Reducing returns: Tips to keep e-commerce merchandise from coming back
By Laura Gayle, Business Woman Guide - Aug 29th 2018, 16:50
Product returns are one of the biggest challenges for online businesses. Customers can’t see, touch or feel the product before buying it, so the return rate for all e-commerce businesses ranges between 25 to 40 percent. How can you prevent that dent from becoming a deep pit that swallows up your time and money?
Product returns are one of the biggest challenges for online businesses. Customers can’t see, touch or feel the product before buying it, so the return rate for all e-commerce businesses ranges between 25 to 40 per cent. How can you prevent that dent from becoming a deep pit that swallows up your time and money?
Unfortunately, not honouring returns isn’t really an option. Since customers can’t try the product in person, stores need to have a flexible return policy to stay in business. We’ll look at the common reasons for returns and how to minimise them without losing your customers.
How Many Returns Should You Expect?
Global E-commerce revenue will increase from $1.4 trillion in 2017 to $2.1 trillion in 2018, according to Statista. Unhappily, more than 30 percent of those golden sales are destined to return to your inventory – particularly during the holiday season. E-commerce returns can be twice to five times worse than physical storefronts.
Who’s Returning the Goods?
Online clothing purchases have the highest return rates. There are three main culprits who account for the bulk of serial return-to-sender headaches faced by fashion sites. Here are the personas to watch out for:
• The Wardrober: This shopper buys expensive items to wear once and never intends to keep them. They probably can’t afford to own the item and just want to take advantage of liberal return policies.
• The Late-Night Impulse Shopper: This buyer orders goods on a whim, sometimes after a few adult beverages, and regrets the purchase the next day.
• The Fitting Roomer: This shopper wants the convenience of shopping at home but isn’t sure what size or colour they want. You may get a huge order, but most of it will be returned once the customer tries it on and realizes that what looked great on the model doesn’t work for them.
How Much are Free Returns and Free Shipping Really Costing You?
When you have a sale and offer deep discounts, people sometimes intentionally overspend so that they can keep what they want and return the rest without penalty. Offering free returns encourages even higher order totals, so free returns and free shipping are a potent lure and can affect your bottom line adversely when combined with returns.
These incentives dramatically increase sales and can boost your bottom line, but only if managed wisely.
Frequent promotions or sales contribute to high rates. Factor this in when designing promotions to segments that include those most likely to return your products. When you put an item on sale, clients who just purchased the item will return it the take advantage of the better price.
The Most Common Reasons for Returns
A Forrester study commissioned by UPS found that two-thirds of returns are the fault of retailers. Fortunately, these supply-side problems are also some of the easiest to remedy:
• Size issues: Due to poor sizing guidelines, e-commerce returns included a1 in 4 loose-fitting garments 50 tight fitting garment rate. This should decrease as size guidelines are improved.
• Wrong item: 23 percent of returns result from the incorrect item being sent.
• Damaged goods: 20 percent of returns were because the item was damaged when it arrived.
• Reality vs. expectation: When products differ from how they are presented on the website, they are typically returned. Poor photos or descriptions are blamed for 22 percent of returns.
What Can You Do?
The solutions to these problems seem obvious and within reach, but with so much of sales happening on affiliate sites and shipping and other services being outsourced, it’s hard to control every aspect of marketing and distribution. The best thing you can do is look at the biggest money drains and concentrate on patching those holes first.
1. Return policies can’t just be an afterthought. A free returns policy isn’t feasible for some sites. For startups with negative or slim returns, return rates must be relatively low.
2. Make sure product information and photos are accurate. Detailed product descriptions and accurate pictures prevent misunderstandings.
3. Shorten the return window to reduce the impact on operations of late returns.
4. Automate your inventory processes. Automation can improve order fulfillment accuracy. It can also connect marketplaces to order status, inventory, and pricing so that customers know if a product is currently available to be shipped.
5. Develop a “reason for return” survey question. Returns cut into your profits, so it’s important to pinpoint preventable issues. Collecting information will help you find and fix problems.
6. Encourage customers to leave reviews. Reviews help buyers make more informed decisions and can reduce the gap between expectation and reality. You might lose a few sales, but when customers are better informed of the chances of a return are significantly lower.
7. Use the right packaging. A lot of damage can be reduced by making sure packaging is the right size, the right material, and offers enough padding.
8. Offer parts replacement and exchanges. Replacing missing and damaged parts and offering exchanges is often less expensive and can save the sale.
9. Allow in-store returns. If you have physical stores, letting customers bring the item to you reduces shipping costs and speeds up restocking.
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