E-commerce returns, a formidable adversary, silently sabotaging profits and threatening your business's core. The numbers for 2024 reveal a daunting reality – a colossal $817 billion in returns, a staggering 16% of total retail sales. The National Retail Federation chimes in, estimating a staggering $101 billionas the cost of returns.
For online retailers, it's an uphill battle. Fueled by a growing trend where customers strategically plan to return a chunk of their purchases, returns have become a strategic move rather than an occasional hiccup.
Online businesses are reacting by recruiting, expanding, and specializing, acknowledging that returns are now the new normal, an integral part of the consumer experience. Surprisingly, returns can be a strategic advantage, not a curse.
In reality, mastering e-commerce returns, both pre and post-purchase, empowers your brand, sets it apart, and even boosts profitability.
What is the typical e-commerce return rate?
The e-commerce landscape is a dynamic terrain, and returns play a significant role, with an average return rate ranging from 20% to 30%. Picture this – for every 100 products sold, 20 to 30 find their way back. The culprits behind this dance of returns? Customer dissatisfaction, sizing mishaps, and products not aligning with their online descriptions.
The state of e-commerce returns
Industry-specific e-commerce return rates
E-commerce returns are an omnipresent challenge cutting across all industries, an inevitable part of the retail world. As of 2022, reducing returns has become a top priority for businesses, driving the adoption of E-commerce returns management software.
According to the National Retail Federation, the impact is tangible: for every $1 billion in sales, retailers face a hefty $165 million in merchandise returns. The battle against return fraud adds complexity, with a loss of $10.40 for every $100 in returned merchandise accepted. The NRF's 2022 survey reveals a 43% year-over-year jump in expected fraud, reaching 14% from 9.8%, even when a receipt is present.
Delving deeper, consumer preferences in returns by category are telling – 26% highlight clothing as the most returned purchase, trailed by bags and accessories at 19%, and shoes at 18%.
Why do consumers return products?
PowerReviews unveils the psyche: a staggering 81% return items due to damage or defects. The intricacies of customer decisions unfold:
- Item Doesn't Fit (75%)
- Item Doesn't Match Description (56%)
- Don't Like the Item(s) (33%)
- Ordered Multiple Items/Sizes (14%)
- Item Arrived Late (11%)
E-commerce returns and the holiday season
The seasonal dance reflects the rhythm of peak sales in the dynamic world of e-commerce returns, particularly during the Christmas season. The holiday online sales ended With an amazing $240 billion in internet sales in 2022. The subtle balance between Christmas purchasing enthusiasm and post-celebration returns is revealed by annual return rates, which average roughly 17.9%.
As the calendar flips to December, January, and February, the return tale unfolds. Gifts deemed unlikable or the aftermath of holiday-induced spending splurges contribute to this surge. E-commerce brands become adept at navigating this delicate dance, aligning with the nuanced preferences and financial recalibrations of their customers during this seasonal ebb and flow.
Returns and its effect on consumer loyalty
The impact of returns on customer loyalty is akin to a ripple effect. A seamless returns experience, marked by transparency and efficiency, becomes the linchpin for fostering lasting customer loyalty. When businesses prioritize hassle-free returns, customers not only feel valued but are more likely to remain loyal patrons.
However, missteps in the returns process can send ripples of dissatisfaction, potentially eroding the bedrock of customer loyalty. This reality is underscored by data, revealing that nearly 80% of US online shoppers are less likely to return to the same retailer after a poor returns experience. In the turbulent waters of e-commerce, securing customer loyalty demands not just product excellence but an impeccable returns experience.
Strategies for managing e-commerce returns
Return the item to your warehouse by mail
In e-commerce returns, the crucial post-item return to your warehouse significantly impacts customer loyalty, particularly for brands without physical stores. When customers want to return online purchases, the norm is a straightforward process—sending it back to your warehouse or fulfillment center. Here, the merchandising department steps in, inspecting and confirming refund eligibility.
To enhance efficiency, e-commerce businesses turn to return management applications. These apps not only save time but also offer customers real-time return status updates and automatically update inventory systems. Streamlining this post-return warehouse process goes beyond logistics; it's a strategic move to fortify customer loyalty in the fiercely competitive e-commerce landscape.
Return goods to the retailer
For e-commerce brands with a physical footprint, the choreography of returns extends to the strategic act of returning items to the store. This seamless integration into the brick-and-mortar realm offers a unique advantage in fortifying customer loyalty. When customers opt to return items to a physical store, the experience is often more personalized, fostering a sense of connection and immediate resolution.
This in-store return journey becomes a powerful tool for building lasting bonds with customers, transforming a return into an opportunity for positive engagement. Harnessing this facet of the returns process not only contributes to customer satisfaction but also strategically positions the brand to stand out in the competitive landscape of e-commerce.
Reverse logistics outsourcing
In e-commerce, the strategic outsourcing of reverse logistics transforms the returns process, optimizing efficiency and enhancing customer experience. Specialized third-party logistics (3PL) partners manage the entire order fulfillment, including returns, streamlining operations, and ensuring a hassle-free journey for returners.
These providers store a retailer's inventory in a third-party warehouse. When a customer returns a previously shipped item, it's inspected and processed for a refund by the 3PL team. The approved item is then restocked for future orders. This strategic move, beyond logistics, becomes a cornerstone for solidifying customer loyalty. Embracing outsourced reverse logistics in the competitive e-commerce landscape differentiates brands, fostering enduring connections with their customer base.
Best e-commerce return management software
Selecting top e-commerce returns management software is crucial for efficient returns management. This strategic decision isn't just about managing returns; it's about optimizing the entire process. Leading software solutions offer a comprehensive suite of tools, guiding businesses through the entire returns journey with a focus on seamlessness and customer satisfaction.
These platforms empower businesses to effortlessly track returns, maintain transparent communication with customers, and efficiently process refunds. The best returns management software surpasses transactional functionalities, integrating analytics to provide valuable insights that elevate customer experience and inform strategic decision-making. Navigating the intricate landscape of e-commerce returns becomes more agile with a strategic investment in superior software, streamlining operations, and positioning the brand as an industry leader committed to customer-centric excellence.
Persifund Return Management Software
Persifund is an e-commerce returns management software for Shopify sites.
Persifund emerges as a beacon for streamlined returns management. This top-tier e-commerce returns management software encompasses the entire post-purchase journey, from order tracking during fulfillment to offering flexible return options for merchants.
Alireza Alipour, a spokesperson for PersiFund, emphasizes the pivotal role of automation tools in enhancing the post-purchase process for merchants. By consolidating various tasks into one powerful tool, PersiFund facilitates the seamless management of return policies, data gathering, and brand cohesion. This integrated approach allows merchants to focus on revenue growth while minimizing operational complexities. In the competitive landscape of e-commerce returns, PersiFund stands out as a holistic solution, ensuring a hassle-free and on-brand experience for both merchants and customers.
The Most Effective Techniques for E-Commerce Returns
There are still things you can do to limit the amount of returns you handle now that we know the method for managing e-commerce returns and the alternatives open to you. (After all, it is the ultimate objective. Fewer returns result in happier customers and more income.).
Here are six best practices for e-commerce returns to increase productivity and save expenses.
Provide precise and accessible product information
Ensuring that product information is accurate and easily accessible emerges as a crucial step to minimize return rates and enhance customer satisfaction. Standard practice dictates a thorough check of all public-facing content, particularly product descriptions, as any discrepancies upon delivery significantly elevate the likelihood of returns.
To curb returns and elevate conversion rates, it's imperative to include the following information prominently on every product page throughout your e-commerce site:
- Product weight and dimensions
- Materials used in product construction
- Size guides, including the size a model is wearing (if applicable)
- E-commerce returns policy, detailing return timelines, associated costs, and eligible product types
As exemplified by Rothy, highlighting returns policies on each product page not only aids in reducing returns but also serves as a conversion booster.
For Supplement Warehouse, addressing return reasons involved making product labels large and visible on product pages, and ensuring customers are informed about specific ingredients.
Automation, utilizing tools like Low Stock Alert, proves instrumental in preventing errors due to manual management, ensuring accurate and up-to-date product information and ultimately enhancing the overall customer experience.
Utilize AR and 3D on your e-commerce site
In the realm of e-commerce, the absence of in-person interaction poses challenges, especially concerning sizing and visualizing products. However, leveraging Augmented Reality (AR) and 3D technology presents a transformative solution. These technologies empower online shoppers to virtually experience products, mirroring the advantages of in-store shopping. Retailers, recognizing the potential to mitigate return orders, have integrated AR to showcase how products look when worn or placed in a customer's living space.
A noteworthy example is Gunner Kennels, who, faced with the challenge of customers determining the appropriate size for a dog crate, turned to Shopify Plus for a solution. Implementing 3D models of its crates, Gunner Kennels enabled buyers to visualize the crate next to their dogs, significantly reducing return rates by 5%. This investment in 3D and AR technology not only decreased returns but also brought substantial returns in terms of enhanced cart conversion rates (3%) and order conversion rates (40%).
Embracing 3D/AR technology emerges as a best practice in the e-commerce landscape, offering a tangible way to address sizing concerns and elevate the overall customer experience.
Pack and send goods safely
Safeguarding Customer Satisfaction: Secure Packing and Shipping as a Return-Reduction Strategy.
The journey of an item doesn't conclude once it departs the warehouse; its arrival at the customer's doorstep is a pivotal moment. Faulty or damaged items, often leading to returns, are not the result of intentional oversight but can occur due to mishaps during transit. While the role of the delivery carrier is significant, proactive measures can be implemented to diminish the likelihood of items encountering damage en route, thus reducing return orders.
A thorough pre-dispatch inspection of every clothing item ensures it meets quality standards before reaching the customer. Employing protective materials, such as bubble wrap, within delicate packaging provides an additional layer of defense against potential damage. Incorporating Fragile labels on parcels containing breakable items, like glass, serves as a cautionary measure for both carriers and recipients. Utilizing the correct parcel size prevents items from jolting around during transit, maintaining their integrity.
In the complex dance of e-commerce returns, the strategic choreography of secure packing and shipping emerges as a best practice. By prioritizing the protection of items in transit, businesses can fortify customer satisfaction, fostering a seamless and damage-free delivery experience.
Ensure the sustainability of your returns procedure
In an era where environmental concerns are at the forefront, reshaping return processes to align with sustainability is not just a trend but a responsibility. Many return processes fall short of eco-friendly standards, with the fashion industry alone contributing to a staggering 10% of global carbon emissions through its return practices.
Reducing the frequency of returns directly translates to a diminished carbon footprint for e-commerce brands. Fewer returned packages mean less fuel consumption and resource utilization in the reverse logistics pipeline. While returns are inevitable, adopting a sustainable approach to the e-commerce return policy can make a substantial impact. One notable practice is eschewing the inclusion of prepackaged free-return labels in parcels, a seemingly convenient but environmentally costly gesture. Instead, encouraging customers to generate their labels online when necessary not only minimizes waste but also fosters a more sustainable and responsible returns process.
In the pursuit of a greener footprint, the conscious integration of sustainable return practices emerges as a best practice, aligning e-commerce operations with ecological responsibility.
Keep customers up to date on the status of their return
In the realm of e-commerce, brand perception is a delicate dance that can significantly impact consumer decisions. A single social media post detailing a frustrating return experience has the potential to sway prospective customers toward or away from a brand. When refining reverse logistics processes, the pivotal question to consider is whether the design prioritizes customer experience over operational efficiency—ideally, it achieves a harmonious balance of both.
Prioritizing the customer journey involves real-time communication. Keeping customers informed about the status of their returns, preferably through channels like Facebook Messenger or SMS, fosters transparency and confidence. Utilizing an Order Management System (OMS) that supports such communication channels enhances this experience. Additionally, actively seeking feedback and ratings on the returns process unveils valuable insights, allowing businesses to differentiate themselves in a competitive landscape.
Choosing a shipping carrier that provides tracking information further contributes to customer assurance. Supplying tracking numbers allows customers to monitor the return parcel's location. Upon its arrival at the warehouse, an automated message confirming receipt and offering an estimated refund processing time solidifies a customer-centric returns approach, fortifying brand loyalty and satisfaction.
E-commerce returns are unavoidable, but they can be managed
E-commerce returns, constituting over 16% of online purchases, demand strategic attention rather than neglect. While vigorous efforts to minimize returns are commendable, acknowledging their inevitability is equally crucial. Prevention measures, such as accurate product descriptions and secure packing, are instrumental, but a few returns are an inherent aspect of the industry.
Effective communication with customers throughout the return process is paramount. Opting for sustainable practices and mitigating fraud risks through online store credit contribute to a comprehensive returns strategy. For retailers grappling with the intricacies of reverse logistics, outsourcing to third-party logistics (3PL) partners can offer a timely and efficient solution.
Recognizing that the returns process is a pivotal point in a customer's journey, its significance echoes beyond a mere transactional conclusion. Balancing preventive measures, customer communication, sustainability, and fraud prevention ensures that while returns are inevitable, they remain manageable, enriching the overall customer experience.
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