In this age of information and technology, online shopping has become one of the most popular hobbies of people. According to global statistics, there were 2.64 billion online shoppers in 2023. This whopping number of online store users has also paved the way for ecommerce stores to shine. But of course, no online purchase is perfect. Returns and refunds have also become a part of ecommerce.
Ecommerce returns can have negative impacts on both online retailers and their consumers. Product returns, when not managed properly, can result in unpleasant feedback, and worst, losses. This article will serve as your guide to making the return experience for your consumers hassle-free. By following these ecommerce returns best practices, you can make online returns easier, and create better leverage for your business. Keep reading.
What is Ecommerce Return?
Also called “reverse logistics”, ecommerce return is the process of returning a specific product to its sender. In online shopping, ecommerce returns happen when consumers return their items due to quality or quantity-related reasons.
What is the Ecommerce Return Rate?
Based on data presented by the popular ecommerce site Shopify, the average return rate for ecommerce was 17.6% in 2023. This means that out of 100 items sold, 18 were returned.
Luxury online stores experience return rates as high as 40%.
High return rates can cause serious losses to businesses. For example, returns cost an estimated $550 billion in 2020.
10 Best Practices for Your Ecommerce Returns that Will Bring Advantage to You and Your Customers
1. Utilize automation to handle ecommerce returns efficiently.
Automation is the ultimate game-changer for ecommerce stores to achieve a hassle-free return process. With the availability of advanced software solutions, you can help customers easily return the goods while monitoring each step. These software solutions also provide an enhanced customer experience by automating processes like return requests, return label generation, inventory updates, and communication with customers.
Apart from these features, you can also process returns and effectively track the shipment of returned items. By implementing this type of technology, extracting data will also be easier. Likewise, your customers can continue a valuable relationship with your brand.
2. Make the most out of data analytics to properly manage returns.
To identify the best solutions and reduce your e-commerce RETURN rates, analysis of return data is important. Each return might have a different cause from another. This means that you have to properly analyze the types of products that are commonly returned.
Along with this information, gather the usual reasons why customers return the said product type. By identifying these two important data, you can have a clearer view of what you should improve in your ecommerce website. You can also use these data to reduce the number of returns and enhance your overall operations.
3. Communicate your return policies clearly – every customer should understand your ecommerce return policy.
Make returns easier by communicating your return policies in a clear, concise way. An efficient and effective returns process starts with knowledge between two parties (seller and customer). When your policy is vague or not readily available on your platform, this could cause frustration to your customers.
A data from Invesp found that over 67% of consumers check a store’s return page before making a purchase. This means that you are responsible for ensuring that your return policy is easily comprehensible for all customers. When customers understand your return policy, easy returns are always possible.
You might also want to consider researching the federal laws regarding product returns, as this may vary per state. If you are a startup ecommerce store, it’s recommended that you consult a lawyer to avoid legal problems in case of complicated return cases. Despite providing a seamless returns policy and process, most stores suffer from return fraud. This is why having a well-written return policy is crucial in protecting your business and your consumers.
4. Arrange and implement effective quality control measures.
As we mentioned earlier, quality and quantity are two of the most common causes of product returns in ecommerce. In 2023, research found that around 81% of products are returned because they are either damaged or defective. Implementing stringent quality control measures as well as packing solutions can help reduce your ecommerce return rate.
For fragile items like gadgets, electronics, and appliances, make sure to monitor their quality before safely packing them. While logistics companies offer insurance for damaged goods, the stress that a damaged item could bring to a customer can’t be reversed.
5. Optimize reverse logistics to encourage efficient return processes.
Handling returns can be stressful. To cut the stress brought by several returned items, optimizing reverse logistics is a must. You can do this by dividing the returns process into specific categories such as receiving, inspecting, sorting, restocking, ecommerce warehousing, and disposing.
Sure, setting up a designated site for this process can be costly. But the long-term benefits of having a well-optimized reverse logistics process are worth every penny.
6. Set up a sustainable returns management system.
This best practice for ecommerce returns benefits not only the sellers and customers but the environment as well. Creating sustainable ecommerce returns solutions is one way to reduce the cost of returns and save the environment as well. You can start by encouraging customers to carefully unpack the items to keep their original packaging and reduce waste.
It is also a nice touch to attach a reminder to returned items packaging about your brand’s sustainability advocacy. Of course, you may also opt for highly sustainable and recyclable packing materials like old newspapers and magazines and paperboard. Depending on the item ordered, you can use some of the safest, most environment-friendly materials to make this little movement possible.
7. Provide accurate product photos as well as descriptions.
Not every expectation vs reality moment is funny. Most especially, if it involves a product that you bought with your hard-earned money. The likelihood of returns due to this type of experience is high, so it’s crucial for you to address this. You can help your customers manage their expectations by providing them with accurate photos of each product.
When we say accurate, we also mean high quality yet unaltered. It is also necessary that you include a complete description of every product. Its features/specifications, handling and cleaning tips, and inclusions should be present. Setting expectations is a way for you to show transparency and honesty to your consumers, so make sure not to give them another disappointing experience.
8. Reduce return rates by providing alternative solutions.
If you are a customer who received a slightly loose pair of shoes worth $12, would you return it, or would you accept a $20 gift card? This is the type of deal that ecommerce stores should offer to minimize the impacts of returns on business. While free returns / free return shipping is the most common practice that stores offer, it is always an amazing option to offer a better deal.
In this case, ecommerce stores offer gift cards, exchanges, or store credit that cost a little more than the original item’s price. With this kind of practice, you can avoid losses and even encourage customers to make bigger, pricier purchases. Remember that returns aren’t the only option available out there. Be creative in providing alternative solutions and make your customers feel valued.
9. Encourage customers to leave feedback and reviews to reduce the likelihood of returns.
Whatever your business is, feedback matters. You can easily get feedback from your customers by enabling customer reviews after every purchase. Online shopping platforms like Shopee encourage customer feedback by giving coins for each review. Reviews with photos or videos earn more coins which customers can use for their future checkouts.
This is a practical way to learn more about customer behavior, their preferences, and the factors that influence their purchases. Once you know the common issues that they encounter with specific products, you can make creative solutions to prevent them. You may also motivate your customers to leave reviews by offering discount vouchers or freebies with low minimum purchases.
10. Try retargeting and remarketing + get updated with the latest Ecommerce trends.
If even after having a generous return policy, you still have a high return rate, it’s time for you to reevaluate your market. Returns can be costly, and it could bring plenty of long-term problems to your business. Analyzing whether you’re catering to the correct market is highly important. You may also try reinventing your product offerings, or scale your brand up or down, depending on the demand. Trying new marketing and promotion tactics is also a nice way to keep up with the changing preferences of people.
How is the Ecommerce Return Rate calculated?
Calculating the ecommerce return rate can help reduce product returns and evaluate your store’s performance at the same time. The return rate represents the percentage of products returned by customers compared to the total number of products sold. Here’s a step-by-step guide to calculating an ecommerce return rate:
1. Collect two important data: The number of products sold and the number of returned items.
2. Select the time period: Decide whether you want to calculate the return rate on a weekly, monthly, or quarterly basis.
3. Use the formula for return rate: The formula is Return Rate = Number of Products Returned / Number of Products Sold x 100. For example, if you sold 500 items, and 15 of them were returned, multiply the quotient by 100, and you’ll get 3. Your return rate is 3%.
4. Assess your ecommerce platform performance: Return rate is essential in making sure that ecommerce retailers are performing well. Generally, ecommerce stores experience higher return rates than brick-and-mortar stores. However, high return rates in ecommerce might also signify quality issues that need to be addressed. Most of the time, customers make returns because they are dissatisfied with the product.
A lower return rate, on the other hand, means that customers are satisfied with the product they receive. This could also mean that your store is using the right marketing tactics to target the right consumers.
5. Compare results with industry benchmarks: Determining how much return rate is healthy for an ecommerce business can be tricky. The types of products offered as well as the seasonal changes in customer preferences play a vital role in the purchasing decisions of customers. Hence, it’s always advised to stay knowledgeable and updated with the average ecommerce return rate for each type of item and time period.
6. Address and think of preventive measures for underlying issues: High return rates can be quite alarming, but there is nothing good planning couldn’t solve. Before your business suffers from irreversible and long-term losses, use returns data to correct common issues and observe customer behaviors and preferences.
Most Common Reasons Customers Return Products
There are many reasons why customers return a product. To reduce the number of product returns, it’s important for you to know the top reasons of customers when they decide to choose reverse logistics:
1. The item doesn’t fit the customer.
One of the most common reasons why customers return products is a size or fit issue. This is especially applicable to garments and other pieces of apparel like shoes. The wrong size or fit can’t be easily repaired, so most of the time, customers need to resort to returning the items to the sender.
2. The customer received a defective / damaged item.
No customer wants to receive a faulty or damaged item. A common problem for electronics, appliances, and gadget purchases, item defects, and damages are often caused by manufacturing mistakes or poor packing and handling.
3. Product is not as described.
This is where the importance of uploading high-quality and updated photos on your ecommerce platform comes in. The images of the products you post on your website should showcase the real appearance and quality of your items. Inaccurate appearance and quality are usually described as the expectation vs reality purchase experience.
False advertising has been a constant problem in the ecommerce world. And believe it or not, this could lead to losses or a complete business failure.
While some of these experiences are just meme-worthy and relatable, frequent failure of online stores to meet customer expectations can cause long-term effects. Customer dissatisfaction comes with every failed expectation, and dissatisfaction certainly has a negative impact on any business.
4. Wrong product type / variation received.
There are items that come with different types and variations. Others come with accessories or other attachments. For example, perfume brands have different variations and editions every season. If a customer receives the wrong variant, he/she could opt for a return or replacement.
Many stores offer in-store returns or replacements to minimize the negative impacts of returns on sales. In fact, 62% of shoppers shared that they are more willing to purchase goods online if the shop has an in-store return option.
5. Change of mind.
This reason might seem irrational to most ecommerce vendors. But one of the most common reasons for customers to return their purchased goods is as simple as a change of mind. For apparel, customers might change their minds about their purchase if the items don’t fit their usual style or the overall vibe doesn’t match an occasion.
Regardless of the reason behind this, change of mind is a valid reason for some ecommerce brands when approving and accepting returns.
6. Poor shipping and delivery status and options.
Have you ever experienced ordering an item overseas, and expected it to arrive at a specific time period? But then, delays in shipping are part of the overall logistical issues that couriers need to address. When the courier fails to deliver an item within the estimated period of arrival, the customer can return it.
The key solution to this is to tap a reliable courier that offers quick shipping services to clients. You may also want to offer extended guarantee and item protection, or vouchers for shipping delays. Even if your shop didn’t cause the delays, it is your responsibility to ensure that each item will be delivered on time and in top condition.
7. Pricing issues and value perception.
Most ecommerce brands are known for incredibly affordable deals and the lowest prices. Seasonal sales offer the biggest deals for different types of products. But there are times when brands with physical stores offer better prices and value. This may encourage customers to return items if they believe that other brands provide better value for their money.
8. Poor customer service and support.
Every customer expects active support during and after purchase. When product pages fail to include all the necessary details about the product, questions are inevitable. When customers encounter the issues mentioned above, effective customer support and assistance should be readily available.
For example, a customer who has a concern regarding a missing item might contact the support channel via live chat or email. Live chat agents typically reply within minutes, and emails within an hour. Failure to respond to the customer’s concern could result in a bad customer experience, and the customer is highly likely to return the item. This is why many e-commerce businesses are turning to specialized outsourcing solutions to ensure round-the-clock, efficient customer service that can handle a wide range of inquiries and issues.
By outsourcing e-commerce customer service, businesses can provide consistent, high-quality support that meets customer expectations and helps build brand loyalty. This approach not only improves customer satisfaction but also allows in-house teams to focus on core business activities and growth strategies.
9. Lack of advanced ecommerce features.
Technology is a must, and this is especially true for ecommerce. When your platform is outdated and the return options are not clearly defined, customers might be frustrated. You can reduce your return rate by maintaining an ecommerce platform with a reliable knowledge base.
Your help center tabs may also feature a returns FAQ or a separate returns portal to manage your ecommerce returns. An intuitive platform that guides customers to their purchases is also a must for ecommerce stores. Ecommerce platform like Shopify implements a highly intuitive platform that’s friendly and easy to navigate.
Effects of ecommerce returns and refunds on businesses.
Returns in ecommerce have the most visible effects on the financial aspect of the business. Typically, returned products are considered losses. Unless there is a specified policy wherein the customer shoulders the reverse logistics costs, sellers are given the bigger burden of arranging the return shipment and paying for the fees.
Multiple product returns may also interfere with inventory management, which is an integral part of keeping track of sales and business performance. Moreover, returns also have an impact on the satisfaction levels of customers. This is specifically applicable to returns caused by quantity and quality errors. Potential customers might see unpleasant feedback, and any feedback could influence their purchasing decisions.
Returns management is an integral part of ecommerce.
With the current state of ecommerce returns, businesses should think of more creative and practical ways to reduce the likelihood of returns. Having a clear and comprehensible policy, offering free return shipping, and providing customers with better alternatives can help you protect your business from losses.
Returns management is an integral part of ecommerce that should not be overlooked. Along with constant communication with your customers, utilizing the right technology can also help.
Get a reliable outsourcing partner for your ecommerce business.
The rise of automation and advanced software solutions also pave the way for ecommerce stores to provide better support for every consumer. Likewise, BPO companies are equipped with the right technology and workforce for businesses to achieve higher customer satisfaction rates. Here at Digital Minds BPO, we’re always ready to help you take your business to the next level.
As the e-commerce landscape continues to evolve, many businesses are discovering the benefits of outsourcing various aspects of their operations. From efficient data entry services to reliable customer support through live chat and email, outsourcing can significantly enhance your e-commerce store’s performance and customer experience.
If you’re looking to streamline your e-commerce operations and extend better assistance to your customers, Digital Minds BPO offers comprehensive e-commerce outsourcing solutions at competitive prices. Our range of services is designed to support your business growth and improve overall efficiency. Take your e-commerce journey to new heights – contact us today to learn how we can tailor our outsourcing solutions to meet your specific needs.