If you've ever shopped online, chances are you've had to deal with returns. It's just part of the process, right? Well, yes and no. For a consumer, being able to return an item can provide them with peace of mind and confidence in their purchasing decisions.
Actually, eCommerce businesses offering a flexible and hassle-free returns policy is one of the key reasons why eCommerce has grown so rapidly in recent years. By providing customers with the ability to easily return items that don't meet their expectations or requirements, online retailers have been able to build trust and loyalty among their customer base, which in turn has helped to drive the growth of the eCommerce industry as a whole.
The returning problem
But returns are also starting to become a problem for the industry. They are not only costly for eCommerce businesses, but they also have a significant impact on the economy as a whole. When a customer returns a product, the eCommerce company has to pay for the shipping, restocking, and often, a refund. These costs can add up quickly, especially for smaller businesses with tight profit margins. According to a survey from 2022 among US brands, retailers lose 21% of their order values due to eCommerce returns. The total amount of U.S. retail returns was $428 billion in 2020, which represents 10.6% of the total amount of retail sales. Most returns occur in clothing & shoes followed by electronics and accessories. National Retail Federation estimates that the overall rate for returns will increase to $816 billion.
But it's not just the financial cost of returns that is a problem. Returns can also have a negative impact on customer satisfaction and loyalty (and who would not want loyal shoppers?). When a customer has a bad return experience, they are less likely to shop with that eCommerce company again in the future. In fact, according to a study by Narvar, 95% of customers say they are less likely to shop with a company again if they have a difficult return experience.
Of course, making the return process more difficult is not the answer to this trillion-dollar problem, especially if you are trying to build and maintain brand loyalty and high shopper retention rates. Obviously, businesses need a creative approach that will help them reduce the return rates while also not hurting their relationship with their shoppers.
For instance, Amazon recently announced that they are rolling out a warning label for frequently returned items. The end goal is to encourage customers to read the details of the items or reviews carefully before making a purchase. Considering that not having enough information about a product is one of the biggest reasons behind the returns, that’s an amazing solution.
Before moving on to other possible solutions, let’s look at the reasons why shoppers return the products they buy online, shall we?
Why do shoppers return items?
First of all, as per Insiciv's analysis, 73% of returns are caused by retailer actions, such as products not matching the description. This can be due to poor product descriptions, inaccurate images, or simply because the customer had different expectations for the product in terms of quality or fit. Damaged or defective products are another major reason for returns. This can occur due to mishandling by the courier during shipping, poor packaging, or a defect in the product itself. And sometimes it’s all on the supply chain because customers receive the wrong product. This could be due to a mix-up in the warehouse or a mistake made by the courier.
So, what can eCommerce companies do to reduce the number of returns they receive?
Obviously, what needs to be done for damaged or defective products, eCommerce companies should invest in high-quality packaging and shipping materials, as well as conduct quality control checks on all products before they are shipped. Partner with reliable couriers who have a proven track record of delivering products on time and without damage.
Reducing the number of wrong items delivered, on the other hand, calls for robust inventory management which is tracked and updated in real-time, and an automated order fulfillment process to reduce the chances of human error, such as barcoding technology.
The solution is taking action “before” the purchase
But these are actions to be taken for the steps AFTER the purchase. Yet, the best thing businesses can do is to take a look at the steps that occur BEFORE the purchase - which is providing an accurate and sufficient amount of information about an item. The truth is shoppers return 5 to 10% of what they purchase in-store but 15 to 40% of what they buy online. That’s simply because they’re able to acquire as much information as they need about the product to make an informed decision.
What do I mean by the “sufficient amount” of information? Obviously, detailed size charts and measurements for their products, details about the features, and specifications. So, investing in predictive analytics and machine learning to better understand customer behavior and predict which products are more likely to be returned could be a good idea.
Though keep in mind that product descriptions with lengthy texts can be overwhelming for shoppers. According to Animoto's research, users have shown a preference for watching short videos about a product over reading its description, with a fourfold increase in the rate of choosing video over text. So, why not embrace the power of videos in your shopper experience? Storyly Stories, for instance, could be a great solution for delivering product descriptions in the video easily in an engaging, interactive and immersive way. By embedding Stories into your shopping app or your website, you could show how the product and the fabric looks, what sizes and colors are available, how it can be combined with other items, how the shoppers should care for it as well as reviews with user-generated content or influencer collaborations.
Another tactic could be offering virtual try-on or augmented reality features, which allow customers to see how a product will look or fit before they make a purchase, though it requires development efforts. This can help reduce returns by giving customers a better understanding of the product before they buy it.
On a final note, let me share another important statistic: Product returns must be a priority for eCommerce businesses because note that returning an item can take away up to 85% of its value. And according to a survey by Newmine and Incisiv, even a 10% reduction in returns can save $75 million for a retailer with $10 billion in annual revenue and a "low" average return rate of 5%. And believe me, you can make great strides even with simple and easy-to-implement actions like improving the way you deliver product descriptions.