If not managed efficiently, product returns drain any company’s bottom line. This is especially true for eCommerce retailers. Whether B2C or B2B, returns have a big impact on operations. In this article, you’ll get ideas and best practices for reducing returns.
How Much Do Product Returns Cost Businesses?
Companies that sell products online are especially susceptible to high-cost returns: A study by the National Retail Federation and Appriss Retail estimates that 20% of total online purchases are returned, and a ReverseLogix survey of eCommerce retailers found that 80% of respondents said the cost of managing product returns is “significant to severe.” According to Gartner, companies can lose up to 50% of their margin on a returned item.
Case studies of companies impacted by eCommerce returns
eCommerce returns aren’t only a challenge for pure-play B2C retailers: here are two case studies of B2C/B2B hybrid retailers that were challenged with the complexity and cost of online returns. Take a look at their approaches to reducing returns.
How to Reduce Returns for Your eCommerce Business
Putting the right technology in place is critical for optimizing eCommerce returns management; a returns management system (RMS) will support best practices that lessen the likelihood of an eCommerce return. But an RMS isn’t a silver bullet; take note of these recommendations for helping customers find the right item and reduce the chance of an eCommerce return:
Ensure product descriptions are accurate
“Item not as expected” or “Incorrect size, bad fit, or color” are two of the top reasons for making a return. How many times have you shopped online, only to find one image of a product?! The lowest hanging fruit for an online retailer is to have detailed product descriptions.
- Descriptions that include color, feel, dimensions, durability, etc.
- Several images that show off the product from every angle. If apparel, include several model sizes and shapes. For other products, include other items in the photo for a sense of scale.
- Videos are an under-used but extremely helpful tool for shoppers. Preview the item in action or in motion.
Size guides
Detailed, brand-specific sizing guides are ideal for online apparel purchases. Include measurements for hips, shoulders, and length to give customers a better sense of size. Retailers pushing the envelope with AI may even recommend a size based on the customer’s past purchase and return history.
Customer reviews
Go beyond asking customers for a review and encourage them to give a detailed review. Ask them to rank the size, color, fit, and feel of an item so the next round of shoppers have a specific idea of what to expect.
Improve packaging
Are items arriving damaged? If so, take another look at the packaging so that fragile items are protected from a potential return. Repackage them differently or bring your findings to the vendor for resolution.
Analyze returns data for trends & return reasons
One of the most powerful features of an eCommerce returns management system is its ability to gather, analyze, and report on data across the lifecycle of a return. If a particular return reason is common for an item – such as too small or arrived damaged – you can reduce future returns by responding with a better item description on your website or better packaging. In the case of the ReverseLogix customer, Samsonite, its repair centers track which parts are failing more often. This prompts them to order a higher part volume ahead of time so that they are prepared for future returns and can complete the product repair faster.
Halt serial returns
“Bracketing” is the practice of ordering many sizes or colors of the same item, with the intention of returning most of your purchase. eCommerce retailers can mitigate this expensive practice by using return data to improve product descriptions or add website features that give customers a better idea of the apparel item.
To be even more proactive, configure your shopping cart page to recognize when consumers may be bracketing and alert them to the sustainability impacts of returning extra items.
Evaluate eCommerce returns policy
Take a fresh look at your returns policy: Is it realistic for the current economic environment? Does it balance customer expectations with the reality of the resources it takes to manage returns?
Recent studies have found that newly implemented eCommerce return fees are hurting business, but it doesn’t have to be a question of “Fee or no fee?” Think creatively about offering store credit instead of a refund, or incentivizing customers to make a return within the first 10 days of the purchase to increase the chance you can resell the return quickly. Go here for best practices when writing a return policy.
Effectively communicate with customers
Effective customer communication starts with a clearly written return policy that’s easy to find on your eCommerce site. Additionally, the customer portal in which they initiate a return should track the item’s status and deliver automated email or text notifications about when the return is received, processed, and when the refund, credit or exchange can be expected.
Ask customers for feedback on returns
Like the companies noted above that instituted return fees and are now losing customers, eCommerce sites should take cautious steps before making wholesale changes that could catch your customers off guard. Survey customers about their willingness to adapt to new return policies and what they appreciate about your business model today. If you have a loyalty program, consider offering those customers an incentive to submit longer form feedback about their experience.
How eCommerce Returns Can Make or Break Your Business
A return is a chance to engage with a customer and build loyalty by delivering a fast, easy experience.
The impact on brand reputation & customer loyalty
Most customers check a retailer’s return policy before purchasing an item, and studies have found that more than 50% of shoppers wouldn’t buy from a brand that charges a fee for eCommerce returns. It’s important to carefully consider your return policy and potential new fees.
eCommerce companies that offer a fast, easy and transparent return experience can expect to be “paid back” with reduced returns and stronger customer loyalty: 92% say they would buy again from a company that had an easy return process.
A great example of this is Jabra, a global audio technology company that “significantly” improved their customer satisfaction scores after implementing ReverseLogix for a better returns experience. Hear how they improved their return processes.
Managing returns to gain a competitive advantage
Efficient, frictionless returns are good for the customer, the business and the planet. I believe there can be a middle ground that benefits both loyal customers and the company. For example, members of the loyalty club or those who spend over a certain amount could be entitled to free returns. The “best” customers (however a retailer defines that) could qualify for instant refunds or credit, rather than waiting for the item to be inspected at the warehouse.
Making a return is a common occurrence for eCommerce shoppers, and so creating a fast and easy return experience should be emphasized just as much as the purchase experience.
How ReverseLogix Can Help Reduce eCommerce Returns
The ReverseLogix returns management system (RMS) is supply chain software purpose-built for the entire returns process, from start to finish. Unlike other point solutions on the market that focus on one part of the return (like a customer returns portal), we address your needs on the back-end and customer-facing sides.
An RMS is a powerful solution for automating returns & auto-route returns, configuring workflows based on location or product type, and giving your team members a faster, easier way to process returns. Here are a few more ways ReverseLogix stands out among eCommerce returns management software.
Data analytics to identify return causes
An RMS integrates with an eCommerce company’s existing supply chain software stack, becoming the hub of all returns-related data. This gives users an unprecedented view of analytics within every module, queue, and order, helping them make better business decisions.
ReverseLogix RMS data delivers insights into product quality, customer preferences, and potential areas of improvement. Use it to identify and address frequent eCommerce return reasons, potentially reducing the number of returns over time. Point solutions can’t gather data from the entire return lifecycle or give you a view of the full picture; only an RMS can pull all the pieces together to solve the entire puzzle.
Enhanced product information optimizations
Returns data and analytics will reveal quality issues more quickly, so you can get ahead of issues. For example:
- Proactively address quality or material problems with the manufacturer.
- Discontinue products with high return rates and low satisfaction scores.
- Improve product information with more photos, videos, augmented reality, sizing recommendations, and other tools that help shoppers buy the right product the first time.
Customized return policies to reduce unwanted returns
The flexibility of the ReverseLogix RMS allows you to configure return policies based on customer histories and the type of product purchased.
- Did the customer load 5 variations of the same item in their cart? They could be bracketing. After ensuring that you have optimized product descriptions and size guides, retailers may consider adding a small fee for bracketing.
- Members of a loyalty club or those spending over a certain dollar amount could be rewarded with free eCommerce returns, within a certain time frame.
- Incentivize customers to return items to a store or drop-off location rather than mail it in. This makes for more efficient package transport and is often less costly for a retailer to process a return at a brick-and-mortar location.
Return alternatives
A traditional return – accept the product, issue a refund, then try to resell the item – doesn’t have to be the only way. eCommerce retailers are experimenting with alternatives, including:
- Prioritize repairing an item over throwing it away and sending a new product.
- Issuing a full refund if the customer will take a store credit, but a reduced refund if the customer wants cash.
- Accepting older and gently used items for a recommerce program built with ReverseLogix RMS – this can be beneficial for growing a customer base and keeping items out of the landfill.
Use the ReverseLogix ROI Calculate to See your Savings!
The efficiencies, automation and speed from the ReverseLogix RMS will save you time, money, and labor costs. Ready to calculate your eCommerce return savings with our Returns Management ROI Calculator?
