How to minimise the pain of ecommerce returns
23 Nov 2023
5.5 min read
Returns are an annoying facet of ecommerce – and one that cannot be avoided. Looking to minimise returns is a strategic goal for many retailers, but it can be challenging, especially in fashion and apparel, when shoppers so often buy multiple sizes to be sure of getting the right version of the product they want.
Some retailers are even charging for it. Zara was one of the first to issue this, and other brands like Uniqlo, Boohoo and Next have followed.
H&M received a number of complaints, first because it announced charges for returns in-store, when most brands still accept them for free. Secondly because shoppers complained about inconsistent sizing, and how items that were marked as the same size could have drastically different fits.
There are tactics brands can use to reduce returns themselves, such as charging or trying to ensure that customers get the right product in the first place, but that’s not what we’re here to do.
Returns are inevitable, so how can brands minimise the pain associated with them? Accepting returns with a clear policy can help enhance customer satisfaction and manage expectations. Ultimately ecommerce companies need to provide a positive returns process while mitigating against the cost of returns logistics, fraud, and strain on customer service.
By implementing best practices in handling returns, businesses can streamline their processes and cut costs, leading to better overall financial performance.
With that in mind, here are a number of tactics you can deploy to minimise the pain of returns.
Understanding Ecommerce Returns
What is the average return rate for ecommerce?
The average return rate for ecommerce can vary significantly depending on the industry, product type, and customer expectations. According to the National Retail Federation (NRF), the average return rate for ecommerce hovers around 16.9%. This means that for every 100 products sold, nearly 17 are returned. High return rates are often driven by factors such as customer dissatisfaction, incorrect sizing, or products not matching their online descriptions. Understanding these statistics can help retailers better prepare and optimize their returns process.
Why do people return items?
There are several common reasons why customers return items. A study found that 65% of online shoppers have returned items that didn’t fit. Other prevalent reasons include:
Incorrect product description: When the product received does not match the description provided online.
Product not matching online description: Discrepancies between the product’s appearance or functionality and what was advertised.
Product was damaged or defective: Items arriving in a damaged state or with defects.
Product was not what they expected: The product failing to meet customer expectations in terms of quality, color, or other attributes.
By understanding these reasons, retailers can take proactive steps to reduce return rates and enhance customer satisfaction.
Step 1 - analyse the returns process with returns management software
First of all, you need to gather data to understand why customers may be contacting you about returns in the first place.
For example, do customers have total clarity on the returns policies? Do they know what the windows for returns are, and how that might differ from the window for warranty claims for example?
Are the returns methods clear - is there an option for in-store drop off? Once they have returned, how long will it take for them to be refunded? Is it sizing issues or picking the wrong product?
The best way to find this out is by analysing your customer service tickets to see what topics come up time and again. You can obviously do this by looking at wrap codes and any other conversation tagging you have in place. If that’s too arduous, you can use AI to analyse requests.
Once you have an idea of the main reason or reasons, you can put steps in place. You could ensure that policies are communicated clearly in emails, or highlighted during the checkout process. If sizing is an issue, then perhaps you could deploy a virtual assistant to answer questions about sizing.
Analyze and optimize the return process
Analyzing and optimizing the return process is crucial for reducing return rates and improving customer satisfaction. Start by gathering data on returns to identify trends and areas for improvement. Implementing a clear and comprehensive return policy is essential. Ensure that product information and sizing charts are accurate and detailed. Offering free returns and exchanges can also enhance the customer experience. Additionally, improving packaging and shipping processes can help reduce damage and defects, further minimizing returns. By focusing on these areas, retailers can streamline their return process and boost customer satisfaction.
Step 2 - Decide on return labels
When it comes to automatically including return labels in orders, retailers have to make a judgement call. Including the labels will lead to an improved customer experience because it’s easy to return the products.
But including it means that customers don’t have to register the returns meaning that you don’t always know why they are returning them. It also means that returns can come outside of the return window meaning that your warehouse has to deal with that. Plus there is the environmental impact of unnecessary printing.
If you do include them, it’s common for customers to lose them, so regardless you need a good process for generating return labels. Ideally, it needs to satisfy 3 conditions:
Low burden on the customer support team
Low customer wait time
Compliance to your business rules
Returns management software can automate and digitalize the returns process, enhancing customer experiences and operational efficiency.
With AI, these three conditions can be satisfied. By connecting an AI to your backend systems, it can enter all the necessary information for a return label. Take a look at this video to see how it works.
This example follows the brand’s business rules in order to generate the return label when the necessary criteria are met. This saves a huge amount of time for agents, and creates a smooth process for customers.
Step 3 - Dealing with delays in reverse logistics
If a customer has returned an item, and has not got their refund in an expected time frame, then they may start to ask questions and bother customer service again. This is understandable but it creates more pain.
Like returns, delays are something that cannot be avoided, and are often outside of a brand’s control. But if a customer has to wait until the reverse logistics process is complete from the brand side, they could be waiting a long time.
As a result of this, some retailers have implemented return in advance policies, where refunds are authorised as soon as the return shipment has its first carrier scan, but before it arrives back at the warehouse.
This is a much better customer experience, it reduces WISMR (where is my refund) queries, and it means the customer isn’t penalised if the shipment is lost in transit.
There is a possibility, albeit a small one, of fraud here, if customers put something else in the package instead, but that is a rare case. But you can still mitigate against it.
We recommend a mixed approach where you apply Refund in Advance in certain circumstances. For example, repeat customers who have never returned before, or VIP customers. Or even customers who have an order under a certain value.
This means that you might want to wait to process a refund if it’s a large order from a first time customer, or repeat-returner.
Obviously whatever you do, it’s best not to leave everyone waiting for a refund with an indeterminate timescale. Here is where AI comes in handy again.
AI can scan all open returns, check the time that the return was initiated, and then check the shipping and warehouse status. If there has been a significant delay between checkpoints, then the refund can be triggered at that point.
Effective Return Policies
Create a comprehensive return policy
A comprehensive return policy is essential for building trust with customers and reducing return rates. Here are some key elements to include in a return policy:
Eligibility: Clearly state which items are eligible for return.
Initiation: Provide detailed instructions on how to initiate a return.
Payment Methods: Specify what forms of payment are accepted for returns.
Time Frame: Clearly outline how long customers have to initiate a return.
Return Options: Indicate whether returns are accepted in-store or online.
Refunds and Credits: Explain whether store credit or full refunds are offered.
Usage Period: Define how long customers have to use store credit.
A well-crafted return policy should be clear, concise, and easy to understand. It should also be easily accessible on the website, such as in the footer or checkout page. By providing a comprehensive return policy, businesses can reduce return rates, improve customer satisfaction, and increase customer loyalty.
So, should you charge for returns to ensure customer satisfaction?
The final point is one we brought up in the introduction. Charging for returns is more and more common for retailers, but should you do it?
If you are very up front about it, you are likely to put some people off buying, so you’ll see a hit in conversion rate. It’s possible that you will see an increase in average order value, because if someone is going to return one item, they may as well return several for the same price.
If it’s not clear until the point the customer is looking to return, then you risk damaging the customer experience and potentially losing some customers in the long run.
If you’re selling other brands’ products, then you are always competing against other retailers for those items, and this would put you at a disadvantage.
So those are the possible downsides. The upsides are that you will preserve margin on the orders you do get.
Improving post-purchase retention strategies, such as facilitating easy exchanges and utilizing tracking features, directly contributes to increased revenue retention and client savings.
Our advice is that you should look to minimise the pain of returns first. There are savings to be made, and improvements to CX that can be had before you weigh up the cost benefit of paid returns.
