How E-Commerce Retailers are Reducing Their Losses on Returns

If you are an e-commerce retailer, or “e-tailer”, there’s no doubt that customer returns are costing you. High return rates have long been a challenge for e-commerce companies – at least 30% of all products ordered online are returned (as compared to only around 9% for brick-and-mortar stores). Online clothing purchases have an even higher return rate than other kinds of products – closer to 40%. Online shoppers have exacting demands: they expect the return process to be hassle-free, and they also expect return shipping to be at no cost to themselves. Close to 70 percent of online consumers check the return policy before making a purchase. So what can businesses do to help prevent high return rates?

Reasons for Product Return

Selling the right product to the right person in the first place is a good start. It’s in your hands to empower your customers to make good buying decision, and that means implementing tools that help your online customers pick the right product. Some of the most common reasons for product returns are:
  • Getting the wrong size due to the inability to try things on (the cause for most returns)
  • Quality control – the customer receives the wrong product or the product is damaged.
  • The product looks different from the online photo.
  • The item did not measure up to their expectations.
Some of the tools e-commerce retailers can put in place to counter these causes and reduce the number of returns include reliable sizing technology for clothing, augmented reality apps for home interiors, high quality images (including multiple views and the ability to zoom in on details), reviews from other customers, detailed and accurate descriptions to create realistic expectations (we can’t stress this one enough!), order fulfillment platforms for better accuracy, and online chat to answer questions

The Returns Process

No retailer wants to encourage customer returns, yet creating an easy returns process is an important component of your sales strategy because it creates customer loyalty. Studies have shown that 42 percent of the shoppers who return items are also likely to buy again – and again. Not only can a customer-centric returns policy positively influence repeat purchases, it can also affect the “customer lifetime value” for the long run. An article in the The Washington Post cites a surprising result from a study on shopper returns: more lenient time limits on return policies are associated with a reduction, rather than an increase, in returns. Several reasons were offered, such as more time to become attached and reduced urgency around the decision to return. But the study also suggests that achieving the optimal return policy is complex – a retailer might have to choose what’s more important: boosting overall sales or reducing the number of returns. (Halzak, 2016). References: Halzak, S (2016, January 22) The surprising psychology of shoppers and return policies, from The Washington Post. 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