion, such as size information and care instructions, which make it possible to organize and thus avoid being overwhelmed. However, it is also possible to reflect hot topics such as sustainability. Either in a separate area or with the help of the search function, whereby the search function is to be seen in general terms and returns one or more hits for each term searched for.
However, a clear presentation or the filling of the respective display areas requires a clean product data structure. This can be realized very easily with the help of a PIM system. A PIM system forms the information basis for the online store. All relevant product information is categorized and managed here. As soon as the product information is complete, the PIM system automatically displays it in the online store. Validation workflows ensure data quality. Updates to product data are also transferred to the online store immediately after approval. A PIM system is therefore the right tool for providing detailed product information. Just like OMN PIM.
Since online shopping also depends on images, additional assets such as photos, videos, 3D views or other materials help customers to get an even better idea of a product. After all, most buyers first look at the photo of a product before they look at the text. Only when the image corresponds to what I am looking for do the details come into question. Ideally, these assets should be managed in a DAM system, for example in OMN DAM. The great advantage of OMN DAM lies in the channel-specific output of the assets. This ensures that the size and quality of the reproduced assets correspond to the specifications of the distribution channel.
If you also want to permanently reduce your returns rate through detailed product information, you need the interaction of PIM and DAM. Thanks to the seamless integration of OMN PIM and OMN DAM, you can provide both precise descriptions and realistic images.
Why PIM and DAM belong together
Today, companies are constantly creating new content in order to remain visible in the various channels and within the flood of content on the Internet and to address their target groups in an impressive way. A DAM system can not only support the management, preparation and channel-specific distribution of this content, but can also positively influence some SEO factors such as loading time and findability, thus improving your ranking in the various search engines in the long term. This is all the more true in combination with a PIM system, because before you can convince potential customers “in your own store”, you first have to be found on the World Wide Web.
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