A generous return policy is a major consideration for customers before purchase. More than 60% of shoppers will review return guidelines before checking out, and 92% say that the ease of the process impacts whether they become repeat customers. When brands have a solid return policy in place, it indicates they trust the quality of their products, value their buyers, and want to gain their confidence.
While significant shopping events such as Black Friday and Cyber Monday (BFCM) welcome a surge in sales, and with it an uptick in refunds, keeping returns to a minimum is ideal. This blog post will help set expectations based on industry trends and dive into the biggest motivators for returns. We will also introduce some business tactics to optimize the customer experience (CX) for BFCM 2022.
The Status Quo of eCommerce Returns
At least 25% of shoppers send back 5% to 15% of their purchases. This phenomenon is more prevalent for online buys with the takeoff of eCommerce and shift to digital shopping. In 2020, online returns doubled compared to the previous year. The average return rate from eCommerce was 20-30% and 2x to 3x more than physical retail stores.
Of the $761 billion attributed to merchandise returns in 2021, $218 billion was from lost online sales. According to the National Retail Federation (NRF), the average retailer incurred $166 million in merchandise returns for every $1 billion in sales.
The High Cost of Returns for Brands and Retailers
Returns have been exacerbated by supply chain issues arising from the pandemic and have gotten expensive in recent months. A survey by the Reverse Logistics Association found that at least 50% of retailers expect the costs of product returns to rise, while 65% anticipate growth in the volume of returns.
Online returns already cost more than physical returns because of the spending on freight, handling, and stock replenishment. Brands spend between $10 to $20 for every item returned, not including shipping. Returns result in increased spending directed towards labor and inventory management, as well as losses from markdowns and stockouts. Because of this, some retailers have opted for a returnless refund, allowing shoppers to keep the items.
The increase in online returns has also resulted in costly parcel deliveries. In 2021, UPS predicted a 23% increase in returned packages from the previous year. Both FedEx and UPS have announced that their rates would increase by at least 5.9% across all their services.
Why People Return Items and What They Expect from Brands
Before taking action and implementing eCommerce technologies to curb product returns, it’s important to understand shopper motivations. Why would a consumer choose to send back an item, and what impacts customer satisfaction?
Some of the common reasons for online returns include:
The Product Failed to Meet Expectations
Customers can find it challenging to visualize what they’re buying from an online store. Items might not be true to size and product images may be inaccurate, leading to incorrect assumptions. This is especially common in fashion, where items end up a few sizes too small or large and the fit could be unflattering. When an item looks different in person than it does online, it results in 22% in returns.
Customers Purchase Several Products Intending to Return Undesired Items
At least 30% of customers deliberately over-shop, intending to return unwanted items. This can be because they want to try products first, buy them in multiple styles and sizes, or compare items. This behavior, known as bracketing, is a reflection of the uncertainties shoppers encounter online. Nevertheless, some of the best customers also return the most products and are repeat customers who already trust a brand’s return process.
The Shopper Received Defective or Wrong Products
Shipment always comes with the risk of damage. Packaging Digest found that as much as 11% of unit loads arriving at a distribution center have some level of case damage. While this can be due to poor handling on the part of the freight service, it can also be caused by substandard packaging and warehousing. Proper inventory management and package inspections can prevent damaged and incorrect shipments.
Fraud can happen in many ways. Customers might return an item they’ve already used, also called wardrobing; send back stolen items; use a fake receipt; or strip parts of a purchase to render it useless, which is known as bricking. Fraudulent returns are a problem in eCommerce, with 10.6% of online returns or $23.2 billion losses attributed to it. NRF also found that retailers lose $10.30 to fraud for every $100 worth of returned merchandise.
Product Returns and Customer Expectations
A smooth and easy return policy impacts overall customer satisfaction and loyalty. At least 84% of shoppers will shop again with a retailer if the returns experience is a positive one. What factors into this is whether or not there are fees, the return policy window, processing time, communications, and overall customer service.
At least 40% of consumers surveyed say they will not proceed with ordering unless the returns period is 30 days or more. Further, 74% of customers will choose not to shop at an eCommerce store if they have to pay for the returns.
14 Strategies for Reducing Returns
The best practices below all boil down to trust. When customers are confident with purchases made from your eCommerce site, products are less likely to be sent back.
1. Make Your Return Policy Visible and Readable
Be upfront with what your customers are getting into. Your return policy should be easy to locate and read. The conditions must be clear, leaving little to no room for misinterpretation. Nordstrom’s page for returns and exchanges is a good example of this. Besides making it easy to read in the form of a bulleted list, the page also includes FAQs for any related questions.
2. Present Your Products Accurately
Make sure your products appear as they are so customers receive what they expect. You can build trust by providing detailed and accurate descriptions of your SKUs, which include product dimensions, materials, and sizing. A size guide also comes in handy as it encourages customers to check their measurements. Accurate product tagging is also useful to ensure that items are categorized correctly according to style, brand, occasion, color, use, and more.
Decathlon gives customers a clear idea of their products with detailed descriptions on the product detail page (PDP). More than features, the brand also includes the benefits of buying a particular item, such as comfort, easy transport, and breathability.
3. Use AR/VR to Help Shoppers With Visualizing Products
One advantage of in-store shopping is that customers can inspect and interact with products they’ve eyed. Augmented reality (AR) and virtual reality (VR) can fill the online-offline gap by emulating physical shopping in the online world. Customers can visualize items in different colors and sizes against backgrounds, or on themselves. AR/VR has led to a 25% decrease in product returns and an increase in revenue, as 40% of shoppers are willing to pay higher if they can preview an item through AR.
Walmart is just one retailer taking advantage of AR. Customers can visualize 300+ home decor and furniture items in their personal spaces through Walmart’s mobile app.
4. Include High-Quality, 360-Degree Photos on Product Pages
High-resolution photos fill in when words don’t suffice and work in tandem with detailed product descriptions. Added features such as 3D, 360-degree photos, and videos also clearly present items’ features to customers.
Coleman Furniture does this well with professional photos of its products, as well as the option to view items in 3D, 360-degree, and AR.
5. Help Customers Shop with Educational Guides
Be a knowledgeable authority in your field by empowering your customer base with educational guides. When shoppers know you are providing them with everything there is to know about a particular topic or product range, they can better complete purchases feeling confident. Examples of this are guides to buying pants and picking the right jewelry style for special occasions. Zales has a dedicated page for purchasing engagement rings, style explanations, gem guides, and product care.
6. Offer Concierge Services and Chatbots
Shoppers value convenience. They won’t always have the time to go through every page on your website to find answers. Concierge services and chatbots can be the online version of in-person sales representatives, assisting customers with every concern. Kay Jewelers paves the way for purchasing ease with a live chat option and virtual appointments with its jewelry experts.
7. Be Transparent at Every Step of the Customer Journey
Customers desire transparency from brands. They want to know the status of their purchase, the time allowed for returns, and how soon they can receive refunds. Peak Design’s email may appear like your typical post-checkout message, but it reassures shoppers by offering useful tracking information.
8. Build Trust With Social Proof
Put customers’ minds at ease by showing how other customers had positive shopping experiences with your brand. Besides reviews and testimonials, user-generated content (UGC) provides a layer of authenticity. Customers value recommendations from family and friends, as well as real people online. White Rose Fashion does this well by highlighting reviews on its homepage to build trust with site visitors.
9. Zero In on Products that Match Exactly What Shoppers Are Looking For
Customers may not be familiar with jargon specific to fashion, home decor, or jewelry verticals. Visual AI-powered tools enable shoppers to find the products they want even when they don’t have the words for them. Through camera search, users can upload images to your site and find comparable items. Like Revival Rugs, brands can implement a “Find Similar” function so customers can find complementary items they might like.
10. Encourage Previous Shoppers to Leave Feedback
Buyer feedback can inform what you need to improve about the customer experience, your products, or the returns process. Reviews can also underscore the many ways you stand out from competitors. This is best done post-purchase and can be automated, similar to how Everlane sends an email after confirming a customer has received an item.
11. Prioritize Quality Packaging
A significant part of the delivery is out of retailers’ hands, but packaging is something that’s still within their control. Ensure that your products are secured in sturdy boxes or high-quality envelopes. Saving on packaging is beneficial in the short term, but over time losses and returns from transit damage can rack up.
12. Make Sustainability a Priority
Today’s customers are more environmentally conscious, and sustainable returns can make up a large part of their decision process. At least 75% of customers want to shop with retailers with sustainable returns, and 71% are willing to pay more for an eco-friendly option. Patagonia has a clear plan: returns are featured on its WornWear site at a discounted price and head to recycling centers if they don’t sell.
13. Encourage Exchanges Instead of Returns
Exchanges are one way to ease the return process while also making your customers happy. This keeps you connected with your client base instead of inadvertently causing them to turn to competitors. Brands can promote exchanges by providing a longer window of time to send back items as compared to returns.
14. Protect Agasint Fraud
Prevent fraudsters from taking advantage of any loopholes in your return policy. You can ban serial returners who frequently send back items, ship items through a freight service that utilizes tracking numbers, and purchase fraud protection. There can also be strict conditions covering the nature of valid returns, such as attached labels and unbroken seals.
Cost-Effective Returns and a Better CX on BFCM
With high site traffic and a surge in purchases this BFCM, you can put these strategies to the test to ensure a seamless customer experience and keep an eye on your profit margins. Bear in mind that product returns are also an opportunity to solidify your connection with shoppers and improve the purchase process. With a clear policy and smooth returns procedure in place, you can build trust over time and ensure customer satisfaction.