Total refund requires managing the growing issue of e-commerce returns in MENA
MENA’s growing population is buying more products online than ever before, but as this purchasing trend increases, so does the volume of e-commerce returns. Each marketplace, online retailer, and brand has its rate of returns.
These rates vary considerably by location and product category. However, it’s estimated that around 30 percent of all consumer retail items bought online in MENA are returned each year. Local studies by the Dubai Chamber of Commerce and Industry put the return rate of e-commerce between 15-40 percent, dependent on the category. Across MENA, this equates to around $4 billion of goods that are returned and refunded yearly.
Returns are an increasingly important touch point for brands, as the process is essential for consumer purchases and loyalty. Refining the returns process to become frictionless and straightforward can help brands improve profitability. Statista research, amongst other studies, suggests around half of the shoppers in the region prioritize the ease of returns and refunds, with free returns especially crucial.
But further global studies by Invesprco uncovered why people are returning items. Sixty-five percent of the time, returns happen because of the merchant’s fault. Twenty-three percent of products are returned because customers received the wrong item, and 22 percent said the product received looked different from the one they had ordered. In comparison, 20 percent identified damage or faulty product as the reason for return, which is unacceptable to customers.
Companies must resolve these return issues before purchase by improving the e-commerce journey. On marketplaces, online retail stores, and brand websites, improving the accuracy of item descriptions, imagery, and size charting is a helpful exercise to guarantee customers know precisely what they are getting. Technology advancements can also improve this experience with innovations such as virtual try-on enhancing purchasing decisions across fashion and beauty. Video shopping augmented reality and even the metaverse could provide more of a concierge experience for online customers and help keep returns down.
Behind the scenes, effective warehousing and stockkeeping by professionals reduce the likelihood of customers receiving incorrect or damaged products by 90 percent, with a high-quality fast delivery process acting as the essential connector between brand and consumer.
Historically, MENA has built a robust brick-and-mortar ecosystem. The acceleration of the COVID-19 pandemic pushed more businesses online, forcing the pace of transition for these brick-and-mortar retailers to embrace digital commerce. Still, that same physical infrastructure does not necessarily translate to e-commerce. Many of the challenges of digitization are entirely different to store retail and require expertise. As Liam Neeson might say, it needs a specific set of skills.
Some brands struggling to make inroads in online retail or are trying to enter MENA from international markets turn to managed e-commerce. It is where brands employ a specialist provider to run and manage brand websites and offer seamless marketplace administration. The effects are immediate, and online businesses can quickly reduce their rates of return to less than one percent. Economically this is far better, and there’s an environmental benefit too. Lowering the rate of returns can help reduce carbon dioxide emissions, with fewer trips for trucks and vehicles collecting items. Similarly, by decreasing the number of returned products, fewer items end up as waste in landfills.
Ultimately, brands have a choice regarding managing digital commerce and returns – either create and build their online retail infrastructure and return processes or partner with a specialist expert who can optimize and handle returns. To provide an analogy, this is like deciding whether to climb a mountain on your own or do the climb with an experienced guide. While both businesses can reach the top, the latter option provides a faster route to success through tried-and-tested strategies.