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SVIn the dynamic world of retail, the issue of product returns remains a significant challenge. Last year, over 23 million* items were returned in Sweden, with physical stores experiencing an average return rate of 8-10%, significantly lower than the 20-40% faced by e-commerce. This blog explores the reasons behind returns and offers insights on how businesses can reduce them.
E-commerce not only contends with high return rates but also needs help to resell products at their original prices. This often leads to discounted offerings, resulting in financial losses and unsustainable business practices.
How today's E-commerce companies are affected by returns
Returns are a downside for all global e-commerce players, quickly diminishing profit margins and conversion rates. As e-commerce continues to grow, return rates are also expected to rise unless measures are taken to mitigate them.
Reasons for product returns
- Poor fit – The product does not suit the customer (especially relevant for clothing).
- The product did not live up to the description on the website.
- The product was delivered late, or the customer no longer needs it.
- The product was either damaged or defective.
- The retailer delivered the wrong product or the wrong size.
- Wardrobing (where a customer purchases a product with the intent to use it temporarily and then returns it for a refund).
Why analyzing customer return behavior is important
While returns are considered a natural cost of doing business, a deep understanding of customer behavior and return causes can help minimize overall return numbers. Consumers often view the option to return as part of the online shopping experience, but with the proper knowledge and expertise, businesses can significantly reduce return rates.
6 strategies to minimize returns
1. Size Matters
Since the purchase in an e-commerce setting occurs exclusively online, customers only have the opportunity to test the product after buying it. Issues related to size and fit account for approximately one-third of all returns. You can minimise this type of return by:- Update size guides and recommendations.
- Encourage customer reviews on product pages.
2. Use high-quality images
31% of all clothing and fashion returns occur due to poor fit. By capturing high-quality product images from various angles, consumers can make better purchasing decisions and avoid returns.- Feel free to incorporate 360-degree videos to provide a more comprehensive view of your products.
- Enable your customers to upload videos of the product if they wish.
- Capture all angles, including the most minor details and features. Let's zoom in on the images to reveal more intricate details, such as seams and buttons.
3. Integrate product reviews
The concept of "social proof", or social capital, is an innate instinct deeply rooted in the human psyche. People will always follow the actions or examples of others. An e-commerce store with many positive reviews on a product will likely receive more orders than another with a similar product but fewer appreciative reviews. This is because customers perceive the former as both popular and credible. Social capital in the online shopping experience can manifest through interactions on social media, user testimonials, case studies, product ratings, reviews, and recommendations from well-known personalities.
A study indicates that 92.4%* rely on online reviews to make purchase decisions. Detailed reviews addressing product quality and usage significantly increase sales and fewer returns.
4. Update product descriptions
Nearly half of all returns are due to the product not meeting customer expectations. Counteract this type of return by consistently providing accurate and relevant product information. However, offering detailed and engaging product descriptions that meet customer expectations and needs can be easier said than done.
Simultaneously, compelling product descriptions can serve as a form of customer service, addressing numerous customer questions about a product and helping improve your rankings on search engines. We recommend leveraging purpose-built technologies such as Product Information Management (PIM) platforms to manage and update all your product information.
5. Have a clear return policy
90% of consumers review the return policy before purchasing a new brand. Therefore, ensure that the terms of your return policy are clear and transparent, just like the product descriptions and images that capture the customer's interest in your store.In addition to acknowledging the stark reality that you will receive a considerable number of returns, you can still make it more difficult or, in the worst case, prohibit "serial returners" – individuals who frequently abuse the return policy – from shopping with you.
6. Tracking and real-time updates
That customers receive incorrect products or a damaged product is rare, but it can happen. However, it should only occur occasionally, as it is a sign that you have a more significant problem. If you receive many reports of logistical issues, you must conduct an immediate investigation and try to address the root cause of the problem.
Therefore, we recommend using a tracking system to document any logistical errors. The tracking system should also enable customers to quickly bring any shipping or delivered product issues to your attention.
Finally
Returns are undoubtedly one of the most significant challenges for e-commerce businesses. However, even though returns are inevitable in operations, they do not have to spell disaster for your company. Analyzing and understanding customer behaviour is crucial if you want to succeed in reducing the number of returns. Use the advice and tools described above to address the most common reasons for returns.
Ready to transform your returns into revenue?
*Transportföretagen Paketindex 2023
