Examining the most common return motives and how to avoid them
Statistics show that while brick-and-mortar experience 8% – 10% returns on purchases, online stores experience 20% – 40% returns. High-end goods close in on nearly 50% returns. Besides online stores experiencing high returns, they are not able to resell the items at the original price. Most of these items are offered later on discount. This implies losses on the part of the business and it isn’t sustainable in the long-term.
What is the impact of product returns on modern eCommerce businesses?
Returns are the ugly underbelly of eCommerce rapidly cutting profit margins and conversion rates. In recent years, online stores are seeing increased product returns. For example, in the United States alone, Statista forecasts that by the end of 2020, product returns will reach 3.5 trillion kroner, a 75% increase in the last four years. Mind you, that this figure doesn’t account for inventory losses and restocking expenses.
Reasons for Product Returns
A lingering question among business owners is why do customers return merchandise? Sometimes returns are clear and obvious yet in other instances, the reasons behind the returns are obscure.
There are varying reasons why customers return products. Based on our research, here are the main reasons why customers return items;
1. Poor fit – the item doesn’t fit the customer (mainly under apparel);
2. The product did not match the description provided online;
3. Item arrived late or the customer doesn’t need it anymore;
4. The product was either damaged or defective
5. The retailer shipped the wrong item or the wrong size
Why is it significant to analyze consumer behavior?
A common narrative in commerce is that customer returns are a justifiable cost of doing business. To a certain extent, this statement is true since returns are inevitable. Nevertheless, understanding consumer behavior and the rationale behind returns can greatly minimize returns.
Not all product returns are genuine. Some online consumers purchase products online with a premeditated plan to return some or all of them. In fact, free shipping and free returns are the two most effective methods of convincing consumers to shop from your store. Yet, these two conditions present a loophole for exploitation.
In our Reclaimt survey, 60% of online shoppers think that free returns are the most important aspect when it comes to the return process of buying online. Close to 70% of online consumers are likely to shop more at an e-commerce shop with a smooth and easy return process. Women are even more likely than men to do so.
Ironically, experiencing high product return rates implies higher indirect costs to your business. Think about establishing entirely new processes to handle the returns, for example, hiring employees, renting, or buying physical space, and even opening a new department all aimed at handling returns.
Based on these consumer perspectives, as an online retailer, expect returns. Online shoppers view product returns as part and parcel of the online shopping experience. However, with specific knowledge and expertise, you can significantly minimize returns.
Strategies to reduce the number of product returns
In contrast to brick-and-mortar store, online retail transactions occur in a non-tangible space contributing to product returns. Nonetheless, employing these tweaks will minimize product returns in your store.
Since eCommerce transactions largely take place online, customers don’t have the opportunity to try out products. Issues related to size (fit) result in approximately a third of all returns. You can minimize such returns by;
Providing a detailed size guide that is easy to read and that covers the various products in your store; and
Allowing customers to leave reviews below the product pages. Customers who love the product will feel free to include their height and weight and how the product fitted can serve as a useful reference to other shoppers.
2. Use high-quality images
The majority of consumers purchase goods within the clothes and fashion segment. Poor fit accounts for 31% of product returns in Sweden according to a survey we conducted among online shoppers.
The solution, in this case, is pretty much straight forward – details and accuracy. Use high-quality images taken from various angles on your products. A picture speaks a thousand words. Even more than product descriptions, images capture the attention of anyone browsing through your products.
Incorporate 360 videos to present an up-close review of your product. Also, leave room for your customers to leave product review videos if they’re willing to. Ensure whatever you upload is detailed. Cover every angle including the minute aspects of the item. If possible, zoom to reveal more details e.g., stitching.
Apart from reducing product returns, this approach will also encourage repeat customers since they know exactly what to expect.
3. Integrate product reviews
Social proof is an innate instinct deeply rooted in the human psyche. People will always follow actions or models set by others. In simple terms, an online store with many great reviews on a single product will get higher orders compared to a different store with a similar item but with fewer reviews. In the customer’s mind, the former has been tried and tested. Social proof in the online shopping experience can be in the form of social media interactions, user testimonials, case studies, product ratings, and reviews and endorsements from well-known figures.
A study showed that 92.4% of people rely on online reviews to make a purchasing decision. Detailed reviews touching on product quality and usage significantly contribute to higher sales and lower returns.
If you haven’t created a system to capture and analyze customer reviews, you need to make this your priority. Special attention should be given to the feedback you’re receiving from customers. What are your customers communicating in the review? Are they complaining that the color of the pants is not similar to the one provided in the product description? Update the product description to match the concerns raised in the review. The same applies to what is being shared as positive regarding your product. Highlight these details in the product descriptions and images. Let both positive and negative reviews work for you.
4. Product descriptions
Almost half of all product returns relate to products not matching the customer’s expectations. Such product returns can be minimized to a great extent by providing descriptive and accurate product details. However, this is easier said than done. The greater challenges faced by online retailers today is that there are thousands of SKU’s across multiple channels. Providing detailed and engaging product descriptions that live up to customer’s expectations can be a challenge.
How can this problem be addressed? Product descriptions serve as agents and answer customer questions regarding the product. Besides, they assist in page rankings. We recommend that you take advantage of technology such as product information management (PIM) platforms to update all your product information.
5.Have a clear return policy
At least 60% of online shoppers review the return policy before they go ahead and make any purchases. At least ensure that your terms are clear and transparent in your return policy similar to the product descriptions and imagery that drew in the shoppers in the first place.
In addition to accepting the reality of returns, ban any serial returners from using your platform. Serial returners abuse the return policy.
6. Logistical problems
Cases of customers either receiving the wrong item or the item arriving damaged are rare yet still do occur. It shouldn’t however happen frequently since this pinpoints to a bigger problem. In case you’re having many reports of logistical problems, you need to carry out investigations to address the root of the problem. We recommend using a tracking system to document any logistics errors. The tracking system should also allow customers to update you on any problems with shipping or with the product.
Product returns are one of the leading challenges eCommerce stores are facing. Returns are an inevitable part of the business yet they don’t need to spell doom to your business. Understanding consumer behavior is crucial if you want to reduce returns. Besides, use the methods we have outlined above to address the most common reasons for returns.
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