According to a recent study, at least 30% of all products ordered online are returned as compared to 8.89% in brick-and-mortar stores. Many of our clients operate online stores, from the data we’ve seen with our clients, that number is in the ballpark. Ecommerce returns are very important and if you haven’t given them the appropriate time it needs, today is a great time to start.
While most people think a customer’s doorstep is the final destination for a product, that’s not always the case. Ecommerce returns are a real concern and threat to your business. Last year alone, over $380 billion in sales was lost due to returns. Think about that for a second, $380B! That’s a lot of money, it doesn’t matter how small or large your ecommerce business is, no one wants to see lost sales. If you’re an online merchant, you can’t afford not to have an ecommerce return policy.
As customer expectations evolve, retailers have to keep up, especially around holiday sales (and returns) season. In fact, UPS has dubbed the second and largest spike in returns as “National Returns Day,” which occurred on January 2, 2020 with nearly 2 million packages returned to UPS alone. This was a 29 percent increase over the year prior. Now, volume has increased so much, they call it National Returns Week.
Creating an ecommerce return policy may seem like a hassle — but it’s also a great opportunity to keep happy customers coming back for more.
Returns Can Make Or Break Your Business – Look At The Stats
Believe it or not, how you manage returns can impacts sales, experiences, and loyalty:
- 92% of shoppers say they will buy again if the returns process was easy
- 79% of consumers expect free return shipping, and 49% of online retailers offer it
- More than 60% of consumers review a return policy before making a purchase
- Around 49% of retailers offer free return shipping now whereas 67% of shoppers check the returns page before making a purchase.
- It’s clear that returns can have a huge impact on your bottom line, and for good reason: the nature of ecommerce makes a good return policy a must-have. Unlike brick-and-mortar retail, ecommerce often requires customers to make a purchase decision without ever having interacted with or experienced the product in person.
With that level of uncertainty in mind, it’s no wonder that half of shoppers review a retailer’s returns policy before buying, that goes to show just how important returns are to customers. You’re not willing to take a risk on a size if they don’t have a return policy, right?
Much like a shipping policy, it’s critical to make your returns policy clear and straightforward. Transparency is an integral part of the ecommerce customer experience. There should be no hidden fees associated with returns, and if customers will be responsible for return shipping costs, which can help you reduce shipping costs, make sure that information is presented clearly.
Transparency is equally important once your customers’ returns are on their way back to you or your ecommerce fulfillment partner. Customers will inevitably have questions about the status of their return shipment and refund or exchange. We recommend giving your customers tracking information for their return shipment and/or automatic text alerts once their return has been received and refunded.
Fail to provide the ecommerce return policy that shoppers expect, and they won’t buy. Make the returns process a confusing hassle, and they won’t come back. But create a transparent, seamless policy and process, and you’ll see a boost in brand loyalty — and your bottom line.
State of Ecommerce Returns And 2020 Stats
As online sales increase year over year, so do ecommerce return rates. As we near the end of 2020, here is the current state of ecommerce returns:
1. Customers Expect Free Returns
Like it’s done with two-day and same-day shipping, Amazon Prime has made free returns synonymous with ecommerce for many shoppers. 79% of customers won’t purchase from an online store that charges return shipping fees.
While free return shipping won’t make sense for every business’ margins, offering it may cause a big enough increase in sales that it essentially pays for itself. You have to check your numbers first, check to see how many additional orders you would need to break even on free return shipping, it may just surprise you and can lead to a lot of new sales.
2. Refund Speed Matters
72% of online customers expect a refund credit within 5 days of returning merchandise. Many customers are willing to give you a few days, more patient than one would think. Still, don’t wait to long, doing so can hurt you.
Even with a smooth return process, waiting too long to credit a customer can hurt brand loyalty: 88% of customers would limit or stop shopping with a merchant that took too long to credit the refund. Ensuring a quick return and refund process will keep customers coming back to your store time and time again.
3. It Pays Off To Have A Process
If you just launched your ecommerce solution, it may be tempting to handle returns on an ad-hoc basis. However, as your business grows, investing in your returns process can pay dividends. Your process should make it extremely easy for your customers to make a return, which means making our process simple. 58% of customers say they want a hassle-free return policy, and 47% want an easy-to-print return label.
Penske found that businesses that invest in improving reverse logistics processes see a 12% increase in customer satisfaction and a 4% decrease in cost.
4 Ways To Proactively Reduce Returns
It’s clear that creating a great return policy is important for increasing sales and building customer loyalty. But with the average retailer spending 8.1% of total sales on reverse logistics, it can pay to reduce overall return volume as well.
1. Create Clear Product Descriptions
With online shopping, what you see isn’t always what you get. That’s why 88% of shoppers characterize detailed product content as being extremely important to their purchasing decision.
Giving reliable info about your product upfront can also decrease returns. When what customers receive matches their expectations, they’ll be less likely to return that product. Make sure that the product pages on your website are descriptive and include high-quality, accurate product photos.
2. Increase Return Time Window
Customers expect at least 30 days to return an online purchase. But only 5% of shoppers say they return online orders more than 30 days after a purchase.
Being lenient with return time limits (e.g., a 60-day vs. 30-day policy) can actually decrease returns by creating less urgency around returns for the customer.
3. Conduct Regular Quality Testing
If your product page seems to reflect the product accurately, and you’re still getting a high rate or returned items, there may be an issue with the item itself. Assess the quality of the item, do product testing, and check in with your manufacturer to address any production or quality issues.
4. Identify Trends With Commonly Returned Items
You can also include a quick one-question survey in the returns process asking why a customer chose to return a certain product. If your returns process is easy to complete, customers will likely be happy to select a return reason from a list of preset options.
This can be particularly helpful in identifying a quality issue with a product, such as a fit issue with apparel. For example, if clothing items are being returned because they are too large, you may be able to identify a potential sizing issue with your manufacturer.
Gathering information on the return side can help you identify trends and issues with your products and make the necessary improvements to future inventory.
Building A Competitive Return Policy
Handling returns in-house can be costly and time-consuming, especially for a quickly-scaling ecommerce business. To stay competitive, many direct-to-consumer merchants choose to outsource logistics to a third-party logistics (3PL) company. Here’s why.
Staffing & Scale
Working with a 3PL means your customers’ returns can be handled by a designated staff to receive, assess, and process each item. 3PL staff and operations leverage years of industry experience, knowledge, and best practices to manage returns at scale.
3PL companies help ecommerce brands scale by automating inventory management, order fulfillment, and, of course, returns. This can include providing customers with prepaid return labels, sharing return tracking information, and even supporting integrations that will automatically text return and refund updates to customers.
For apparel companies, the returns management process may require additional steps, from pressing each shirt to in-depth quality assessment to determine if an item has been worn. Apparel companies should consider working with a specialized apparel 3PL, as many 3PLs will not be able to accommodate these requirements.
Preparing For The Holidays
Holiday fulfillment can be a challenge. If you’re seeing a lot of holiday orders coming in, the time to prepare is now.
Return volume during peak shopping season is often more than ecommerce businesses are prepared to handle in-house. Outsourcing to a third-party logistics provider helps keep merchants from falling behind every time there’s a holiday or sales event. This can translate to time and cost savings year-round.
A 3PL can also help merchants create a customer experience that encourages brand loyalty and repeat buyers. This is especially vital during busy shopping times when new customers are forming their first impressions about a merchant or brand.
Holiday Return Strategies
With a prediction of $124.1 billion in ecommerce sales this holiday season, businesses are set to see a huge influx in orders. Unfortunately, more orders means a greater number of returns during the first few weeks in January.
In fact, 5 million packages are returned to retailers in the first week of January alone.
How can you get ahead of the inevitable influx of returns and create a great holiday return strategy?
1. Be Proactive
Before the new year, make sure you have a straightforward returns process in place and that it’s clearly communicated across your website. If you outsource fulfillment to a 3PL, work with them to figure out if and how they manage returns for their clients.
Your 3PL should be able to help automate the returns process in a quick and cost-effective way, including providing your customers with a shipping return label and tracking information once their return is shipped. If your product requires a more complex quality inspection before it can be restocked or discarded, consider having returns shipped directly from your customer to you.
2. Extend Your Return Window
If you typically only offer 30 days (or fewer) for returns, consider extending your window for holiday returns. If you don’t, you risk alienating early shoppers who are buying gifts well in advance of the holidays.
For example, Amazon’s holiday return deadline is January 31 for orders shipped between November 1 and December 31. This gives gift recipients ample time to return unwanted items.
3. Create A Gift Return Policy
How do you currently handle the authorization of returns? Do you require an original packing slip? If so, this can hinder the return process for gift recipients — especially if they don’t want the gift giver to know they’re returning their gift!
Consider letting customers choose a gift option at checkout. Refrain from including packing slips that list prices, or even include a gift receipt with instructions on how to return gifts. Make sure that you clarify your gift refund policy, as well; most merchants (including Amazon) allow gifts to be returned for a gift card, minus any return shipping and restocking fees.
4. Automate The Return Process
With the huge influx of returns after the holidays, automating the return process can make an otherwise overwhelming workload more manageable. One way to do this is by working with a 3PL to automate the reverse logistics process.
You can also automate the customer-facing half of the equation. Whether you keep fulfillment in-house or outsource it, technologies like Thill Inc. has allows ecommerce merchants to create a fully hosted, brandable, self-service returns portal.
Ready to optimize your returns management? Properly managing returns can drastically help your bottom line and your returns process can be automated. To learn how we can help implement in your business, give us a call at (920) 967-9201 or use our contact form.
