The returns, that breaker of business plans. There is a lot of talk about trying to charge for returns and little about the bad experience it generates for the user. first realize that what you have bought is not worth it, which is already somewhat frustrating. If about that, we make it difficult for the return and weeks of waiting to make sure that they have returned the money… THAT is a DRAMA.
We are going to see with Fernando Pedraz, from Reveni, how to turn it around, how to turn that crisis into an opportunity to build loyalty. Stay because it provides powerful data: test A/B of how with its platform, if you return the money immediately, those who buy again double, buy more times and buy more expensive.
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Interview Fernando Pedraz (Reveni)
10:21 For those of us who are clueless, what is it and what do you do in Reveni.io?
He was working on a Glovo logistics initiative, with which he was looking to become a logistics provider for other eCommerces. We started with riders, but they have limited space and we added vans, becoming a carrier, but with a more powerful technological layer. One day I met with the logistics director of El Corte Inglés and while he talked about why he had to sign with Glovo and tried to convince him, he paid me no attention. So to hook him up I swore at him and just said: reverse logistics.
This single sentence completely caught his attention and he began to tell me that they had just measured the time it took to refund a return of an online purchase and it took them between 10 and 15 days, which caused two problems: first, by law in Europe there are 14 days to refund the money and they exceeded the limit. The second, the real problem, was that taking between 10 and 15 days made him lose customers, because the customer experience is lousy and your competitor on your website does it better.
This talk struck me because I thought that the fact that take time to return the money, which is not a logistics KPI, affects both the customer experiencewhich is not a logistics KPI either and how this has such an impact on an eCommerce.
The journey that a product has to make from the moment you request a return until the money is delivered to you is very long. They have to go to your house or some convenience point, the product must go to a warehouse, it is checked and once it is verified that it is in good condition, the money is refunded. In addition, the money that is refunded also takes time, because it depends on the original payment method, for example, with a credit card it can take 7 days.
The executive was thinking of solving his reimbursement problem by shortening the logistics time, but I thought that instead of making a large investment in logistics to change a lot of processes, a risk analysis in reimbursement and I came up with Reveni.
Reveni start a return process through a platform that we have developed so that the smallest brands have a return portal and the customer is autonomous to accept the return. This portal is also integrated with reverse logistics and the customer can choose the logistics method, if they prefer to have the product picked up at their home or convenience point. You also choose how you want to have your money, offering three options: instant refund, in which it took us 6 seconds to return the money; regular refund, in which we do not refund the money and store credit.
Instant refund is a bit longer process than normal refund and you have to insert bank account number, so some people prefer the traditional method. However, we have been surprised to find that 65-70% of people prefer instant refundsaround 20% traditional cashback and 10% store credit.
22:36 It’s validated that if eCommerce installs Reveni, people are going to use it, so I guess the friction is that they think it’s so good that it causes more returns.
Indeed, eCommerces have that fear, but we have a mix of customers: some do not charge returns, others do, others charge the second return but not the first and we have discovered that Reveni does not increase returns, because nobody wants to return a product. If it returns, it is because it does not work for them or because they do bracketing, which is when a user buys three products of three sizes and returns the ones that do not work.
In fact, I have some data for you: the 62% of people review the exchange policy before making a purchase And the third most common reason for cart abandonment is that they don’t like the exchange and return policy. Therefore, if you have an eCommerce and you think that to deal with bracketing you are going to implement a super complicated and expensive process so that no one returns, you achieve that no one buys from you. With Reveni you have an easy and fast way to build customer loyalty through a good shipping and return policy and that is our value proposition.
In addition, it must be taken into account that the 35% of the complaints of the clients of an eCommerce, is where is my money? so this is a perfect time to shine on the competition and build customer loyalty.
29:15 When you talk about taking risk, what does that mean? Do you do some kind of scoring?
We make a risk model, where we evaluate the client in real time and see if they are eligible or not. In case of a bad score, the instant refund button does not appear on the web. We can play on this score and we can put it one day above 90 out of 100, the next day above 53 and we keep going.
We pay instant refunds to bank accounts and give eCommerce a time frame. When the deadline is over, we call you and tell you the amount we have reimbursed and add the commission. I return what I will later claim from the client.
Broadly speaking, our risk model works by putting three types of information into a shaker: the first is data from third parties that we buy, data from whether the IP address of the purchase is the same as the IP address of the return, iPhone data, credit bureau data, etc. Second, Historical facts, both those that we generate ourselves and those that some of our brands give us access to. Third, data on how the person interacts with our platform.
Example, when you use a page many times, you navigate it using the tab, but if you don’t know it, you use the mouse. So, Rubén enters my platform for the first time, I don’t know him and I don’t have any information about him, but he acts according to the tabulator as if he had entered 100 times and I assume that Rubén is not Rubén, but another person who does use the platform.
We put all this data in a graph-type cocktail shaker, which is ordered in the form of nodes and where the different information atoms are connected to each other. In this way, I can see if an address is the same as a fraudulent order, Therefore, an information risk is generated in that direction and I give a negative score.
40:18 On the web you have some pretty interesting data, like 72% of people prefer the instant model, 92% of consumers would buy again if they have a frictionless experience, and 88% of customers don’t buy from a eCommerce if you have a long wait.
This is the typical data that comes out of Klarna or Shopify, but I am going to give you a couple of real data from Pompeii, one of our first clients and with whom we have more history. We did a study, from June 1 to September 30 and found that 68% of people asked for an instant refund.
In this same time window, we tracked everyone who bought and were able to determine three KPIs: first, how many people bought again? 14.61% with instant cashback vs 8% with regular cashback. Second, How many times did they buy again in that period? 1.13% with instant cashback vs 1.05% with regular cashback. Third, Do they buy cheaper or more expensive? and the answer was 68 euros instead of 60.
45:14 How much does Reveni cost?
we charge a commission for each instant refund of up to 5% of the refunded value. If you have a return cost of 5 euros and you return 100, I will refund 95. I am exposing myself for 95 euros and I charge the percentage for those 95. We have less than a year since we launched the product and in February 2022 we lifted a round of financing of a little less than one million euros. In August we raised 3 million euros and now we are financing the operations with this money. We plan in the future to have to raise debt to finance more.
We have been making refunds within Europe since we started, we have clients from Italy, Portugal and others. We open an office in London and have clients positioned all over Europe. We have processed returns from our portal just over 3 million euros and we have between 40 and 50 brands as clients.
Something very important is that we have our returns portal, but the brand does not have to use it. There are three types of eCommerce in the world: the first are the little ones, who use shopify, mail and excel and there are many, but they occupy a very small market share, they can use our returns portal; the second type of brand, the mediums that have a Shopify or a CMS and that can use our returns portal or one of our partners; finally, the first group of brands, of which there are fewer, but occupy a greater market share, such as Inditex or Mango. We can connect to the latter via API and we are not very intrusive.
Being able to work with all three types of brands allows us to expand much faster and we can work with brands that operate internationally.
51:11 In the debate on whether or not to charge for returns, where does Reveni stand?
As revendy would tell you, very few brands are taking the step to charge, that is, Zara is not really speeding up the process for small brands to charge, because they already had their own policies.
Personally, I think the The return rate is absolutely asymptomatic of how your company is doing. If you are a guest dress brand that invoices 2 million euros online and the average return is around 30 or 35%, but your return ratio is 12%, you cannot be very excited, because normally you are below the market. If the average is 35% and you have 30 or 28%, you are doing something right.
If you have 15% or 12% returns, it could be one of these two reasons: first, they charge 15 euros for each return and no one returns, but they won’t buy you again either, or second, you only sell to your loyal customers who already know how the product fits, they know the fabric and the colors, but you don’t grow. That is to say, Your problem isn’t returns, it’s that you’re not selling to new customers.
Now, if you have a brand where you are growing a lot and you have a return rate of 37%, when the average is 30 or 35%, your problem is that you have few loyal customers and You have to think about how to retain them, so you have to offer exchanges for a gift card or different refund and return alternatives to prevent the sale from going away.
56:37 What goals do you have for this 2023? And news?
Our challenge is expand and end up being the default solution in Spain and I think we are getting brands that are very good ambassadors for us. I think one goal for this year is for the United Kingdom to be at the same level as Spain at the end of the year, where we have between 50 and 60 brands and we are growing a lot. Although we are selling in many markets, the UK is the only one where we have contracted a specific team to sell.
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