The rise of the digital economy means customer expectations are higher than ever. These days consumers expect a seamless experience at every point of their journey, and are willing to look elsewhere if they don’t get it.
One often overlooked area of friction in customer relationship management is refunds. A badly implemented refund system can cost a business time, damage its reputation, and impact sales.
Ozow Refunds was created to retain customers and boost sales by simplifying and speeding up the refunds process.
Here’s how we did it, and how Ozow Refunds drives more than six times the value of refunded products for our merchants.
The problem: the cost of refunds
Sources suggest that as much as 30% of all online orders are returned, and the numbers involved are staggering By 2025 global online retail sales are expected to reach $8.5 trillion. This means a potential refunds value of more than $2.5 trillion – a significant potential loss.
Beyond these factors, there is another good reason for prioritising efficient refunds: cost control. Once upon a time, tracking and reconciling refunds meant laborious paperwork, not to mention the cost of man hours lost to refund logistics. An effective refunds solution reduces this administrative headache while freeing up time for revenue generating activities. In fact, one study predicted that better refunds systems could save businesses up to $125 billion annually.2
On the local stage, South Africa’s eCommerce market generated roughly R84 billion in revenue in 2021, and is expected to grow at 8% yearly until 2025.3
The primary driver of this trend is convenience: In a 2022 McKinsey survey, 48% of customers point to convenience as a significant motivator for shopping online.4 The same McKinsey survey found that worries about receiving faulty or damaged goods proved to be one of the biggest barriers to online shopping. Meanwhile, 72% of consumers say that a returns policy has a direct impact on their final purchasing decisions.5
These statistics highlight the business utility of an effective refunds process for customer retention, further demonstrating why new approaches to refunds are valuable.
Luckily, there’s already a better way.
The solution: Ozow Refunds
To address the need for quick, efficient refunds that benefit both the business and consumer, we created Ozow Refunds. Our solution simplifies refunds to just a few clicks for merchants, which not only allows for quicker response times to requests, but also cuts down on valuable time spent managing the process.
Ozow Refunds contains multiple quality-of-life improvements, in comparison to traditional methods:
- The process is housed in the same place as purchases are made, so merchants don’t need to request additional information from consumers.
- The system automatically ensures that refunds don’t exceed transaction amounts, eliminating the potential for human error.
- An easy float top-up allows businesses to manage funds efficiently.
- Real Time Clearing ensures money is in back in customer accounts in 48 hours.
For the customer, Ozow Refunds means convenience. It means knowing the status of a refund at all times, getting their money back sooner, and an all-round smoother experience.
The effect: customer loyalty
Ozow Refunds can save a business time and money by simplifying the process and doing a lot of the background work for you, but does it make a difference with customers?
To test this theory, we performed an analysis over 530 000 transactions, covering 85 of our merchant partners.
The results confirmed what we already knew. We’ve found that customers who receive a refund through the Ozow process have an average refund payment ratio of more than six in the 90 days following a refund. This means customers typically spend more than six times the amount they were refunded, with the same business, when using Ozow.
Generally, customers are quick to return as well. Our findings show that the average time between a refund taking place and a new purchase by the same customer is less than two weeks – and in some cases, it’s only a day.
A deeper look at the effect of refunds on industries is even more revealing:
Clearly, consumers don’t just appreciate a good refunds process – they actively reward it.
To find out more about the power of Ozow’s Refunds solution, or to discuss your business’ needs, contact us today.
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