Lessening product returns is one of the biggest challenges facing eCommerce businesses globally. Returns not only have inconvenient hidden costs but also harm profit margins, reduce conversion rates, and ultimately affect the brand.
Nevertheless, every eCommerce business must have a clear, comprehensive return policy to maintain high customer satisfaction and loyalty. In fact, how your eCommerce handles returns—both pre and post-sales—can help you define your brand, gain a competitive edge, and even increase profits. This article unveils some practical strategies to reduce return rates, among other information.
eCommerce Return Rates: How to Calculate?
eCommerce return rates are standard across all businesses. In fact, a quarter of all online shoppers return between 5% and 15% of the items they purchase.
Customers in the automotive industry have the most significant problems, with over 1/5th of their goods being returned.
Following closely behind are garment stores (12.2%) and home improvement and homeware retailers (11.5%).
There are also differences in the number of eCommerce returns and the payment method used by a customer: Customers who made an online purchase with a credit card were the most likely to return it. Conversely, those making purchases using a debit card were the least likely.
To find out your return rate, use the following eCommerce return rate formulae:
Net Sales = (Total number of returns/ Total number of Products Sold) x 100
Let’s see an example of this calculation: Say in 2021, you received 2000 orders that you successfully fulfilled. Out of the fulfilled orders, 500 were returned.
So, the return rate would be = (500/2000)x100 = 25%
Please note that most eCommerce businesses have some percentage of return rates and achieving a 0% return rate is unreal.
Moreover, your Rate of Return is a very high-level statistic. And it does not provide an answer to questions such as ‘how’ or ‘why’ returns occur.
For instance, the return rate won’t indicate how many of your returns could have been avoided, nor will it indicate your conversion rate from converting returns to exchanges (which is a good strategy, BTW).
This is why it is advised to always compare your eCommerce return rate to more detailed KPIs like:
Refund rates: (returned units /number of refunds) x 100.
Exchange rate: (Number of exchanges/ total number of orders) x 100.
Why Do People Return Items?
According to data, 20% of products purchased online are returned, compared to only 9% of items purchased in a physical store. So the question is: why do people return?
When it comes to the cause of returning an item purchased online, multiple factors come into play.
- Sometimes, a person will order several items on a whim and choose to keep only one and return the rest.
- Sometimes, a person will simply return an item they purchased online because they’re no longer interested.
- Some customers order multiple variants (colors, size, or configuration, depending upon the item) of the same item and choose only one and return the rest.
Other factors why people return online purchases could include (data from SaleCycle):
- Poor value—7.5%
- Item damaged or broken—80.2%
- Late delivery—7%
- Item did not match the description—64.2%
- Disliked item—37.2%
Zooming into the fashion product categories: Consumer preference-based returns (e.g., size, fit, style, etc.) make up approximately 72% of all returns.
Non-preference reasons (for example, defective) and “not as described” each account for 10% of the total.
Other causes of returns in the outfit segment include:
- Size too small—30%
- Changed my mind—12%
- Defective—5%
- Not as described—5%
- Size too large—22%
- Style—8%
- Other or not specified—18%
Moreover, over half of all shoppers purchase more than they intend to keep. As a result, return programs are becoming more popular as a convenient option for customers to test out or try eCommerce products, increasing overall returns.
The average eCommerce return rate, predictably, is high during peak eCommerce sales periods. For example, holiday season sales.
So you see, there are simply too many reasons why customers choose to return their online purchases, and eCommerce cannot prevent them. But with the correct analytics and data, online retailers can significantly prevent/reduce returns.
How to Reduce Returns in eCommerce?
You have several strategies for lowering return rates and increasing customer satisfaction. Take a look at the following eCommerce returns best practices that can help bring eCommerce returns down to a more manageable level:
1. Ensure your listed products include high-quality images and descriptions
Surprisingly, the number of listings online that feature a single, unclear product image is far more than it should be.
Audit your current eCommerce listings and double-check that each product has high-quality images, a thorough description, and, if required, videos. Ensuring these factors could significantly contribute to fewer returns.
According to research, 9 out of 10 online customers consider product content such as descriptions extremely significant when purchasing. If a buyer buys anything without fully knowing it, you’ve set them up for disappointment and potentially a sureshot return.
Instead of going into great depth on each of your product’s features, concentrate on a few most crucial ones. Studies have demonstrated information overload confuses potential customers and steers them away from converting—so striking a balance is a must!
With enough product information ensured, it is upto the customers to decide whether to buy a particular item or not, and this leads to fewer return tickets.
2. Use size guides and fitting tools
Returns due to the wrong size are among the highest causes of returns for online outfit purchases.
Therefore, assess your present size guides and ensure they’re current and accessible on both desktop and mobile devices. With the right tools to assess the best fit and size, they will be less likely to order wrong sizes and subsequently return them, improving your return rate.
Fitting tools can range from a little slider on the product to virtual room planners that illustrate how furniture will fit into specified measurements and places (i.e., fits as expected or fits larger than intended).
Adding similar tools for fashion retailers will reduce the number of size-based returns and will help prevent buyers from ordering multiple of the same item in different sizes and returning the ones that don’t fit.
3. Offer alternative products during the return process
You may use your eCommerce returns process to recommend/exchange the product for a different color or style or highlight related products that the customer would be interested in.
Customers may appreciate the alternative, and it may persuade them to choose the exchange (or cross-sell for you) versus returning the good. Moreover, with such options accessible, customers can swiftly browse to a better-suited product for their needs if one is available. As a result, they’ll be less likely to buy something on impulse, which will lower your return rate.
4. Request reviews from your customers and reward them for doing so
Design a basic reward mechanism to encourage people to post a review of your product or service. Wherever possible, give them a discount, such as 10% off their next order in exchange for reviews. You can also use free incentive programs to encourage customers to leave reviews and reward them.
Over 93% of shoppers use online reviews to make purchasing decisions, which means that reviews will improve your sales while lowering your eCommerce returns.
This can also assist you in identifying any defects or problems consumers are having with the product and areas of misunderstanding, so you can change your marketing, advertising, or communications accordingly and enhance customer satisfaction and loyalty.
5. Ensure every order is correct the first time
Every eCommerce business faces the problem of sending the wrong item to a customer at some point.
With 23% of buyers citing the wrong item as the cause for their return, enhancing order fulfillment is an excellent place to start if you want to reduce eCommerce returns.
eCommerce businesses that rely on spreadsheets and post-it notes to manage orders and fulfillment are setting themselves up for failure. Instead, implementing a system to handle your orders, pick-up, pack, despatch, and ship is a simple solution to reduce returns.
Hence, you’ll be able to provide excellent customer service, minimize returns due to incorrect items, and avoid mistakes through the supply chain.
6. Make your return policy clear
Any good eCommerce business already has a return policy as a web page. Are you clearly explaining how a customer can return an item?
You cannot understate the benefit of a good return policy. Given that 8 out of 10 customers read your return policy before making a purchase, more than 60% of customers think an easy return experience makes them more inclined to shop from a merchant again.
So, in your next meeting with your web developer, do recheck if you have a functional returns policy page; if you don’t have one, you would want to ensure it is there.
7. Protect your brand against fraudulent returns
While the number of returns rises throughout the holiday season, many returns are fraudulent. You can take the following precautions to protect yourself from fraudulent returns:
- If you find a customer returning items repeatedly for no apparent reason, you can block their payment cards or email from your systems.
- Consider purchasing a fraud protection system to safeguard yourself against chargebacks or use a built-in mechanism on your eCommerce platform.
- Consider having customers sign packages when they arrive and attaching tracking numbers to each product you mail out. This way customers won’t be able to argue that their order was never delivered.
- Ask customers to share their receipts whenever they request a refund. This way, you can double-check to make sure they bought it.
8. Product return rate analysis
Returns analysis system collects all data concerning a product’s return and presents them in easy-to-understand graphics that explain why it was returned.
Whatever the reason for the return, you’ll need to provide outstanding customer service to manage returns and determine the problem. But, again, these analytics could come to your aid in designing a robust return request handling mechanism.
Returns result in financial losses, and if they aren’t managed appropriately, you may lose clients. To avoid these issues, you’ll need to examine your customers’ returns and optimize the process. For eCommerce to be successful in the long run, you must conduct a product return rate analysis.
Final Thoughts and How Can Helplama Help
While some people will always take advantage of your generous return policies, the fact remains that the vast majority of customers would rather avoid dealing with returns.
Taking measures to reduce returns is a sure shot way to increase ROI, improve brand value and customer satisfaction.
Connect with us at Helplama to understand how we can assist your company in reducing high return rates and improve profitability with end-to-end, fully-personalized, virtual customer support services.
Helplama provides outsourced and dedicated customer support with representatives in US, UK, and Australia. eCommerce businesses rely on robust customer support (via calls, chat, email, and the like) to handle various aspects of their operations, including returns.
This is where they benefit from a fully-managed customer care system with Helplama. Moreover, localized teams in some of the world’s biggest eCommerce markets mean we better understand the local clientele and can converse in more local dialects.
As a business owner, you convey your needs and market details; to win over customers is on Helplama.
