While subscription box businesses may not experience the 20% to 30% return rates of ecommerce, they still wrestle with their share of returns, and how they handle them can significantly impact subscriber retention.
It is critical to provide efficient, hassle-free service and prompt refunds where necessary. To facilitate this process, you’ll want to determine the fastest, most cost-effective method for handling returns. It can be helpful to consider several key factors.
Reason for Return
Many subscription companies do not accept returns unless items are high value. Therefore, the primary reason for subscription returns is the inability to deliver due to incorrect addresses because subscribers input information incorrectly, relocate, etc.
Subscription companies that sell full-size products or add-ons via an ecommerce channel may be more likely to accept returns for a variety of reasons.
Since the majority of returns are due to bad addresses, some companies choose to tackle the problem at its source. The most common solution is to invest in address-checking technology.
Basic software is available to check for valid delivery zip codes at checkout. More sophisticated options provide the subscriber with an alternate, approved mailing address if it appears to have been input incorrectly. While this can help to minimize errors, it does extend the checkout process.
Reasoning that subscribers will be more likely to complete a transaction requiring fewer steps, many companies prefer to forego address checking. They are willing to incur a higher cost for returns processing in order to reduce the potential for greater cart abandonment.
Speaking of costs, take your average order value into account when establishing your return policy. Since subscription boxes tend to be relatively inexpensive, many companies find it more economical to send a new box instead of asking subscribers to return an order that arrives damaged or incomplete. For higher value items, of course, it will make sense to coordinate returns.
When return shipments are required due to incorrect addresses, you typically have two options:
- Return to sender
- Ask the post office to dispose of the box
Keep in mind that there is a cost associated with return to sender, and your carrier service may not include free returns. For example, UPS Parcel Select and Parcel Select Lightweight only pay for outbound transportation. Note that return to sender is your only option if the box includes hazardous materials such as hand sanitizer, nail polish, items containing lithium batteries, etc.
If you opt for product disposal, be aware that the post office routinely auctions off returned items. Take time to consider any potential negative implications for the integrity of your brand.
If you opt to return to sender, you’ll need to decide how you want to handle the returns. The good news for companies sending subscription orders on a regular cadence is that they tend to receive a high return volume all at once. This allows them to take advantage of economies of scale for return processing.
Since the majority of boxes will be returned unopened, it is fairly easy to confirm the contents and process them back into inventory. Undamaged orders can be repackaged in a fresh box and returned to stock for reuse or resold as a “mystery box.” Another option is to break down the box and use individual components for future orders. However, this is a more labor-intensive process and can be more costly. Some subscription companies opt to dispose of the items or donate them to a charitable organization.
While returns management can be a complex process, careful consideration of key issues like these can help subscription box companies to deliver a positive experience for subscribers.
Nicole Lee is director of fulfillment at of Saddle Creek Logistics Services