You probably have done everything to differentiate yourself from the competition. You provide fantastic items and top-notch customer support and service coupled with exceptional order fulfillment, which all adds up to the unbeatable value for consumers.
But, is your policy on product returns working against you instead of for you? One main factor that dictates where e-commerce consumers select to shop is the lack or existence of a comprehensive and fair return policy.
Studies have shown that very fair return policies increase sales without any increment of returns. Furthermore, Web Retailer also reports that if your online business has at least forty percent repeat consumers, you’re likely to have fifty percent higher sales than online retailers who have ten percent repeat buyers.
In other words, repeat users are vital to your business. However, returns could be expensive.
Chain Store Age has reported on a study by the HRC Advisory (Human Rights Council) that shows that investments in online business infrastructure such as supply chain updates and online returns take two or three percent off the top of online retail sales.
This investment would hit your bottom line. But, there are methods you could leverage returns to support your e-commerce business’s health and keep your consumers happy.
E-commerce Returns by the Numbers
Your return estimate would depend on the kind of product you are selling and the kind of consumers you are selling to. If you’ve tons of repeat consumers who know your merchandise, as well as your e-commerce returns, are likely to be pretty lower than the average.
However, your e-commerce return average could go by as much as fifty percent above normal at the end of the holiday season. Returned holiday gifts could be a headache for many online retailers.
Besides, shoes and clothing are returned at the highest amount year-round, primarily because consumers often purchase multiple sizes intending to return products that don’t fit.
The average e-commerce return rate
Because of the adaption in e-commerce return estimates, it is a lot tougher to pin down an industry estimate.
In 2016, the CNBC reported that online retailers often have e-commerce returns as high as thirty percent, and clothing sites could see e-commerce return rates as high as forty percent.
It might be painful to provide refunds for almost a 3rd of the orders you ship, and it feels disappointed to pay for return shipping on top of it. However, returns are an essential service you offer for your consumers.
Think of e-commerce returns as the primary core aspect of your consumer retention program. Online reviews are a dominant way to inspire customer trust in your e-commerce business. An online buy is still a risk for the customer.
Two-thirds of users eager to know what is your return policy before they click the purchase button. This is even more essential if you want to expand as international e-commerce. If you create “returns” simple as possible, almost all consumers will purchase from you again.
A 2019 survey by UPS(United Parcel Service) found that online shoppers research their buys and gravitate to shops with transparent policies. The study has found that thirty-six percent of e-commerce shoppers had made a return in the previous 3 months.
And seventy-three percent said that their experience with returns would affect their decision to purchase again from any web retailer. The returns experience can have a significant impact on your repeat sales as the initial sales experience.
What’s the Primary Reason Customers Return Purchases?
All of those Reasons for return will vary by brand and industry. The national survey across all industries reveals that fit is the main reason that tremendous customers return a product, with sixty-five percent of shoppers citing this point for their buy returns.
Product information not suiting the product caused thirty-nine percent of shoppers to return products, and thirty-three percent said they returned items because they looked unique in person. There is also the issue of customers purchasing with the intent of returning.
Across all customers, thirty-five percent are over-ordering when purchasing online. However, the rate is even higher among younger customers.
Among millennials, forty-three percent purchase intends to return items, and for Gen Z, this goes even higher to forty-six percent. This behavior varies by brand and industry.
Besides that, It isn’t likely that customers buying household goods or items like coffee will place orders with returns in mind. This behavior is extreme in the fashion brands, with sixty-six percent of customers saying they ordered more products than they intended to have.
Significantly as CORONA COVID-19 has changed exercise and eating habits, assessing clothing fit could be even more challenging. This could mean customers order multiple sizes intending to return the option which wasn’t right.
How much would the average e-commerce return rate charge your online business?
For that, Shopify has reported that online returns are predicted to cost e-commerce retailers a collective $550 billion.
If you need to understand what that means for your bottom line, then you could take the average online return rate of thirty percent and multiply that by your expected sales volume in the next year.
Do not forget to reduce the cost of return shipping if you pay for it, restocking, and damaged or lost products.
If you have data on your past online returns, estimate the average online return rate for your business. If it is below thirty percent, give yourself credit; you are doing better than most.
If it is higher, it might be the right time to implement some useful strategies to deduct your return estimate. Unless you sell sized products like apparel, any higher online return estimate is a crucial part of your business price.
If you are not tracking your online return rate, it is time to add that metric to the KPIs(key performance indicators) you monitor in your business.
Besides that, A clear understanding of how online returns impact your profit margin could help you keep your online business profitable.
The hidden cost of free returns
Free shipping on online returns is vital as free shipping on the necessary order. A 2012 survey found that ninety-six percent of respondents see free shipping on orders as an incentive to purchase.
Besides, eighty-seven percent prefer to shop at websites that provide free returns.
However, free returns could cost your business. Almost a 3rd of customers purchase extra products intending to return a few of them, according to the research by Barclaycard.
A recent study put this amount higher, at forty percent. The Barclaycard survey has also found that forty-seven percent of customers will not purchase a product if they’ve to pay for return shipping.
These customer’s desires come with hidden costs: twenty percent of e-commerce retailers have raised fees to make up for the expense of online returns.
Returns are an aspect of your overhead. Your costing must cover your overhead as well as your price of goods sold. An honest assessment of your online returns fee would help you determine whether you require to adjust your costs.
The online return experience can win or lose customers
When you estimate the price of a liberal refund policy and free return shipping, do not forget to add the opportunity price of lost business when you make returns challenging.
Many shoppers will not purchase from your e-commerce store again if they’ve a bad experience with online returns. This trend is pronounced among millennials. However, more than half of them would shun your website if you hassle them for a return.
On the other side, if you make online returns quite simple, you could increase consumer loyalty and retention. Logistics Matter reported that customers who return buys are most likely to be repeat consumers.
Almost all consumers who had a great experience with an online return said they would again purchase from the website.
The significant fact that consumers might actually like your business if you recover well from an issue such as a mis-packed or damaged package is called the service recovery paradox.
On top of that, You could utilize this to your benefits with a generous online return policy.
12 Best Practices for Your Online Refunds and Returns
Implementing an acceptable e-commerce return policy is not rocket science. Here are twelve best practices to deduct your e-commerce return rate and also increase customer loyalty.
1.) Your online returns policy should be easy to find
Whatever your online return policy might be. It must be clear enough, easy to find, and easy to read on your website.
Whether it is an FAQ section or a laid out a single page, you must add prominent links that make your online return policy easy to find on your mobile and web site.
Having a worded return policy and more comfortable to find also develop trust with your consumers and leaves less area for frustration as they figure out how and when to make returns.
This trust could lead to increased sales. Besides that, your online return policy’s Clear expectations mean you get some people calling your call center about e-commerce returns, which saves you money and time.
2.) Include crystal clear deadlines in your online return policy
Even though your online return policy was an essential part of the purchasing decision, most of your consumers didn’t expect they will have to return something.
Please do not make your policy so complicated that an advanced degree is needed to make sense of it and provide a deadline, so your consumers get it done.
Do not hide your deadline in the fine print; you should state it prominently in bold alphabets in more than one place on the returns page.
Straightforward e-commerce returns policy that sets expectations for the duration period while which consumers could return a product permits your consumers to understand what is needed in the returns process.
They’re less likely to blame you for the return which goes wrong if they know your return deadline.
You have to keep in mind a clear timeline for returns could also help you predict revenue. You could book the profit for older sales than the return deadline without any fear that you will have to provide a refund.
3.) Accept e-commerce returns via shipment or in-store, if you have one.
Everyone has not both an online shop and a brick-and-mortar store. However, if you do, you will get a massive benefit in consumer satisfaction when you permit buyers to make online returns at your physical location.
Some of your consumers prefer to return in-store, so provide them that option. Additionally, as pointed out by the channel, an in-store return is an excellent opportunity for an up sale.
More than two-thirds of consumers will purchase something else when they come to make a return. When a consumer returns one product, you could show them why another may be better, and you may even convince them to make that buy again with a different approach.
4.) Make return labels easy to print
When you offer an online portal that makes returns easy, you save a lot of time for your customer and you. Let consumers view their orders and choose which products they are returning.
From there, it must just take a click to print a return label.
Making the return operation pretty more straightforward helps your consumers make their returns faster and with less hassle. Quicker returns mean a faster turnaround for you.
By providing your consumers the incentive to easily and quickly return an item, you spend less time with a deducted inventory. That permits you to get your products into another customer’s hands faster.
On top of that, an online returns operation protects you from return fraud. Some co0nsumers would try to take advantage of returns by claiming that everything is inside the return box when it is not.
Others might be pretty confused. To overcome these problems, make a return list showing all the products being sent back. Ask your consumer to print the list and then put it in the box with returns.
This pick-list would help to keep your consumers honest and make it much easier for fulfillment department to determine if the any online return is in order.
5.) Copy your return policy from the pros
You can find out through error and trial what return policies work for your online business. Instead, why not get some experience from the experts – other online retailers?
You will have to tweak many things once you put your online returns policy into practice. But you would get a head start when you develop on the experience of other retailers.
Visit as many e-commerce websites you like and also study their return policies. Steal the aspects you want from successful online retailers to make your own online returns guidelines. BigCommerce has compiled a few great examples and tips to provide you a head start.
6.) Pay for free return shipping.
Returns are one of the most considerable pitfalls for online businesses because the rates could easily add up and hit the bottom line. But free shipping on every return is expected in current days.
As reported by The Web Retailer, eighty-eight percent of customers surveyed charge-free return shipping as “very important” or “important” to their buying decisions. So, while not paying for the return shipping may save you some cash, it can cost you consumers.
If the price of return shipping is a lot much for the business, then get creative. For example, you can state in your return policy that you will pay for return shipping on orders over $50.
This can encourage your consumers to purchase some additional products to bump themselves over the limit while making that you’re not spending more on return shipping than the products’ price.
7.) Illustrate your returns operation
We are all pretty overwhelmed by how much content we require to absorb in our hyper-connected globe. If your online returns policies are spelled out in a webpage of fine print, dense, your consumers’ eyes will glaze over.
This is the opposite of the transparency that is so essential for a successful returns policy. Do what you have to do on your webpages and create your policy easy to understand with icons, graphics, and images. Besides, illustrations provide cues to help your consumers easily understand how the return process works on your website.
A good-designed page about your returns policy is an opportunity to make a human connection with your consumer. Graphics play an essential role in making that connection. You could even utilize graphics to inject a little humor in an otherwise dry subject.
8.) Watch your profit margins.
Returns could erase your profit on sale products, so you should consider a returns policy that excludes items you sell with a steep discount. Ensure that your retail costs include a margin to cover operating expenses. The price of returns is your operating expense, so have that in your rating calculations.
9.) Understand the laws governing returns
Your online return policy isn’t just a good business practice – it is the law. Under United States federal law, you should accept back defective products. Besides, consumers have 3 days to change their thoughts about merchandise that price at least $25.
Additional state laws might apply to the returns policy. Save yourself the embarrassment and the appearance of being shady by keeping on top of the latest legal needs for online returns.
10.) Re-engage customers
Do not consider a return at the end of the line with your consumers. That consumer was interested enough in the business to place an order; there is a good chance you could lure them back. After a return, re-engage with your consumer to keep the relationship alive.
If you control the return right, you left your consumer with a fuzzy, warm feeling. That person can become a loyal and profitable consumer.
11.) Utilize online returns as an opportunity to show consumers how much you care
You may find returns demoralizing and frustrating. However, it will be much better if you never let your consumers see this. Show empathy when a consumer expresses frustration, and you could turn their anger into gratitude. Thank your consumers for doing their part in completing the returns operation.
Your terrific customer service and positive attitude would be a huge factor in turning returns in the future sales and winning loyal consumers.
12.) Continuously update and review your online return policies.
Your return policy should change because online retail changes continuously as well. It is not enough to track your returns; utilize the data you gather to keep your return policies relevant to your consumers and your business. Besides that, If your returns spike, figure out how, and adjust the strategy accordingly.
13.) High-Quality Product Images
Explicit, high-quality images and true to color are significant. The consumer requires to be able to imagine the products without actually seeing the product in person. The ideal way to help them with this is by giving many images of the product: back, front, close up of the garment if it has a design or print, and the apparel on the actual person to see how it sits. If possible, provide a 360-degree viewing ability.
14.) Follow winning online return policies.
- Include a form of the refund process in your policy. Be clear about what type of refunds you provide, such as a refund to an exchange, credit card, or store credit. It’s essential for your consumers to know what type of refund they could expect before purchasing your item.
- Be transparent. Put some links to your returns policy in prominent locations on all pages. List your consumer service contact information on the bottom and top of the webpage. Permit your consumers to track returns and refunds the identical way they track orders. Send email confirmation. Transparency would win you a ton of goodwill.
- Set a time limit for refunds. Providing your customers between thirty and ninety days to send back a buy is a ton of time, in most cases. A duration limit would make your inventory management pretty much more straightforward and deduct your losses on the returns.
- Be flexible. Put a reasonable duration limit on your returns, making a lot of sense for you and your online business – but do not be a stickler. Permit your consumer service reps some discretion. Whenever a consumer wants to return an item on day thirty-two of a thirty-day return policy, honor it. A bit of consideration like this goes a long way.
- Keep it positive. Yes, it’s the return policy. However, it does not have to be full of punitive and harsh language. Keep your tone friendly and light when you communicate the information your consumers required.
Undoubtedly, How to decrease the product return percentage is a hot topic, and it always will be, as nothing hurts more than seeing a successful sale converting into a returned one. It’s a big failure if this percentage is over the normal limit.
Being optimistic, you’ll be able to increase the success percentage, and obviously, your income is also going to increase. The return policy is a must, but you need to be pretty sharp while narrating it, and it should be something that never offends a potential buyer.
The rest of the success story is written up there, and in case you’ve missed a tip or two, it is still not too late!