Peer-to-Peer Returns: The Future of Efficient and Sustainable Ecommerce Returns

Alright, let’s dive into a topic that’s probably made you roll your eyes at least once in the last month: ecommerce returns. You know, that inconvenience that costs you both time and money, but is required to keep your customers happy and coming back for more. The problem is, returns have a massive hidden cost. Not just in dollars and cents, but in carbon emissions, packaging waste, and just general hassle. But what if I told you there’s a way to make returns cheaper, faster, and greener? Say hello to peer-to-peer returns by Cahoot.

Peer-to-peer returns are pretty much exactly what they sound like: instead of sending returned items back to a centralized warehouse or processing center (and burning tons of money and fuel in the process), customers “forward” their items to the next purchasing customer. So, for example, if a customer returns a jacket that’s been opened but never worn, they use a forwarding shipping label to send that jacket directly to the next customer who has purchased the brand-new but “open box” item at a discount. No need to ship it back, inspect it, and restock it. It’s quicker, easier, eliminates all friction, and it’s a whole lot cheaper. Not to mention, it’s better for the environment: win-win!

Benefits of Peer-to-Peer Returns for Ecommerce Brands

So why should you care about this model? First and foremost: make more money. Ecommerce businesses spend a lot of money on returns. You incur shipping fees, labor costs for inspecting and restocking the products, and sometimes even storage fees for returned inventory. Peer-to-peer returns cut all of that out and protect your downside. It’s not about savings, it’s about increasing revenue. Ecommerce margin pressure is at an all-time high, and many sellers are squeezed to the max. With very little changing elsewhere in the industry that can help you make more money (as opposed to saving a little bit here and there), the peer-to-peer returns model turns the largest untapped cost center (averaging 20% of revenue!) into a revenue growth driver.

Most items that are returned are still in great condition, like clothing, gadgets, or books. So, instead of spending money on reverse logistics, you’re moving inventory much faster, which makes your entire operation leaner and more cost-optimized. You’re eliminating the lost opportunity cost of not being able to resell the item while it’s in transit or in a returns processing queue. The return is resold and “fulfilled” without you ever laying eyes on it. It’s done automatically by the technology.

Additionally, you’re freeing up valuable warehouse space and labor resources that can focus solely on returns that require human intervention, such as fulfillment defects and items delivered damaged. Those have valid customer service requirements. But many times, good returns management software can even take care of those for you independently. With peer-to-peer returns, you remove most of the returns burden so you can focus on selling and shipping new orders. It’s all about keeping things flowing smoothly and optimizing your operations.

How Peer-to-Peer Returns Enhance the Customer Experience

Okay, but let’s not forget the most important part: the customer experience. Customers hate returns. Nobody wants to jump through a bunch of hoops that they didn’t expect to spend time on: they buy something online, it shows up, and either it’s a perfect fit or not so much. You request a return, print out the label, pack the thing up, ship it back (hoping it doesn’t get lost in the mail), and sometimes wait several weeks before you get your refund. Not exactly a stellar experience. But if you make the return experience quick and easy, they’ll love you for it. Because that’s what customers want: convenience.

Using Generative AI in the Ecommerce Returns Process

With peer-to-peer returns, the returning customer snaps a few pics of the item so generative AI can assess the condition and relist the item for sale immediately and autonomously (in real-time). Customers shopping on your website see the “open box” item listed beside the listing for the brand new item with the condition and discounted offer, and as soon as they click “Buy”, the shipping label is created and sent to the returning customer. Instead of waiting for weeks to get a refund, it’s processed much more quickly, and also without human intervention. The second customer gets the item they want sooner than they would have if they had to wait for it to be restocked. Plus, they get a discount for a brand new item (after all, it would have been resold at full price had it been returned to the warehouse, and the customer would be none the wiser). So the process is quick and easy. No hassle. No waiting.

Incentivizing Ecommerce Returns

In addition, the original customer can be incentivized to do a great job, either with cash, store credit, or any number of ways they may find valuable. So much money is saved by offering peer-to-peer returns that it’s worth incentivizing the customers on both sides to do a great job and provide feedback. The Cahoot network uses the feedback to build customer profiles that can then be used to provide visibility and transparency about past shopping and returning experiences, which is valuable for many reasons: from helping to identify root causes for returns (and fix them), to identifying serial returners across channels and platforms, to informing business decisions.

It’s a win-win for everyone involved, and that’s the kind of experience that makes customers want to return to your brand again and again. And, you get a loyal customer who’ll spread the word. So it’s not just about making things easier; it’s about creating customer loyalty and increasing customer lifetime value.

Overcoming the Challenges of Peer-to-Peer Returns

Okay, so peer-to-peer returns sound pretty great, right? But as with any new model, there can be challenges to overcome. So, let’s dive into the challenges and how you can tackle them head-on.

Making it Scalable

The first issue is scalability. If you’re running a small operation, local returns might be easy to manage. But as your business grows, how do you ensure you have enough customers returning items that can be forwarded? High-volume SKUs are easy because there’s sufficient volume that peer-to-peer works naturally and consistently. And there will always be some percentage of returns that will not “match” with a new customer and will need to be managed using traditional workflows. But software like Cahoot automatically manages the workflows and communication between all parties for every return.

Ensuring Quality Control

The second challenge is quality control. One of the risks of decentralizing returns is that you’re relying on technology and inexperienced human feedback for evaluating the condition of returned items, and then forwarding them to the next customer. How do you make sure the product is in returnable condition? Well, generative AI is great at using photos taken by the returning customer to confirm the reported condition. How do you make sure the “return” is prepped in a manner that the new customer would want to receive the item? Explicit (but simple) step-by-step instructions are provided to the returning customer to ensure high-quality prep and shipping. Lastly, incentivizing both customers to do a great job enables them to capture value for the role they each play. The technology tracks everything in real-time, so there’s full visibility between all parties throughout the process.

Handling Returns Fraud

Finally, there’s the issue of fraud. As with any returns model, fraud is a risk. People might return things they wore or even swap them out for something different. Implementing safeguards, like requiring photos of the items before they’re offered for resale, can help reduce fraud and keep the returns process legitimate. Also, tracking customer return history across the web, along with peer ratings and reviews about the quality of each experience, adds a social component similar to how Uber drivers and riders rate each other, fostering a sense of mutual respect and fairness while encouraging positive interactions.

Final Thoughts: Future-Proofing Your Returns Strategy with Peer-to-Peer Models

So, where does all this leave us? Peer-to-peer returns are the future of returns management, and they just make sense. They’re faster, cheaper, and more sustainable. By allowing items to be forwarded to the next customer, you cut down on shipping costs, reduce your warehouse overhead, and offer a better customer experience. And, importantly, you’re doing all of this while reducing your environmental impact.

Reduce costs and Improve Customer Satisfaction

As ecommerce brands face increasing pressure to reduce costs and improve customer satisfaction, peer-to-peer returns offer a solution that works for everyone: your business, your customers, and the planet. It’s time to ditch the old returns model and start embracing the future. The peer-to-peer returns model isn’t just a nice-to-have anymore; it’s a must-have for brands that want to stay competitive and sustainable in the long run.

You’ve got nothing to lose and everything to gain.