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New Study Reveals the True Impact of Customer Returns on Small Businesses

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According to a new study by Capital on Tap, nearly 1 in 5 (18%) orders placed with small businesses in the UK end up being returned. From squeezing resources to hurting their bottom line, returns are having a huge impact on the operations and profits of small companies. But what is the true impact of customer returns?

To find out, the survey delved deeper into the common issues that SMEs (small amd midsized enterprise) face with returns, as well as which industries have been hit the hardest and the areas that see the most returns. The team has also provided top tips for how small business owners can streamline their return processes and minimise costs. 

“Time spent” is the biggest issue for small businesses when it comes to customer returns, with 27.3% admitting this has been a challenge 

The most common issue in regards to returns is the increased time that companies have to spend on managing them. Of those surveyed, over a quarter (27.3%) of small businesses say this has been a big challenge for them over the last year.

In second place is the financial impact due to refunded products, with 26.9% of small businesses across the UK saying this has been an issue for them. The third and fourth most common issues with returns are because products have been sent back either faulty (26.5%) or in an unsellable state (25.7%). 

Small businesses in Plymouth see the highest volume of returns, with nearly a quarter of all customer orders being returned 

When it comes to location, with nearly a quarter (23%) of all customer orders being sent back, small businesses in Plymouth see the highest number of returns. 

SMEs in Liverpool see the second highest number of returns, with those surveyed saying around 21% of all orders end up being sent back. Following in joint third place are Cardiff and Southampton, with businesses based in both cities admitting that around two-fifths (20%) of customer orders are returned to them. 

On how to minimise the impact of returns, Hugh Acland, Commercial Director at Capital on Tap, says: “Sorting returns is a laborious process, and smaller companies often won’t have enough resources to manage them without it impacting other areas of the business. Automating or outsourcing some of your processes can help to reduce the time spent on returns and should free up some of your capacity so you can get back to the more important tasks at hand.

“While it can be hard to manage the financial impact of returns, using a business credit card can help to give you a bit more flexibility over your finances. They can be a useful tool for bridging any cash flow gaps as you process refunds, and they can also give you greater visibility over spending across your whole business.

“It’s also essential that any business has a clear returns policy. You need to communicate this with customers and confirm the quality and condition you expect returned items to be in to ensure you aren’t losing money on faulty or unsellable items.”

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