Overview of eCommerce Product Returns
If you’ve been running an eCommerce business for some time, every now and then, you may struggle with a higher than average product return rate. Product returns are the biggest and most frequently faced obstacle by most eCommerce businesses. According to a report, it was estimated that in 2020, almost a third of the products purchased by shoppers globally ended up being returned. Considering that there were more than 2 billion shoppers last year, this means that more than 600 million products were returned to the retailers.
Needless to say, product returns put a lot of stress on business owners, forcing them to increase their prices so that they can counter the additional costs incurred. But of course, that’s not a sustainable strategy in the long term. Your business needs to have a more effective technique for dealing with product returns, and optimizing customer experience is one of the best ways to do that.
To understand what we mean by that, take a walk with us through some of the core concepts of eCommerce product returns in this post.
Let’s start with understanding what's the business cost of product returns
It’s practically not feasible for businesses to not offer a return option, for an eCommerce store’s return policy plays a major role when a customer decides to buy. In a survey, nearly 70% of the consumer participants agreed that the return policy of the store is crucial to them while making a purchase, and 59% expressed that if the store charged a fee for the return they wouldn’t order from it. Additionally, 50% of the participants revealed that most of the time, they abandon their purchase due to the absence of or limitations in the return policy.
The key to solving this issue is not limiting the customer’s ability to return, instead, the strategy should be to lessen the customer’s desire to return. The opportunity to return products is a business’s strength and is an important factor to customers, which is why the above strategy will help get into the consumer’s mindset and improve their overall buying experience.
Moving on, let’s explore why people return items
Before we try to come up with an effective business strategy for product returns, it’s crucial to understand why a consumer decides to return a product.
There are three main reasons why a product is sent back:Because of the fit - Either the wrong size was ordered, or they didn’t like the fit of the product.
Reality vs expectations - The product ordered didn’t meet the expectations or the pictures on the website.
Damaged goods - The product was damaged upon arrival.
A survey revealed that 65% of consumers return items because of the wrong size, and 33% do it because the product didn’t match the pictures provided. There’s also a rising issue of consumers who buy with the intent of returning the product. 43% of millennials and 46% of Gen Z consumers order more than they actually want/need and end up returning the products.
Regardless of how generic this behavior seems, in reality, it differs from industry to industry. The above scenario doesn’t take place while buying household products like coffee, flour, sugar, etc. It’s most popular in the fashion industry; 66% of consumers say they order more items than they’re interested in keeping. Especially since the pandemic, buying clothes from brick-and-mortar retail stores has become difficult, due to which consumers have started to order multiple sizes from eCommerce stores, and then they return the ones that don’t fit. Convenient for them but a complete nightmare for business owners!
So how can you, as a business owner, ensure that product returns for your business are as low as possible? More importantly, can you even do something about it? Well, experts say you can, and they vouch for the 15 top tips listed below as weapons to help you achieve this.
15 best practices for your eCommerce returns and refunds
Here's a list of 15 practices that can help you cut down your eCommerce business’ returns and refund requests.
1. Dynamic and appropriate size guide
Ensure that the size guides provided on your website are up to date, easy to understand, and accessible on desktop as well as mobile. This way customers can be sure that they’re not ordering the wrong size by accident. Additionally, you could get fitting tools like a small slider that’s displayed over the product itself, to show the customers how the product fits on them. A good strategy could be something like a virtual room planner that shows how the furniture fits in with the space. Introducing appropriate fitting tools will help eliminate a large chunk of size or fitting based returns, and impede customers from ordering multiple sizes of the same product.
2. Request and reward reviews
Present an effective process that encourages customers to leave a review on the products or services you provide. On receiving a review from a customer, you could offer a 10% discount on their next purchase, or a freebie or something like a cashback/scratch card. This will encourage your customers to provide reviews and will help you in identifying issues that people are facing with your product. Remember, the customer knows best! Implement the feedback that your customer has duly provided in their reviews. It’s been revealed that there’s a 20.3% lower return rate on products that have customer reviews.
3. Offer the best customer service
By making it easy for customers to reach out to you with a query or an issue, you can prevent them from getting frustrated and returning the product because they didn’t know how to use it or make changes they could have done by themselves. Apart from traditional methods of call, chat and email, try adopting live chat or instant messaging, which provides a direct and instant link to the customer. A good percentage of returns can be prevented by answering customers’ queries promptly.
4. Getting it right the first time
23% of consumers report receiving the wrong product as their reason for return. Although this is an issue every eCommerce business tends to face at some point, by improving order fulfillment, a significant number of returns can be reduced. Making note of your trackers and post-it notes is not an efficient strategy; instead, you can find an efficient automated solution for as cheap as $13 a month. This will help in better packaging, delivery, and customer service. Needless to say, all of this will reduce the number of returns due to wrong orders and other mistakes in the supply chain.
5. Make packaging a priority
Packaging differs from item to item, however, as a thumb rule before packaging, you must keep in mind the possible journey your product will take and pack it on that basis. 20% of customers return products because their orders arrive damaged or broken. Don’t hesitate to put an extra layer of bubble wrap or double-lined boxes on fragile items. Most parcels are handled roughly and get stacked under other boxes. Hence, label your packages with what’s inside (unless it’s a gift) and give clear instructions for storage in case your packages take too long to reach your consumer.
Even after taking all these measures to protect your package, if your product arrives damaged, you can be sure that your courier service provider is at fault and you have to notify them. If your packages arrive damaged by that service provider repeatedly, you should start taking measures to change your delivery provider.
6. Analyze returns and adapt
If you’ve not recorded your returns in an excel sheet, do so. Record each one of your returns in a month along with the reason for them. After this, you can analyze the number and get clarity of the things that need to be improved.
Here’s an example of the type of analysis you can do based on the reason of the return:-
Customers returned products because they changed their minds - There’s nothing you can do about this, but if it’s happening frequently, reconsider your customer base and shift your focus towards retaining customers (those who are less likely to return products).
Wrong order or size received - This is an issue of picking, packing and dispatching. For this, try to evaluate each part of your supply chain and work out where exactly things got messed up.
7. Fight off serial returners
Research has revealed that 30% of consumers purposely over-purchase products because they know that the brand has a flexible return policy and provides a full refund. Similarly, 19% of consumers purchase multiple sizes of similar versions of the product, so that they can decide once the product has arrived. There are several consumers out there who take advantage of a flexible return policy. They order an item (particularly clothing), use/wear the item once, and then return it asking for a full refund. In case you’re not aware, this can cost your business a lot of money!
The best way to go about this is to identify these continuous returners in your customer base. Keep an eye on their returning habits and with enough data, you can issue them a warning or block them from purchasing your products in the future. However, before you take such an extreme measure, it’s best to inform your customers via email or on the website itself that the customer base is consciously monitored for such behaviors.
8. Email your way through
Be an email wizard and use software that immediately sends out emails to the customer once they have placed an order. Send the customer an assurance once the order has been confirmed from your end, and don’t hesitate to provide extra information about the product’s origin and other specs. It’s best to add a clear outline and provide clarity to the consumer about an estimated delivery time and cancellation/amendment period before the product is sent out. Include links for contact information, live chat, or instant messaging so that a customer can conveniently reach out to you in case they’ve changed their mind.
The majority of customers forget about the orders once they’ve checked out and paid for the item, which is why the emails you send will remind them of their package to check if this is actually what they want and prevent returns later on.
9. Get a long-duration return policy
It may seem to be counterproductive at first, but research has shown that most returns take place when a business has a “30-day or less” return policy. To reduce your returns, double or triple the number of days the customer can return the product in. This way, the urgency of returning is removed. By increasing the number of days, customers are most likely to get attached to the item, or simply forget about it. This way the number of returns is reduced and the customer is most likely to be more honest with you about their reason for return. In a shorter time frame, customers tend to fill in any reason to get the return done before they are no longer eligible.
10. Even returns are the best experience
All customers remember a brand/business with a seamless return process. Even if you apply all the possible tricks for no returns, you’re bound to get at least a few returns from your customers. In such a scenario, instead of spending so much time worrying about how not to get any returns, focus on transforming the return process into a fun and seamless one! Track your number, inform customers of their products, their returns, the refund, and store credits. All of this will increase your chances of getting a loyal customer who will continue to buy products from you and not your competitor.
11. Promote exchange instead of return
Research has shown that 57% of consumers replace the item purchased and only 16% return the product and switch to a different retailer to find the same product. By making the customer wait for their return, you may be pushing them to find a different retailer. Though the customer is returning your product, keep in mind that a bad return process can force them to go to a competitor and make you lose a potential long-term client. Try your best to provide a seamless return journey, for there’s a potential loyal customer at stake.
12. Segment and section your customer database
Segmenting your customers can help identify trends, behaviors, and other metrics that can assist you in making better decisions. For example, suppose you’re offering a discount of 20% on a certain product line as a part of a campaign. Now if you send it to everyone, you’ll risk having more returns. Instead, send it to those who are less likely to return the product, and this way you can save yourself from time-consuming returns. There’s a lot more sectioning and segregation that needs to be done before using this technique. We agree that this may be a tiresome and strenuous process at first, but once you’ve understood and sectioned your database, you can easily market your business better by sending promos to the relevant consumers.
13. Try data-driven emails
Once you’ve kicked off your customer segregation initiatives, you can identify which products could be problematic and which customers are most likely to return them. Now what you can do is, create content on the potential problematic product and send it to the potential returner. For instance, if your customer has ordered a satin dress and you’ve noticed via customer reviews that the fit of this dress could be a possible reason for return, send the customer an email asking them to check out the content you’ve created on styling this dress, or how celebrities have styled it. This will reaffirm confidence in the customer and reduce the likeliness of product return.
14. Analysis and incorporation
Preventing returns is a rigorous and ongoing process that requires a constant emphasis on data and continuous experimentation. You need to keep analyzing and understanding the feedback loop. The best way to understand your customer and product returns is by scheduling regular meetings with your operations and marketing team to come up with ways that can help you optimize returns. Collect as much data as possible on your customers to help identify the problematic trends, product design, logistics and content delivery.
15. Use returns as an opportunity
Instead of thinking of returns as a loss, use them as an opportunity to grow your relationship with the customer. Rather than simply giving a refund, use this chance to strike up a conversation via SMS or email. Keep it simple and ask the customer why they’ve returned the product. You could offer a discount code or a product suggestion. By reengaging with your returners, you’re growing the customer’s relationship with the brand.
How to reduce product returns through better product information
It can be quite frustrating for a customer to receive a package that they’ve been waiting for for weeks only for it to be not what they ordered. The best way to prevent this from happening is by providing a detailed product description. This way the customer gets a clear idea of what they’re ordering and knows what to expect.
Here are a few things you can implement to optimize product descriptions:
- Provide a catchy and gripping headline that will get the attention of your customer
- Add a descriptive paragraph under the product and give details about it along with what makes it so unique. Showcase the product as a solution instead of just describing its features.
- Have a bulleted list of benefits of the product.
- Wrap it up with credibility and social proof. This way the customer feels more confident and assured about what he’s buying.
- Make a note of the aspects of the product that your previous consumers liked and amplify that in your product description.
The COVID impact on eCommerce returns
DHL, a leading shipping and courier service, revealed that at the start of the pandemic they observed a decrease in the weekly return volumes by 20%. The drop was because customers wanted to avoid the stress of returning a product during the pandemic.
Why? Because for returning a product, the customer would be required to leave their house and visit the local courier centre, which could be a potential risk, especially when everyone was advised to stay at home and be in a lockdown.
Before the pandemic, it took businesses 4 -5 days to register a return, and now since the pandemic hit, the number of days has increased to 8.
What is the impact of returns on customer loyalty?
Regardless of what type of refund you’re offering, as a retailer you have high customer expectations to compete with. Whether it’s a full refund or a gift card, most customers expect a refund within 30 days of purchase. If you by chance delay a customer’s return, you’ve provided them with the worst shopping experience and it will be a huge obstacle towards your goal of getting loyal customers. However, if you provide the returners with a seamless return experience, 92% of them will buy again. This will surely improve customer lifetime value.
In the end...
Product returns are an inevitable part of every eCommerce business. While they happen for reasons beyond the business owner’s control, they can have a huge impact on the overall brand value and revenue cycles. Hence, eCommerce business owners must try their best to minimize returns as much as possible, or else, at least offer customers a seamless product return experience. Remember, the world of online shopping isn’t limited to order fulfillment.