The Business Case of Online Exchanges

The Return Dilemma

Returns pose a significant challenge for brands: they’re painful for the customer, very expensive for the brand, require customer service, and prone to errors regarding inventory management.

Many solutions have emerged to help brands reduce their return rates: analytic tools, sizing tools, product recommendation tools etc.

While these solutions can be very efficient in reducing return rates, a return will inevitably end up in a refund for the overwhelming majority of brands.

The problem is that 70% of returns in online fashion are related to sizing issues, meaning the product didn’t fit, meaning that the customer most likely wants to get a version of their item that actually fits. However, for most brands, a customer will have to:

• Declare they want to make a return, sometimes online, sometimes by calling customer service, in most cases via a painful process
• Wait to get refunded
• When refunded, purchase another version of the product they initially bought (if the inventory is available at that time).

This process is particularly painful for customers, who usually end up getting a refund and spending their money elsewhere.

This operation therefore ends up in the brand refunding the customer, and the customer leaving the purchasing loop, often times frustrated. It’s a net loss for both parties.

But it doesn’t have to be. What if brands could allow customers to choose an Online Exchange, instead of a refund?

Online Exchanges

Elyn enables brands to provide alternatives to refunds, in the form of Online Exchanges and Store Credit.

Customers that want to return an item can log into a fully-branded return portal, and pick the items they’d like to return.

Once the customer has picked their return reasons, they can choose between the following options:

• Exchange for another size or color
‍• Exchange for another item
• Store Credit
• Refund

If a customer opts for a simple size exchange, inventory will be automatically reserved for the new item, avoiding unavailability that happens frequently in most brands’ current processes. Elyn also enables Instant Exchanges, that do not require Inventory Reservation.

Going back to the outcome of refunds, what is the outcome of an exchange ?

• 👕 The customer bought a shirt for 100$
• 🔛 They request a return, and select the exchange option
• ↩️ They ship back their item
• 🎁 They receive their new item
• 🎉 The brand made 100$. Were it a refund, the brand would have made 0$ 😢
• 🌈 The customer is satisfied because they ended up getting the right version of the item they ordered, and the brand didn’t lose 100$ in refunds.

Laid out like this, the business case of exchanges is obvious, but it can get better!

Upselling with Online Exchanges

What if the customer wants to exchange a 100$ item for a 150$ item?

Elyn enables this option with Different-Product Exchanges. The process is similar to simple exchanges, but will include an additional step of embedded checkout, for the customer to pay for the price difference between the two items (here 50$).

In that scenario, not only did Elyn “save” the sale for the brand (100$), but also created a new Upselling Channel for the brand, and generated an incremental 50$.

Elyn has helped 70+ brands such as ba&sh, Balzac Paris and Paul & Joe to decrease their refund rates by -30%.

The conjunction of tools reducing return rates and Elyn (reducing refund rates) can help brands reduce a huge proportion of costs.

Reach out to us if you’d like to know more!