As we mentioned in our recent post on protecting profits, e-commerce returns can quickly cut into profit margins and negatively impact customer satisfaction and loyalty. Yet as costly as they may be, returns – and how you handle them – are an opportunity to connect with customers and build brand integrity. Proper management of e-commerce returns before and after purchase can give you a competitive advantage in your category and even improve profitability.
In this blog post, we’ll look at strategies to minimize e-commerce returns, create clear and streamlined systems to reduce costs, and build trust in your brand to shore up customer loyalty.
According to the National Retail Federation, consumers returned $428 billion in products in 2020 at an estimated cost of $101 billion. Approximately 20% of products bought online are returned versus the 9% rate of brick-and-mortar stores, and the average return rate on Amazon is 5% to 15% depending on the category.
E-commerce returns happen across all categories, but some have higher rates than others. Women’s apparel has an average return rate of 23%, while beauty products are only returned 4% of the time. Regardless of the rate, nearly two thirds of online shoppers expect retailers to allow returns for up to 30 days. On the plus side, 92% of customers say they will buy from a brand again if the returns process is easy.
Understanding the reasons why customers return items is the first step to reducing e-commerce returns for your products. Major online marketplaces like Amazon often have customers flll out a survey during item returns and exchanges. According to the data, the most common reasons customers give for returning items are:
By adding additional product information and specifications to your listings and A+ content, you can ensure the customer has accurate expectations for what they are buying, thus mitigating many of these common e-commerce returns reasons. But minimizing returns is only half the equation.
When a customer trusts that they can easily return an item, they shop your product line with more confidence and spend more freely. Most retailers issue a refund for the purchase price, while only about 18% offer exchanges or the same amount redeemable for future purchases.
Simply offering returns is not enough, however. The return process itself must be as easy and pleasant as the purchase was.
Here are a few best practices to implement and follow for e-commerce returns:
The data shows free e-commerce returns are appealing to customers, almost as much as other perks like free shipping. If you cannot afford free shipping on every purchase, offering free shipping on returns is a way to attract more customers and increase sales. Not every customer will return their purchase, so your costs will be lower than if you tried to ship every order for free.
The returns experience can also help you build more loyal customers. Most shoppers expect to have a bad experience when making a return, so use e-commerce returns as an opportunity to connect with and delight your customers. Studies show as many as 57% of customers who purchase online have returned items, over half of all customers. With numbers this high, you can’t afford not to engage with customers who make returns. If done correctly, the return process might just be where you win a customer for life.
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