For anyone that's running an e-commerce business, you'll often hear a large groan when it comes to the topic of returns. And it's easy to see why - not only do e-commerce businesses lose the profits from the sale, but the cost to ship on process product returns is much higher than in regular stores.
According to the National Retail Federation, a total of $218 billion dollars worth of products bought online were returned in 2021. This number should not just make your stomach knot, but also emphasise the importance of a good strategy to reduce the return rate of your online store.
Let’s take a look at some of the ramifications that occur when a customer returns a purchase:
- Lost sale on that item.
- Depending on the product, some may not be able to be resold or may become damaged.
- There are higher costs associated with shipping (both on return and resending).
- Whether you're outsourcing or handling returns in-house, the staff and process infrastructures can become expensive.
The bottom line is that returns are expensive for e-commerce businesses. And with the biggest names in e-commerce (cough cough Amazon) offering free returns, many customers expect returns to be free of charge. Not providing free returns may deter your online store visitor from purchasing a product in the first place.
So, how do you reduce the rate at which your customers return items?
In order to accomplish this, let's first look at the reasons why people return items:
- They received a damaged product.
- Returning a gift they either didn't need or want.
- The product is not the right size or fit.
- The product was not as expected.
- Customers overbuy to see which items they enjoy the best, then return the rest.
- Fraudulent activities.
With all of these reasons described above in mind, here are five strategies you can employ today to reduce your company's rate of return on goods.
5 ways to reduce your rate of return
1. It's all in the details: product descriptions
The Problem: Customers return items because it wasn’t what they were expecting, the item didn't fit, or was not the right size.
If your return questionnaires have a high rate of "not as expected", fortunately for you this is within your control. When a customer shops for a product online, the biggest challenge is the product being sold is not tangible. You can't actually hold an item, feel its quality, or try it on before making your purchase.
The Solution: Improve your product descriptions, imagery, and videos to include as much detail as possible about your product so that your consumer knows exactly what to expect.
While many companies spend thousands of dollars and invest time to make glorified product photos, it's important that these photos don't push it too far. Otherwise, your customers will be disappointed when they receive the product.
Videos are a great way to showcase your products and give more information to your potential customers. There are many ways to use videos for e-commerce.
On top of good product videos, if you sell apparel, include measurements for each size so that potential buyers can make an informed decision on whether the item will fit them. Include information about the model so that your customer can extrapolate how an item may fit on them. Providing various angles of the product from the front, side, and back views is also a great way to give customers a full 360-degree experience.
When selling products like home decor, be sure to include descriptions about the type of material it's made from and photos of the product inside of a room for scale.
Luckily, there are a lot of great e-commerce platforms out there that help you optimize your product descriptions.
2. Use of Chatbots and Conversational marketing
The Problem: Customers see something they like, but have a question about the product they would be receiving. So they overbuy with plans to return the products they don't like.
This is a very common scenario as this gives many customers the "fitting room" experience without any extra costs with exception of having to repackage and make the return. Others do this because they're not sure if a specific product will meet their needs or expectations, so they purchase multiple items to see which is the best match.
While this may be advantageous to the customer, it would be better for all parties involved to just get it right the first time. So how do e-commerce businesses accomplish this?
Solution: Integrate chatbots into your e-commerce site to assist your customers in choosing the right product for them.
Utilizing artificial intelligence tools in business is a great way to scale your customer experience. Take chatbots for example. Historically, they were used to answer basic questions to help automate some customer support. Thanks, to artificial intelligence, AI chatbots like Giosg can now act like virtual assistants. They can help guide customers through their search journey to help them select the perfect option to meet their needs.
Chatbots have become smart, integrating the capability to act as personal shoppers on behalf of your customers. This enhanced user experience will help them purchase the right product the first time, without having to overspend with the intent of returning.
3. Receive Insightful Feedback on Reasons for Returns
The Problem: Your e-commerce business is experiencing a higher than the industry average rate of returns.
When it comes to returns, fraudulent activity is an unfortunate byproduct. In fact, over 10.6% of returns in 2021 were due to fraudulent activity.
So, how do you determine if your customers are just ordering in mass, and returning what they weren't in love with? Or, are they purposefully ordering for fraudulent reasons to take advantage of your return policy?
Solution: Install software that captures customer feedback on why they are making the return.
By having first-hand data, platforms can trend and flag any fraudulent activity to prevent your company from losing more profits. For those good-intention returns, your company can understand why returns are happening whether it’s a defect with a particular product you can improve upon, the expectations are in need of a reset, or the product description needs improvement.
4. Look at your packaging process
The Problem: The customer returns a package thanks to it being damaged.
With delivery so prevalent in today's economy, you need to have your products properly packaged to be able to bear the brunt of being thrown, tossed, and sorted through various machines. Many of us have personally witnessed the hardship that a package has endured before it hit our doorsteps.
The Solution: Take a deep look into your current packaging process to see if anything can be done to prevent future damage.
It's important that you take a look at how your products are being delivered and if they're able to withstand the process. Are items getting damaged in transit? If so, this will lead to more returns as customers will be unhappy with receiving a broken or damaged product. An easy solution to this problem is to find a better fulfilment service if your current service isn’t performing to your expectations.
There are various ways you can reduce packaging costs while still keeping your products safe during transit. One way is to use recycled materials that are just as sturdy but cost less. You could also look into using different packaging methods like inflatable packaging which takes up less space and is more resistant to crushing. Whichever method you choose, this is a highly preventable return, so make sure you’ve exercised everything in your power to prevent damages.
5. Create a return policy and make it transparent
The Problem: Customers expect to have a reasonable return policy, preferably a free return option.
With the expectations of free or very affordable return policies, companies need to be prepared to either be able to cater to these demands by minimizing their returns or be very upfront about their policies. Companies can lose a lot of loyalty and future purchases if customers have to pay to return an item that did not measure up to what they were sold.
Solution: Evaluate what a reasonable return policy would be for your products and make your policy highly visible to customers.
Your return policy should cover items that are damaged, defective, or incorrect. It's important to have a clear and concise return policy that is easy for customers to understand. This will help to manage customer expectations and prevent any surprises down the road.
Your return policy should also be easily accessible to customers. Include it in your product description or have a link to it on your homepage. This way, customers will know what to expect before they make a purchase and there will be no confusion if they need to return an item.
Implementing even just one of these tips can make a big difference in your return rate and positively impact your bottom line. So, take a look at your business and see where you can make some improvements to reduce the number of returns you receive.
If you wish to get more tips on how to grow your e-commerce business read our checkout page optimization blog.