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The Increasing Online Returns Rate and How to Prepare

Returns have been more than just a nuisance to many retail brands; they have been a plague. When products are returned they often can't be sold again at the original price because of damages and value lost over time. Online retailers are hit with more than 3 times the amount of returns compared to physical stores. These returns greatly threaten e-commerce businesses by impacting their conversion rates and profit margins. Just in the united states alone, Statista estimates that return deliveries will cost businesses $550 billion in 2020. The amount of returns is swelling to an incredibly threatening level for many retailers. Multiple sources paint a poor portrait of what's to come. According to Forbes, , this problem is looking to get considerably worse before it gets better. So how can we prevent things from getting completely out of hand and how did we even get to this point?

With so many online retailers offering free returns and exchanges (49%), customers are taking full advantage. Today consumers value convenient hassle-free returns and exchange policies. Some recent studies show that free returns come second to free shipping With so many online retailers offering free returns and exchanges (49%), customers are taking full advantage. Today consumers value convenient hassle-free returns and exchange policies. Some recent studies show that free returns come second to free shipping:

So what can we do?

Because e-commerce retail sales are rapidly increasing so are their return rates. So how can retailers manage this increasing expense? Since charging for returns and restocking fees is extremely unpopular with consumers, it is not in the best interest of your business to add return costs. In fact, studies show that 82% of customers will not make another purchase if the returns process is difficult. It may seem as though the costs of returns are uncontrollable however, there are several ways to manage the rate in which items are returned. While there are serial returners that purchase items with the intent to return that are harmful to your growing brand, most returns are preventable. The most common serial returners are:

Fitting roomers/Bracketers: those who purchase variations of the same product with the intent to return most of them in order to see which one works best and then resend what does not. 40% of customers engage in some form of bracketing.

Wardrobers: These are people who will purchase something with the intention of returning it after one use and then return it, for example someone buys an outfit for a special occasion only to return it the next day. This does not only happen with clothing or accessories this can happen with anything from luxury items to electronics and more.

Social Media Wardrober/Try ons: In the age of social media and influencer culture customers have started purchasing items to wear or display for social media and later return the item once they have posted. They purchase with the sole purpose of trying on and nothing else.

There are ways to track and prevent serial returners from taking advantage of your brand like asking for identification and limiting the number of returns they can make. An estimated 65% of returns are at the fault of the retailer, which is good news! This means they can be reduced! Here are some of the most common reasons customers return their purchases and how to avoid them:

  • Damaged Products: While online retailers surely don’t send out damaged products intentionally, it still happens on occasion. A customer will understandably be upset if a package they were eagerly awaiting was received damaged or defective and will almost certainly return the item. Even if you send an item in perfect condition there is still the possibility that it can arrive damaged. Preventing damaged and defective merchandise from being shipped is crucial in managing your return rate. Some methods of preventing defective and damaged merchandise are; carefully packing all merchandise, using shipping insurance, double checking the quality of any item being shipped, evaluating your warehousing by ensuring there are no environmental factors that could contribute to the damage or defectiveness of merchandise.
  • Inaccurate Product Description: This situation although common, is easy to avoid by simply making sure your product descriptions accurately describe the product. Make sure any questions a customer may have about the product are answered clearly in the description. Provide multiple images from multiple angles in the description. The customer does not get to physically touch or feel the product so your product description has to do that for them. Being misleading about your product is bad business practice and ultimately is costly when it comes to returns and customer loyalty.
  • Incorrect Item Shipped by Merchant: This can be understandably frustrating to a customer that was awaiting their item. To make an error like this is simple, all it takes is any small slip up at any point during the picking, packing, and shipping process. The best way to avoid this is by using an advanced shipping solution software, like ShipSaving (www.shipsaving.com) to keep track of all shipments and orders, to ensure no mistakes are made.
  • Final Words

    You have most likely already felt the impact of returns and their costs. Returns have become the new normal and having the right strategy and approach will help you be prepared for what is to come. These tips along with a liberal return policy, will help to build customer loyalty and profits.


    References

  • https://www.statista.com/statistics/871365/reverse-logistics-cost-united-states/
  • https://www.forbes.com/sites/stevendennis/2018/02/14/the-ticking-time-bomb-of-e-commerce-returns/#330fe0574c7f
  • https://www.walkersands.com/wp-content/uploads/2018/07/Walker-Sands_2018-Future-of-Retail-Report.pdf
  • https://chainstoreage.com/article/report-online-returns-are-big-problem
  • https://wwd.com/business-news/business-features/personas-of-a-serial-returner-1203333197/
  • https://www.returnlogic.com/blog/the-surprising-truth-whose-fault-are-product-returns