Over the last decade, an increasing number of consumers have embraced the convenience of online shopping. As a result, e-commerce has experienced steady growth.
And the COVID-19 pandemic significantly sped up this growth. In fact, while total retail spending has declined this year, e-commerce has exploded. eMarketer predicts e-commerce will grow 18% in 2020.
This is great news for brands that sell online, especially those in categories that have experienced exceptionally high growth. According to Bazaarvoice, those categories include toys and games, food and beverage, health and beauty, and others.
But there’s also a downside to this massive e-commerce growth. Namely, a surge in online orders will almost certainly be followed by an increase in product returns. After all, 15-40% of online purchases are returned, compared to 5-10% of items purchased in-store.
What’s more, the holiday shopping season can account for up to 40% of total annual sales. Having nearly half of those goods and services returned would weigh heavily on your bottom line. So it’s well worth your time to understand the potential cost of returned goods and to be proactive to mitigate this unsavoury reality of e-commerce.
Let’s take a deeper look at the impact of returns on e-commerce brands and retailers, as well as seven practical actions you can take to significantly slash your e-commerce return rates.
The High Cost of E-Commerce Returns
Returns are a headache for brands and retailers. And a costly one at that.
E-Commerce Returns Are Expensive
An analysis from Appriss Retail found that last year, in the United States alone, $309 billion worth of merchandise was returned. Returns from online purchases accounted for $41 billion.
But lost sales are only the tip of the iceberg. Many other costs are associated with product returns.
Take, for example, shipping costs. Today, many consumers expect free shipping and returns. A 2018 study from the National Retail Federation found that 75% of shoppers in the US expected free shipping — even on purchases under $50. And a 2018 survey from Narvar found that 69% of consumers would avoid shopping with a brand if they knew they had to pay for return shipping.
Your brand might pay for shipping both ways to meet customer expectations. But when merchandise is returned, that’s money gone — without a sale to show for it.
Of course, there are also costs associated with receiving, sorting and repackaging merchandise.
Finally, there’s a lot of returned merchandise that can’t be resold at full price — or at all. According to Gartner Research, less than half of returned merchandise is resold at full-price. For example, if a piece of clothing is returned that’s out of season, the retailer will likely discount it. Or if an opened package of makeup is returned, the brand will be forced to trash it. In both cases, the brand is losing money.
E-Commerce Returns Can Damage Your Reputation
Returns can also have a negative impact on your hard-earned reputation. For starters, an unhappy shopper will likely steer clear of your brand in the future. According to data from Happy Returns, a staggering 87% of consumers won’t shop with a brand again if they have a bad returns experience. Having a central, integrated tool for handline returns, exchanges and repairs is key to a seamless process that won’t sour your valuable relationship.
Plus, unhappy shoppers are likely to tell others about their bad experience. They might even write negative reviews about your product or company, which will deter future buyers.
7 Simple Ways to Reduce E-Commerce Returns
E-commerce returns are frustrating and costly to brands. While there’s no way to completely eliminate returns, there are things you can do to decrease your return rates. The key is to provide your shoppers with all of the information they need to make informed purchase decisions.
If you’re looking for ways to reduce your e-commerce returns (and who isn’t), here are seven key actions to take.
1. Enhance Product Descriptions
When shoppers visit a brick-and-mortar store, they have the opportunity to touch and see a product before purchasing. For example, a shopper can try on a pair of pants to check out quality and fit.
But when shopping online, consumers depend on product descriptions to find the items that best fit their needs.
Great product descriptions give shoppers realistic expectations. When shoppers know what to expect, there are fewer surprises when their purchases arrive in the mail. And they’re less likely to return products.
Review your product descriptions to ensure they’re detailed and accurate. And be sure to spell out what is (and isn’t) included. Though it might be tempting, avoid overselling your products. Doing so will result in disappointed customers — and more returns.
A great resource for uncovering unclear product details is the customer Q&A section. If a topic is not covered in your description and warrants one or multiple customer questions, it should probably be added to your product description. We’ll discuss the value of Q&A for reducing e-commerce returns in more detail in tip #5.
2. Provide Plenty of Visual Content
Photos and videos convey information in a way words alone can’t. So be sure you’re providing your shoppers with plenty of visual content. Again, this is an important step to ensure shoppers know what to expect from your products.
Be sure to provide visuals that capture different aspects of a product. Let’s take, for example, this full cover moisturiser from It Cosmetics. While the main image is a photo of the product’s packaging, the brand also includes a close-up shot of the product itself, which gives shoppers a better idea of texture.
This next photo does double duty, helping shoppers understand what the product looks like on different skin tones — and how large the packaging is.
The brand also includes a video on the product listing that provides an even closer look at the product in action.
Remember: while it’s important to show your products in the best light, it’s also critical to make sure your photos and videos are realistic. According to an infographic from Invesp, a top reason e-commerce shoppers return products is because they look different than pictured.
3. Showcase Product Reviews
Before making a purchase, shoppers want to hear about the experiences of others like them. Product reviews provide this insight.
What’s more, reviews (both positive and negative) help shoppers make more informed purchase decisions, which can reduce the amount of merchandise that’s returned to you.
For example, let’s say a customer is shopping for a new pair of running shoes. She does a quick search and comes across this fun pair of shoes that perfectly fit her style. They’ve got an average star rating of 4.5 and lots of great reviews.
Before she adds them to her cart, she takes a closer look at the reviews. A lot of the four- and five-star reviews rave about how the shoes are great for track running. And several of the one- and two-star reviews mention the shoes aren’t great for trail running. The shopper primarily runs on trails. So based on this information, she keeps searching for a pair of shoes that better fit her needs. She finds another pair she loves that are great on trails, and the retailer avoids an unnecessary return.
You can display the review content on your product pages where it’s easy to find and read, regardless of the device a consumer is using to shop.
4. Respond to Negative Reviews
Shoppers write negative reviews for a variety of reasons. But in some cases, the issues that are raised in a negative review are due to user error. When a brand responds with some quick tips or helpful information, they’re helping the customer have a better experience with the product. And that can help the brand avoid an unnecessary return.
For example, this customer wrote a one-star review for a skincare product, indicating it left an oily residue on her face. The brand responds to the negative review with some helpful application tips, as well as an invitation to chat with a consultant for more help. When the shopper understands how to use the product correctly, she’ll have a better experience. And she’ll be less likely to send the product back.
If you’re a Reputation Studio customer, you can easily monitor and respond to all of your reviews from one platform, regardless of where they were written. That way, you can spot negative reviews early on and respond with information that’ll help shoppers use your products correctly — and help you avoid returned merchandise.
Want to learn more about how responding to negative reviews can turn a bad situation around — and prevent unnecessary product returns? Check out this blog that’s full of tips for responding to negative reviews.
5. Empower Shoppers to Ask Questions
If a customer has a question about a product while shopping in a store, they can find a sales associate to ask. But when they’re shopping online, it can be more challenging for that shopper to get their questions answered.
Be sure you’re giving your shoppers ways to ask questions before making a purchase. That way, they’ll have all of the information they need to make informed purchase decisions.
One key way to do this is to add Q&A software to your product pages, enabling your shoppers to get all of their questions answered before purchase. For example, this shopper asked if the arch support can be removed from a pair of shoes. The brand responds by letting him know the insole is removable, but he’d need to put in a different one. After getting his question answered, the shopper has a better understanding of what to expect, which means he’ll be less likely to return the shoes.
Another way to address questions from online shoppers is to add live chat to your e-commerce site. Shoppers will make more confident purchase decisions after chatting with one of your associates. And they may even end up spending more. According to Forrester, there’s a 10% increase in average order value when a shopper engages in a live chat prior to making a purchase.
6. Feature Size and Fit Information
A top reason shoppers return merchandise — especially apparel — is because it doesn’t fit. To reduce returns, it’s critical to provide your shoppers with the information they need to purchase the correct size.
At a minimum, provide an accurate size chart on your product pages. And consider adding an interactive tool that allows shoppers to determine the best size for them, based on other apparel items they own.
Finally, collect size and fit information from customers who write apparel reviews. For example, ask those who write reviews for apparel items to indicate how the item fit — large, small or true to size. Then, display that information on your product pages.
For example, a shopper can see that this pair of pants runs slightly small, based on customer feedback. As a result, they opt to order a larger size than they typically wear. The pants arrive, they fit great and the retailer avoids a return.
7. Analyse the Reasons Your Shoppers Return Merchandise
You likely ask your shoppers to provide reasons for returns. But are you doing anything with this information?
Be sure you’re regularly analysing this data to improve products and experiences.
For example, maybe you notice a lot of shoppers return the same skirt — and indicate it’s because of poor quality. You may want to work with the manufacturer to see how you can improve the product. Or, you might completely pull it.
Or if several shoppers return a children’s toy because it’s not what they expected, there may be an opportunity to enhance the product page with a better description and more visual content.
How You Handle E-Commerce Returns Can Make or Break the Customer Experience
Regardless of how much you optimise your digital shelf to reduce returns, they are bound to happen. It’s a natural part of retail, and you must accept returns to instill the confidence to buy in the first place.
The returns process can be particularly painful when you are a multichannel e-commerce company. It’s only a matter of time before the approach to using different marketplaces, channels and apps to manage orders, returns and inventories in their own silos backfires. For example, two customer service reps could promise the last available replacement item to two different customers at the same time.
That’s why having an integrated system for returns is key to success. Cloud Conversion allows agents to process returns, exchanges and repairs from multiple marketplaces and channels in one central place.
Workflows help automate communication and logistics with a simple barcode scan. The Cloud Conversion solution also shops for the best return shipping rates so you are optimizing your ROI even as you’re processing a return.—
Blog post by Faith Hinz, Content Marketer at Reputation Studio