Online Returns Skyrocketing: Jupiter Media Metrix

The number of online returns by consumers in the United States is expected to reach 90 million in 2005 representing $5.8 billion dollars worth of goods. And, online retailers that concentrate solely on improving returns processes will miss out on significant cost-saving opportunities, according to research conducted by Jupiter Media Metrix, New York.

Companies need to maximize the value of reclaimed goods by improving their entire reverse logistics systems, including the collection and analysis of consumer data, the firm said.

Jupiter analysts made the following recommendations:

* Collect the data necessary to understand a consumer’s reason for the return. Even with “no questions asked” returns policies retailers must collect well-structured and consistent data regarding the reason for the return and the condition of the product. Companies that fail to do this will be unable to analyze trends in individual product categories and consumer segments and will be unable to affect root-cause change to reduce or eliminate certain types of returns.

*Retailers should maintain policies that treat all return reasons uniformly or they will risk damaging the quality of the data collected. For example, one retailer changed its return policy to include paying shipping for only damaged goods, returns due to damage increased dramatically while consumer behavior-related returns decreased accordingly.

*Effective reporting and analysis of consumer data are the keys to identifying trends early in the reverse logistics process. Improved data reporting and analysis will eventually lower the rate of returns. “Companies need to learn more about why their consumers are returning goods,” Jupiter analyst Darren Bien said in a statement. “The data they collect will be the only way for them to reduce returns, identify trends, and most importantly, quickly redistribute the goods.”