Eliminate Returns To Maximize Profits – Best Practices
When we talk about parts and accessories ecommerce, we’re usually focused on increasing sales to grow profits. But there’s another easy way for most parts and accessories retailers to increase profits: eliminate product returns.
Product returns are extraordinarily expensive. Optoro – a “returns solution provider for retailers and brands” – says that the average return costs $33 to process. While we can’t say precisely how much returns cost, we can say that processing returns takes a surprising amount of time. Therefore, to maximize the profitability of your parts and accessories ecommerce website, it’s a good idea to eliminate as many returns as possible.
Here are some best practices for parts and accessories etailers.
Why Do Parts And Accessories Get Returned?
The most common reasons consumers give for returning auto parts or accessories are (in no particular order):
- “I didn’t need the part” or “I decided not to install the accessory”
- “The part/accessory didn’t fit my vehicle” or “You sent me the wrong part”
- “I couldn’t wait and found it elsewhere”
- “I found a better price somewhere else”
- “I ordered the wrong part”
There are several things retailers can do to reduce or eliminate these reasons for returning an auto part or accessory.
How To Minimize Parts And Accessories Returns
1. Answer The Phone
The single best thing any online retailer can do to limit returns is to make it easy for customers to call or text and ask questions. If a customer isn’t sure about what to order, they might decide to order the wrong part or order two different parts and see which will fit. These types of problems are avoided by offering customer service by phone.
Additionally, many consumers feel more confident in buying online when the retailer has a phone number. Our CRO testing efforts have proven that a phone number on your site will boost sales.
2. Make Sure Your Website Fitment Data Is Correct
Far too many retailers list the wrong part for a specific vehicle application. The problem is common because retailers all use data provided by part manufacturers, and that data is rarely 100% accurate. To check data quality:
- Have your staff use your website to lookup parts. Asking your staff to check for errors as part of the part lookup process is a great way to spot obvious data problems on your website, as well as other issues that might come up.
- Ask customers for vehicle data if they’re returning a part because it doesn’t fit. You can use this data to make sure your website is correct, and also to find out if customers maybe don’t know what vehicle they have and/or what they’re trying to order.
- Make sure all product pages have reference fitment data. Most large retailers have a full list of fitments for each product they sell – it’s typically down the page below the product description. This way, customers can double check and verify fitment before they order.
3. Offer A Price Match Guarantee
If your customers find a better price for a part they’ve already ordered from you, they might decide to cancel/return their order with you and buy elsewhere. You can stop most consumers from doing this by offering a price match guarantee policy.
Note: Make sure the policy is written to protect you from price matching used, unauthorized, or closeout parts.
4. Make Your Return Policy Friendly, Clear, And Direct
Because so many online retailers offer “free returns no matter what” policies, many consumers have developed a habit of buying products online without knowing if they really need or want an item. A person might think, “I’m not sure if I need an alternator or a battery, so I’ll go ahead and order an alternator now, and then if I don’t need it, I’ll return it.” They order the alternator, find out two days later they only needed a battery and return their order thinking it’s no big deal to do so.
You can discourage this with a clear, direct-but-friendly return policy. Spork recommends including the following rules in every return policy, but we’ve written an entire blog post about return policies you can read here.
- Returned parts must be in new packaging with no damage and no missing components, hardware, or instructions
- All returns are subject to a 15-35% restocking fee unless the return is due to the retailer making a mistake
- Returns are only available for products delivered in the last 30 days
- Customers must pay return shipping charges*
*NOTE: Customers should only pay return shipping charges if you set your restocking fee at 15-20%. At higher restocking fees, it’s customary to provide the customer with a return shipping label.
If you assume that a customer who is likely to return a part will read the return policy (and they often do), so-called “speculative” purchases will be discouraged. Additionally, adding a link to your return policies page in every order confirmation and notification email is a good idea too.
5. Call Or Text Every Customer After Ordering
Calling or texting each customer to verify fitment is a proven tactic for reducing returns. It can also boost customer satisfaction. We’ve found many customers appreciate a quick call or text if it comes soon after the order is placed.
Here are some tips for effective follow-up:
- Explain you’re contacting them because you don’t want to accidentally send the wrong part. Everyone knows how infuriating it can be to start a DIY project and find out your auto parts don’t fit after your vehicle is partially torn part.
- Offer to do a quick fitment check to make sure the part number(s) are right. While some consumers will be annoyed by the request, most will appreciate the personal touch.
- Ask the customer to share their VIN. VIN lookups are helpful to consumers searching for parts, but they’re also a great tool for your staff. Check out 3rd party VIN lookup tools that can “explode” the vehicle options and features to make detailed verifications.
- Remind customers about your return policy after you verify fitment. Make sure the customer knows they can’t return parts without paying for return shipping as well as a restocking fee, but that there’s no risk to them if the part doesn’t fit as promised and/or is damaged during shipping.
Please note that we recommend calling or texting – not emailing. Many customers use secondary email addresses when ordering online to avoid dealing with promotional mail. If you email a customer after they order and ask them to verify fitment, you might not get a response for several days. That response will usually start with, “Are you telling me you haven’t sent my order yet??”
NOTE: Before texting customers, be sure to ask for permission to do so during the checkout process with a checkbox questions like, “Is it OK if we text you about your order status?”
6. Tell Customers About Backordered Or Delayed Parts ASAP
Many customers are unable or unwilling to wait for a delayed or back-ordered part. It may be that they have a vehicle out of service they need to repair right away, or it may be that they simply aren’t patient. Either way, it’s essential to alert the customer to a delayed order immediately after the sale.
When telling customers about a back-ordered or delayed part, the trick is to:
- Explain why the order is delayed (e.g., national backorder, warehouse inventory mistake, product lost, etc.)
- Explain what your company is doing to try and expedite things (e.g., reaching out to other companies that sell the same part, contacting different warehouses, etc.)
- Explain what options the customer has other than “wait” or “cancel”
Sometimes, customers will be OK with waiting. Sometimes, they’ll be willing to accept a different brand of part and/or accessory instead. Sometimes, they’ll wait in exchange for a small discount. Sometimes, they’ll cancel, try and order somewhere else, and then realize other retailers have the same problem and re-order.
7. Make Sure Your Fulfillment Operation Is Top Notch
Last, but not least, retailers can reduce returns by investing in fulfillment. It’s important to fill orders as soon as you can, make sure the right part goes in the right box every time, and make sure the customer gets updates at every step of the process.
Obviously, fulfillment is complex, and big monetary investments in fulfillment aren’t possible for a lot of retailers. But there are a lot of little things that even small retailers with minimal staff can do to improve fulfillment:
- Put more emphasis on quality and speed than on low cost when dealing with distributors. Paying an extra $5 on every order to a quality distributor might seem like a waste of money, but it’s cheap compared to the cost of issuing refunds to customers who got the wrong part.
- Consider investing in faster delivery. USPS Flat Rate Boxes are affordable and can often be faster than UPS Ground. Customers also appreciate seeing their order arrive via “Priority Mail.”
While some returns are inevitable, our highest-performing parts and accessories retailers are seeing return rates of 3% or less.
The recommendations we’ve shared above are based on our high performers and lessons they’ve learned the hard way.
Interestingly enough, many of the smaller online retailers we talk to are surprised to learn that our top clients are calling or texting every customer, even if it ends up being several thousand contacts per month. The typical response is along the lines of, “How do they do that? How can they spend that kind of time? How much staff do they have?!” But the fact is that one person can contact 100 customers per day all by themselves, and without too much of a strain either.
If your company is trying to grow and only selling 3 or 5 or even 10 orders a day, odds are the team has the time to contact every customer. And since contacting customers both raises profits and boosts customer satisfaction, it’s a great way to accelerate growth.
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