How to reduce high product return rates

How to reduce high product return rates

Author: Dominic Lidgett — Read time: 6 mins

A high return rate is a common issue facing eCommerce retailers. Not only does this affect sales and revenue figures, it can also be a logistical headache.

Around 30% of products ordered online are returned, compared to roughly 9% in brick-and-mortar stores. This is a trend which hasn’t been ignored in the eCommerce industry, as many retailers have had to adopt relaxed returns policies (free return shipping, longer item return period etc.) to please customers and match their growing expectations.

The importance of this cannot be understated, as studies show that; 92% of consumers will buy something again if returns are easy. 79% of consumers want free return shipping. 67% of shoppers check the returns policies before making a purchase.

Despite this, it is important for retailers to not let customers dictate their policies and practices, as this can lead to customers taking advantage of a generous returns policy, resulting in a decrease in profit margin. Trade publication Inbound Logistics project that the average retailer spends just over 8% of total sales on reverse logistics.

To gain a better insight and understanding of this, customers who return items can be categorised into the four following segments;

Use and return

Even when purchasing the item, these customers always have intent to return it, taking advantage of relaxed return policies. This includes customers buying clothing to return after wearing once (two-thirds of women clothes shoppers have admitted to doing this), and customers buying a game/CD/DVD, getting all their use out of it, then returning within the allowed time period.

This problem isn’t limited to the online world, as customers are likely to take this approach with brick-and-mortar retail stores too. However, this pattern is easier to track and identify using online data.

Buy to try

These are customers who purchase with a view to sampling the product (clothes, technology, food, furniture etc.) to better understand how it looks and feels before committing to keep it.

Unlike the above segment, these customers aren’t buying with the intention to return, but will be aware of and knowledgeable about the return policies, how strict they are, and how easy the return process may be, which will be a deciding factor in their decision to purchase.

Fitting room

This is when a customer buys the same item multiple times, in different sizes or colours, with the intention of keeping the one they like best. Using the right data, these customers are easier to identify.

This is a common case particularly in the clothing and apparel industry, and one which the online fashion retailer ASOS have addressed by giving customers 14 days to pay after receiving their final invoice, only paying for items they didn’t return.

Flakers

With the ease and speed of online purchasing, it’s all too easy to make a decision in a matter of seconds without thoroughly thinking it through.

Customers who are prone to impulsive and spontaneous purchases can get caught up in the moment, or might not in the right state of mind to be online shopping. As a result, they make a purchase, and by the time the product has arrived they no longer want or feel the need for it.


However, higher return rates in the world of online retail aren’t solely a result of consumer behaviour, retailers can also be to blame. There are several issues customers might find with the products they eventually receive, as their expectations may not be met in the following areas;

Quality

20% of products are returned as a result of items arriving damaged. This can be a result of poor supply chain management, manufacturers, or shipping and logistics providers.

Solution: This is where it is important for retailers to have suppliers, manufacturers and logistic providers they can trust. If you are a retailer choosing one, make sure you do your research into the best, most reliable providers.

Although it’s almost impossible to stop this happening on occasion, any cases of quality issues leading to returns should be taken seriously and investigated properly, to ensure everything is done to stop this becoming a common issue.

Size

Particularly in the apparel industry, a common occurrence is when products are a different size to what the customer expected. Without being able to try the clothes on first, this is a risk customers are taking every time they purchase online.

Solution: Information and technology. Retailers shouldn’t just expect customers to make assumptions that what they’re buying is the correct size for them, and various provisions can be put in place to help consumers choose wisely. The solution may be as simple as providing plenty of detail on the size (e.g. “Our model is 6ft tall and wearing a size Medium”), or a sizing guide.

There’s a plethora of available technology in the market which can help too, including virtual fitting rooms and 3D image technology. After discovering that 65% of their returns were size related, U.S. footwear retailer Running Warehouse invested in the appropriate technology and saw returns decline by 23%.

Imagery

22% of returns are the result of products appearing differently in person than they do in the product images.

Solution: Invest in getting some high-quality, varied product images taken. Not only will this help to increase conversion rate, it’s useful for customers to get a really good look at a product so there isn’t a failure to meet expectations when they receive the item.

This could involve multiple images from different angles, shots with perspective that better show the size of a product (models holding a product, sitting on furniture etc.) and ability to zoom in or focus wherever they like on an image.

Description

If the product isn’t described as accurately as possible (material, colour, features etc.), this can also lead to returns.

Solution: Honest, accurate and comprehensive product descriptions. Retailers shouldn’t mislead consumers into buying something that isn’t what they were promised - it’s poor customer service and will come back to bite you eventually! By having in-depth, accurate and easy to understand product descriptions and avoiding any jargon, customers will be receiving what they were promised.

Overall, there are several factors and reasons why customers return items, a lot of which can be out of the retailer’s control. However, by having a sturdy returns policy in place and following the procedures above, there are plenty of ways to combat high return rates and decrease any costs involved.

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