As an e-commerce store owner, you focus your time and effort on marketing towards and retaining customers. As well that you should: sales are the primary concern of your business.
But many of us forget about what happens after customer fulfillment. Without realizing it, we often neglect the post-purchase aspect of our supply chain - and that can be costly.
Your return rate can have a massively negative impact on your online business. Even if revenues and total sales volumes are high, all of that work is erased once a customer returns the product. A single return does not just cost you revenue, but in fact, increases your expenses in a variety of ways:
1. Loss of Sale - Your original profits are reversed.
2. Outgoing Costs - You must pay the expenses related to the original order fulfilment (e.g. shipping and courier services).
3. Return Costs - You may choose to pay for the cost of return shipping. While the product ships back, you eat the cost for inspection, restocking, and refund delivery.
4. Product Disposition - Used or broken items have a lower value than new stock, and repacking expenses will add up.
5. Time - The time spent by teams to restock, correct payments, confirm product quality for resale, facilitate exchanges or credits, and reorganize order pipelines can create extra indirect drag on company efficiency.
Not only did you lose the sale, but you have to foot the original sales costs plus any return fees. On average, you need three extra sales to make up for the losses of one single return. This year alone, returns will cost companies $550 billion (and that is a whopping 75 percent more than just four years ago!). Returns are killing the profit margins of most e-commerce retailers.
Lowering your return rate is crucial for the health of your e-commerce store. We compiled several practices that you can apply today to help improve the post fulfilment journey of an item. Limit cost, create a smooth return journey for all your products, and provide a better consumer experience. In the digital world of e-commerce, that will turn into more customer engagement with your brand and drive a healthy digital business.
Your products have multiple features, and the look of the item can change from different angles. Your customer desires all of that information. The PowerReviews Snapshot for Ecommerce report found 88% of consumers specifically look for visual content prior to making a purchase. Detailed photos or videos filmed in high definition give your user an accurate description of the product. The buyer can make informed choices when you provide them with the necessary and desired context.
The benefit of high quality images extends beyond a reduction in return rate. A Crowdriff study noted that 67% of consumers say product images are very important when making a purchasing decision. In other words, with proper images your sales conversions will increase, returns can decrease, and the sales journey of a product slims down, meaning less cost and more engagement for your business.
Accurate and detailed photographs of your products are of even greater importance in the apparel and clothing industries. Forbes reported that 85% of consumers plan to return their apparel gifts, and that returns are twice as high compared to other holiday items. The fit and sizing of clothes can be misleading, so contextual photos can make all the difference. Photos that show the product used in several different ways and in a variety of sizes can help reduce churn. Improve your product imagery and lower returns: 22% of returns occur because the product looked different in person than how it was displayed on the website.
Recommendation: Start by adding at least 3 to 5 images for each product. Use several different angles, and be sure to highlight the unique selling feature of each item. If possible, enlist a professional photographer. If you use a hosted e-commerce provider, the zoom function on product photos is a necessary technical integration. If you are self-hosted, consider upgrading to a complete 360 degree view offering, where buyers can get a comprehensive look at your wares.
E-commerce stores have the ability to scale faster when compared to brick and mortar stores. But when it comes to user experience, e-commerce stores are limited. Customers cannot touch, size, try on, or inspect the product itself before the order entry. Instead, online shoppers have to rely on product descriptions.
Detailed product descriptions add to the visual element presented to your user. Additional info such as sizing guides, feature descriptions, the material used, and product construction can impact purchase decisions. The more accurate and up-to-date your write-ups are, the more you can lower your return rate. A Powerreviews study discovered that over half of consumers found failed product expectations as the top post purchase irritation. Product descriptions showcase the exact product your customers will receive, and that will only help limit returns.
Additionally, the product research phase is a critical element of a buyer's sales journey. The more often you appear within the sales journey, the more likely you will create a conversion. A well-built product description not only has increased SEO, but it can be the first contact that grabs the attention of a new customer.
A product with 50 reviews has a 135% lower return rate than products with fewer than five reviews. Plus, before purchasing an item, over 97% of consumers read ratings and reviews. Petco reports that products with visible reviews cut their return rate by 20.3%.
The stats are in: reviews are extremely effective at decreasing the total returns to your store.
Social proof gives powerful confirmation to future buyers about the claims of your product. Even negative reviews increase consumer trust, for the user becomes aware of any potential drawbacks that a product might have. Awareness, even of flaws, still leads to an increase in sales conversions. Return rate significantly lowers if the product meets or surpasses expectations. Honesty is of higher value than perfection, and the social proof that previous buyers deliver is a great way to decrease refunds.
Reviews also tie in directly with customer feedback. A review forum gives insight into customer behaviour, and it is valuable data that no software or analytics program can provide to you. You are able to assess a product for quality assurance, and you can make adjustments to noticeable trends found in a review forum. Flag any issues and make the necessary changes; customer satisfaction will increase.
Recommendation: In our world of digital innovation, customers desire continued communications with a brand. Incentives, responses to feedback, and badges for accurate reviews all help with brand remarketing. Attaching Instagram or social features offer consumer-direct images, and the comments section gives you insight into user behaviour. If needed, integrate a software solution that develops review forums, and include the feedback options on all digital sales receipts.
Developing further upon the review feature, you can use customer technology to eliminate churn. The more support a client feels while purchasing a product, the less likely they will return an item. Even with the most detailed photographs and product descriptions, consumers will still have additional questions for you. Customers who can contact your business (with the convenience of e-commerce platforms) will always minimize your return rate.
You can use several software solutions to automate customer support:
1. Chatbots: If a customer has any question about a clothing item, a chatbot can provide near-immediate answers. Technical support issues decrease on the back-end, and the customer gets the up-to-date and accurate information they need to make a purchase - one that they will not return.
2. Live Question and Answer Software: Solve time and improve convenience with digital FAQ solutions. Upload a list of answers to common questions, or receive alerts when users send in a query. This helps automate the sales funnel, all while increasing brand engagement and trust in the product.
3. Address Correction: There are all sorts of e-commerce solutions you can include to limit errors. Add-ons that confirm addresses decrease returns made by mistake. Courier services or 3PL services can minimize breakages and lost items. Order entry software tracks packages as they return to inventory. Tracking systems provide package delivery estimates to buyers. Consider each of these back-end solutions: the more efficient your business runs, the more support you can offer to the customer.
According to Kissmetrics, it's 7x times more expensive to acquire new customers than it is to focus on the ones you already have. It feels counterintuitive, but creating a consistent and convenient user experience for your current digital customers is much more effective than aggressive sales tactics.
Yes, we want to limit the total amount of returns, but strict return policies can ward off potential buyers. E-commerce shoppers cannot view the physical product itself, so restrictive return policies will deter conversions.
A Narvar Consumer report stated that “More than two-thirds of shoppers say they’re deterred by having to pay for return shipping (69%) or restocking fees (67%).” On the flip side, 96% of those very same consumers stated they would shop again with a retailer based on a good experience.
Returns are necessary and will occur. The idea is not to eliminate store returns, it is to make the customer feel that a return is never needed. Without a customer-centric return process, you run the risk of losing customers. In fact, the opposite is true: you decrease the return rate with a liberal policy. Researchers consider this
the endowment effect, where customers who have a longer and unpressured amount of time develop a greater connection with the product itself. Over the long run, refunds diminish. There are some additional benefits to a customer-first returns process that may convince you: a clear return policy limits fraudulent transactions, decreases attempts at wardrobing, and reduces cart abandonment.
At the end of the day, there are three main reasons why a product is returned:
1. The customer bought the incorrect size or the wrong item.
2. The product did not meet the customer expectations.
3. The item failed to ship, or it arrived damaged.
You can address these reasons with the practices stated above, but post fulfilment errors might still hurt profit margins. Plus, some e-commerce retailers need to scale faster to meet consumer demand. Here is where a reverse logistics platform can help you handle the entire problem of returns.
Reverse Logistics Platforms incorporate advanced return rate reduction techniques so that you don’t have to worry about the post-purchase aspect of the supply chain. Instead of building the necessary time consuming and expensive infrastructure to reduce returns, you can integrate with a return service knowing that your expenses can reduce by up to 30%, without any hassle. Here are some of the key advantages a return service provides:
1. Shipping Infrastructure: Improve the speed and efficiency of all returns by piggy-backing on an established courier service. Enjoy freight rates far lower than an individual business can find.
2. Asset Recovery: Receive items back faster and with less damage. Avoid having a cluttered inventory where returned items sit in limbo. Locate easy to reduce waste, reuse items when possible, and recycle efficiently.
3. Reduce Labour and Tech Resoures: Leave the work to the experts. Product disposition time decreases, and you can integrate your e-commerce store with high-quality inventory solutions that track and monitor incoming returns.
4. Supply Chain Visibility: Receive data trends and insights that can lower your back-end costs. Increase productivity across inbound logistics, integrate with other software platforms, and maintain transparency for all stakeholders across your supply chain.
5. Customer Engagement: Take advantage of a network of drop off points, package tracking, and rapid shipping. Ensure that high-priority clients remain connected to your store, helping improve user satisfaction. Enjoy a larger reach and market share
Returns can hurt your e-commerce business, but they do not need to! Use some of the practices listed above to lower your return rate. You will save costs, all while increasing customer engagement with your store. If you need to scale faster and require a return service, we at Return Bear would be happy to help you solve any return logistic problems. Contact us here for more information.
Let’s be honest. Logistics is hard. The retail industry is at a tipping point with an average brand expecting to lose 8% in margin by 2025 with the growth of eCommerce.
Nobody likes returns! Customers are annoyed by the many process steps involved, from getting a shipping label to driving to the post office. For brands, returns don’t just mean lost revenue but also more costs.
We ranked the best Return Management Software and Logistics platforms so you can select the perfect return solution for your e-commerce business.
Return fraud is the practice of returning items that don’t qualify for a refund. According to a study performed by the National Retail Federation, about 6% of returns are fraudulent.