Why online returns are actually a good thing for eCommerce businesses
Product returns and a galore of negative terms are seen together quite often, aren't they? Returns have proven to be a great adversary for any online or eCommerce store. Even to the extent that none can escape from it. Whether you like them or not, returns are almost predestined.
Your customers browse the store, add a product to their cart, get it shipped, and the next thing you know, they don't want it anymore. The real question, however, is, should we always look at returns in a bad light? Are they really that bad for any eCommerce business statistically and logically?
The short answer is no. Returns aren't the worst thing for your online store. We'll answer the 'How?' as we move on with the article. In fact, you might just change your perspective on returns by the end of reading this.
What are eCommerce returns?
Let's brush up on our memory quickly and briefly see what eCommerce returns are first.
Simply put, the entire process of a customer returning a product for any given reason they bought online can be termed as an eCommerce return. Regardless of what industry an online shop belongs to, it will meet returns.
Once a product is returned, stores will usually send in a new replacement for the same item. As a result, firms have to pay twice for shipping. In other cases, firms may also credit partial, or the entire amount spent back to the customer.
Keep reading to find out when exactly customers tend to return products.
5 Reasons Why Customers Return Products
The returns equation is pretty simple; customers will only return a product unless they don't want or like it. However, you can further divide those two causes into five specific scenarios.
1) Buying the wrong product
There are two types of customers that exist: those who buy a wrong product at least once and those who lie. Customers can make the mistake of ordering something different than what they originally intended.
Chances are, you've done this yourself. In fact, this is one factor where you can relate to your customers and bring better solutions to prevent it from happening in the future.
2) Late delivery
With the ability to order items such as food online, customers might buy something that they need rather on time. Consider a celebration scene where a cake was ordered, but it arrives once the party's over.
Not the most pleasant sight, is it? Once a parcel arrives when it is no longer needed, why wouldn't any customer return it to save some extra bucks? This can also be said for clothes ordered for special events.
Okay, here's an interesting one. In case you were unaware, there's a group of customers who buy products, use them for a while and return them shortly later. We're not making this up. Customers will hardly use the product for a special occasion and return it.
It's common knowledge that most online apparel stores do not allow returns after customers use a product. These customers fraudulently try to break this one rule and return items as if they were never used. They are hard to identify, though, since many customers have unfortunately become wardrobing maestros.
4) Damaged product
Ever come across those shipping platforms who remind you to add insurance for your parcels? You might want to consider it since a decent number of returns are usually caused when customers receive a damaged product.
Although, products getting damaged in transit may not be the only cause. At times, manufacturing defects may be the reason for your product to have dents, blemishes, etc.
5) Lack of satisfaction
Lets face it, all of us have experienced the regret of buying a piece of clothing from a retail store, only to feel disappointed in a matter of days. While this behavior is completely natural, it does cause customers to make returns.
For brands in the apparel industry, you might want to pay attention to this one. Customers cannot touch or feel a product through their screens. There's a distinct possibility that their expectations are not met when they receive the actual product in hand.
How Online Returns Can Be Beneficial for eCommerce Firms
Returns have rightfully earned their spot as a formidable obstacle in the path of creating good customer experiences. However, what online store owners may not realize is that returns can be advantageous too. We’ll list down five main reasons why returns are actually good for online stores.
1) Returns can turn first-timers into repeat customers
When a customer returns a product, it's evident that they're not satisfied. Although, if you create a remarkable return, i.e., post-purchase experience, you can turn the tables quite easily.
If you give the customers exactly what they want in a return order, you'll gain their trust, and that trust of theirs is what propels profit in eCommerce. This, in turn, will help you gain repeat customers.
2) Returns can indirectly cause customers to spend more in future purchases
Returns may be unavoidable, but, and that's an important but, once you manage to handle them in the right way, you can gain more than if the customer never returned the product. This is because repeat customers have the tendency to spend more than first-time visitors.
Bain & Company has stated that 5% of retention correlates with a 25% increase in profit. In fact, even Gorgias (an eCommerce customer service solution), in one of their reports declared that happier customers can account for 40% of your total revenue.
3) Returns help you perfect your post-purchase experience
eCommerce Returns, being a part of the post-purchase experience can be refined. How many times have you heard of a brand being famed for any of its returns? Not a lot right? That’s because brands may not endeavor to perfect their returns process.
Here’s where you, as a store owner can outmatch others. Add a unique element to your returns which makes it a memorable experience for the customer (discounts, vouchers, special cards, etc).
Not only are you building brand trust here, but you’re also overtaking competitors and becoming an example for others to follow.
4) Returns can help customers understand your policies better
One of the main things customers primarily do is read your return policy to learn whether they are eligible for a return or not. This entire process holds more importance than you may think.
The thing is, once they start reading, there’s a good possibility that they browse through the entire policy too. For instance, they can learn that you may not support returns on customized products.
It may not be much, but it helps customers stay prepared for future purchases and in fact, avoid any unnecessary return requests which you may have to tackle or reject later on.
5) Returns help you avoid future returns
Don’t get us wrong, we’re not trying to warp you into an inception movie concept. If anything, this one is quite straightforward.
Mistakes are bound to happen in every eCommerce store. When a customer returns a product, you can keep track of why they decided to return it. Whether it be manufacturing defects, damage during shipping or any reason, keep count of all.
Over the course of a month, you can analyze the main reason for customers to return a product. If it's manufacturing, you can improve product inspection. Shipping damages can be sorted by changing your carrier or adding insurance on parcels.
The point is, returns help brands understand any shortcomings on their end. After all, it’s better to deal with a problem you know of compared to one you have no idea of. Unknown flaws within brands can be like termites, eating up all of profit and going away unnoticed.
How Returns Can Hurt eCommerce Stores
Before we sign off, allow us to show you the other side of the coin as well. While returns can prove to be beneficial, they can be just as bad or even worse for any eCommerce store.
The foremost issue is shipping costs. Why you ask? Because you’re the one who might have to bear it. Additionally, when products are returned, you need more space for storage at your warehouse.
This, incorporated with more staff requirements and lackluster senior management, can make the entire process a big hassle. In fact, many online stores may not have proper IT systems to keep track of the rate and cost of returns in the first place, resulting in unknown lost revenue.
When we look at the bigger picture, returned products can be turned into profits if managed correctly. As an eCommerce business, it is crucial to provide the best services for a customer so that they re-purchase from your store. Hence, return management can help you convert dissatisfied users into re-visitors.
1) How many customers return products on average?
Ans: According to a report by Statista in late 2022, there’s a variation on the type of products that customers return. For example, in the U.S alone, 26% of clothing items were returned, while at the same time only 11% of consumer electronics (phones, laptops, etc) were returned. However, products such as food items and cosmetics had relatively lower rates of returns (9% each).
2) How can store owners explain their return terms and conditions?
Ans: You can write all your terms and conditions for returns in a return policy. Ensure to detail these conditions clearly. Preferably, a return policy should cover the timeframe for when a product can be returned, non-returnable items, conditions for when an order qualifies for a return and when it doesn't. Take for instance, an online business which does not accept returns for products that are on sale. Such products are usually marked as ‘Final Sale’.