What about sellers? - exploring the pain-points of sellers, and high return rate in E-commerce
In this note, we will talk about how customer centricity, high return rate affect the small businesses selling through marketplaces.
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An interesting , and somewhat distressing, conversation with one of the sellers who sell products on marketplaces has shaken up my idea of customer- centricity as core principle in business. Well, Business 101 - customer is king.
But today, I am going to switch gears. Category managers are considered voice of the customers. It’s a consumer-centric role. As a category managers, it’s your responsibility to make shoppers happy with the purchase as well as overall experience.
But today, let’s listen to the other side of the coin - our suppliers / brand partners / sellers.
Category managers works with multiple entities including brands, suppliers. In the e-commerce space, category managers works with the sellers (aka suppliers). They are also the customers of Marketplace like Amazon, flipkart etc. Business customers.
And in this note, we are going to talk about one of the grappling issue with sellers - product return.
The seller on Amazon, who wants to maintain his confidentiality not to lose the business, said, “I am constantly on my toe about return rate because first, it hurts my business in terms of financials, but what hurts more in the long-term is seller performance rating. They have something called “A-to-Z” guarantee claim that customer can raise, the no. of which if goes higher for the seller, Amazon will ban the particular seller. Long story short, without listening their side of the story, Sellers could be banned from Amazon.
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High return rate, at one level, indicates that customers are not happy with the product received, but another argument could be that as customers pays no penalty to return the order back, they could abuse the return policy.
While the blessings of online shopping are “convenience”, “accessibility”, “reducing search cost” etc., the curse of online shopping would be lack of sensory inputs to make an informed decision. Hence, for some of the categories like apparel, it is understandable.
Further, if you receive products that are fake and not genuine, product return from customers is understandable.
But what about the purchase at the whim? What about products with 30 days return policy, customers will enjoy them and send them back?
I saw a small pamphlet in the seller’s offline store, tainted a bit, that says “becha hua maal wapis nahi liya jayega.” Amazon has increased customers expectations multifold and delivered on it also; good for customers, but this impacts a lot of small businesses / small shipowners worldwide.
From Amazon seller forum,
https://sellercentral.amazon.in/forums/t/amzon-return-policy-help-customer-to-cheat-openly/269432/35
Automotive parts especially performance parts are a badly affected category. Your customer is a young adult in 18-35 age group, most prone to indulge in fraud.
Quoting Seller as it is posted on the Amazon Seller forum,
Nowadays receive lots of return rejected by buyers orders, put so much effort, money, time on packing and shipping what in return after 20 days or more we get back product, till then short in inventory. Kudos to Amazon company policy of issuing refund to buyer even if they don’t return product.
Read some more here :
https://sellercentral.amazon.in/forums/t/30-day-return-policy-a-big-loss-for-sellers/153158
Customers can write bad reviews and ruin the credibility of sellers even if is not a genuine feedback. THE WEAPON OF TOMORROW - Reviews and rating system - The holy grail
Read service recovery paradox,
Everyone talks about customer happiness, Customer life-time value and from a business perspective, it make sense.
“Be human. Don’t lose a lifetime customer for the cost of a single sale. Embrace the bigger picture.”
– Bill Arnold, President and Chief Strategist, EYEMAGINE
One study featured in the Journal of Marketing found that customers who received free shipping on returns increased their purchases over the next two years by 58 to 357%.
So you see, everything to make customers happy and it ought to be,
https://www.returnlogic.com/blog/shopify-returns-prevention-and-management-best-practices#numOne
A liberal eCommerce returns policy, also sometimes called a customer-centric returns policy empowers the customer to purchase a product with confidence and peace of mind, knowing they have the option to return it later.
If you read “how to write a good return policy” if you are in ecommerce space, mostly it’s written from the consumer perspective. All the tips on the Internet put the burden on the sellers - write your product description well, take a good picture etc. But what about the customers who are abusing the policy with all gone right from the sellers’ end.
#customer focused policy
So now we understand that customer return policy is walking on a tightrope. Keep customers happy but be fair to suppliers.
Few solutions occur to me is
Start with the company’s core principle - establish sellers empathy as an organizational value
Similar to how you keep a tab on reviews and rating for sellers performance, put a tab on customers with high return rate - this will enable businesses to understand if the feedback is called for action on the seller.
Establish a proper mechanism / centralized team to address concerns of sellers - I don’t see a single reply by Amazon on Amazon seller forum
Share the pain :) Share the risk with the seller if you are sharing the benefits of good business.
Let customers know that if they return for not so genuine reason that is going to hurt small business - delivery cost, labor cost etc.. I believe this will change attitude of customers and reduce unnecessary product return requests. (Behavioral economics)
Category manager’s job is to create a win-win situation for everyone, partner brands / Sellers and customers.
You might like this HBR article.
At the very least, returns handling, if done right, can enhance relationships with consumers and supply chain partners. That is what General Motors did when it simplified its process for returning automotive parts. Dealers love the new system, which is less complex and less costly than the old one; they now send all returns to a single facility, using GM’s prepaid shipping labels.
Need to simplify the process for Sellers on E-commerce.
In case you have worked upon return policy or have worked in a similar space, do leave a comment below. Would love to hear from you.
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Till then, have a great weekend and Happy Lohri and Makar Sakranti 🥳🔥 :)