How Do I Lower Our Ecommerce Return Rate?
In the US, product returns account for a large share of total retail sales today. According to the National Retail Federation, 17.6%, or $247 billion, of online retail products were returned in 2023. You may never stop product returns completely, but a high return rate damages the bottom line and strains the reverse supply chain.
A clear return policy helps. It answers customer concerns and makes product returns easier to manage.
This article outlines strategies to reduce product return rates in your e-commerce business, for a better experience for you and your customers.
Causes of High Product Return Rates
Knowing why return rates are high helps you spot trends and act before they grow. There are only a few main causes, which makes them easier to manage.
Here are some of the major causes:
1. Product Related Reasons
23% of product returns are due to the wrong item being sent, but that’s not the only problem. Product defects are a significant cause of product returns. Inaccurate product descriptions cause returns too, and in fashion, sizing remains a problem. All of these trace back to the business and account for a large share of returns. They can also hurt customer loyalty and customer lifetime value.
2. Customer Related Reasons
Many of the reasons customers return products are outside the retailer’s control. Return fraud is a common issue, as are buyer remorse and wardrobing (when customers purchase multiple sizes and colors to keep just one). Unsuitable gifts are also returned by the people who receive them, mostly after a peak buying season.
There are still ways to manage this, such as offering opportunities to exchange the items with discounts or offering store credit rather than giving a full refund.
3. Operational Reasons
Operational failures, such as long delivery lead times or poor packaging that leads to damage, also cause returns. For example, an order that takes three weeks to arrive because of a forwarding mix-up, or a television that arrives broken, is likely to come back.
Why Reduce Product Return Rates
An unchecked return rate puts pressure on finances and operations. Here are three reasons to reduce it.
1. Financial Benefits
By reducing the return rates, the business can save on return costs, including logistics and transportation expenses involved in the reverse logistics process of collecting customer items and sending them back into the supply chain. It also protects profit margins, because some returns come back damaged and cannot be resold.
2. Operational Benefits
Fewer returns take less time and fewer resources, which frees them for other parts of the supply chain. Working to reduce returns also shows where product quality, packaging and logistics can improve.
It also makes it easier to bring returned products back into inventory and to track them.
3. Enhanced Customer Experience and Customer Satisfaction
Customers want the option to return items, but they would rather not have to. A better return experience and fewer reasons to return both improve customer satisfaction. Ways to do this include improving product descriptions, improving packaging and quality of the products, offering pre-orders on products, and having a strong order fulfillment system that eliminates delivery mistakes.
Strategies for Reducing the Product Return Rate
Return prevention benefits any business, including brick-and-mortar stores. Which strategies matter most depends on how the business operates.
Here are some of the strategies:
1. Provide More Information
Information helps customers understand each product before they buy. That includes product descriptions, sizes and guides on what the product does. Online shoppers cannot see or handle the product, so the information has to do that work.
Good information gives customers a clear picture of each product and what to expect, so they do not buy with the wrong expectations. Part of that information is a clear and user-friendly returns policy that details the business’s returns process, including acceptable returns and the refund process. It prevents misunderstandings about the returns experience.
2. Enhance Quality Control
Returns of defective products are among the most expensive, because the item cannot be resold and the business takes a total loss. Put strict quality control in place and inspect products before shipping, so defective or damaged products do not reach customers.
3. Use Customer Feedback
It makes sense to shape the operation around what customers tell you. One way to do that is with technology such as ReverseLogix RMS to collect and analyze how customers react to each process and where they think you can improve. Customer feedback does two things at once: it improves the customer experience and reduces the product return rate.
4. Optimize Order Fulfilment, Shipping, and Returns Management Process
A well-run storefront is not enough without accurate order fulfillment and a reliable shipping process. Shipping accuracy has a direct effect on return rates. Improving both means integrating technology solutions such as WMS, TMS, and any inventory management software with platforms like ReverseLogix RMS, so both processes are more automated and handle more volume.
Two Approaches for Product Returns: Avoiding Returns vs. Preventing Returns
At ReverseLogix, we work with companies that approach returns with an avoidance mindset, a prevention mindset, or both.
Avoiding Product Returns
This happens when a customer requests to return a product, but the company finds a way to avoid the return. For example: a customer received an appliance that had a slight dent or scratch. Instead of approving the return request (and spending the labor, shipping costs and transportation emissions needed to exchange the appliance), the company offers the customer a discount to keep it.
Everyone benefits: the customer saves money, the retailer avoids the return, and there’s no extra waste, materials or emissions resulting from a product exchange.
Preventing Product Returns
This approach aims to stop returns before they happen by prioritizing tools and tactics to help the customer make the right choice the first time. These tools could include better product photography, videos, sizing guides, virtual dressing rooms, or other virtual reality tools, such as ones that help a customer envision a dining set in their kitchen or a pair of glasses on their face. With better information and the ability to virtually test or visualize an item, the customer is more likely to make a good decision and less likely to return the product.
Ideally, your company would employ both product returns avoidance and product returns prevention approaches for managing product returns: You would equip customers with tools to make the best decision the first time, and you would think creatively about ways to avoid a product return (without leaving the customer to dispose of the item).
Both approaches reduce cost and environmental impact:
- Less waste for packaging and shipping product returns back-and-forth with the customer
- Fewer emissions and less pollution from transport
- Less time and labor responding to, tracking, receiving, and completing the return
The Myths Surrounding Product Returns Avoidance
Three common myths about avoiding returns can harm your business.
Detailed Product Descriptions Will Stop Product Returns
Detailed product descriptions are important, but they won’t stop all returns. Even with clear explanations, customers may change their minds or find a product isn’t what they expected. Good descriptions reduce product returns but won’t eliminate them.
Perfect Products Will Prevent Returns
Even a perfect product won’t prevent returns. Sometimes, customers have personal reasons for sending items back. These reasons may have nothing to do with the product’s quality. A strong product is important, but you must still be ready to handle returns.
Overly Generous Policies Encourage Customer Returns
Some businesses fear offering a generous return policy will yield more returns. This isn’t usually the case. A good return policy builds trust and improves the overall returns experience. Customers are more likely to shop again if they know they can return items easily, which improves customer retention.
Reducing Product Return Rate With ReverseLogix
Reducing the product return rate requires a strong return management system. One option is ReverseLogix. Features like automation, analytics and tracking, integration, and repair management in ReverseLogix help you streamline your returns process and lower return rates. Get a demo today.
Frequently Asked Questions
Q1: Are there ways to make sure customers order the right size?
Yes. Try including detailed size charts and consider tools like virtual try-ons or fit predictors. You could also showcase how the product fits different body types in your images.
Q2: I’m worried about returns hurting my profits. Any advice?
Absolutely! To prevent returns, focus on improving product quality and providing accurate descriptions. When returns happen, efficient processing and potential product refurbishment can help recoup some costs.
Q3: My products are high-quality, but I still get a lot of returns. What else can I do?
Consider your return policy. If it’s too lenient, it might impact customer expectations negatively and encourage unnecessary returns. You could also look at how you package your products to minimize damage during shipping.
Q4: Can technology help me reduce my return rate?
Yes! A returns management software can help you streamline the process of managing returns. Beyond that, it gives you insights into why customer returns are happening and can help you predict which items might be returned more often. With tech solutions like RMS, you can reduce return rates and manage returns seamlessly.
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Discover how you can jump-start your returns management efforts with ReverseLogix.
