E-commerce isn’t slowing down. In fact, it’s just getting started. According to a recent report by Statista, global ecommerce is currently valued at more than $3.4 trillion. Over the next two years, current predictions show it pushing $4.8 trillion in annual sales (through end of 2021).
Retailers attract consumers to their online stores by creating a “shopping experience.” But alongside the buying process that feeds this industry is returns; or the “after buying experience.” Of course, one might think that buying equals profits and returns equals losses. But such is not the case.
Returns have forever been frowned upon by online retailers, often seen as one of the biggest pain points. But online product returns are not the monster that they’ve been painted out to be. Quite the opposite, in fact. Instead, they should be viewed as a way to improve customer service, make product descriptions more informative, and also as a way to encourage long term sales and attract loyal buyers.
Wondering how you can turn online product returns into future profits? Read on to learn more.
33% Average Online Return Rate
Returns are joined at the hip with purchases. Shoppers want to know that it’s going to be easy to return something that didn’t work out. And retailers who cater to this offer a method of shopping that’s more convenient than brick and mortar. With new studies finding that about one in three items purchased online are returned by consumers, retailers can no longer ignore the need to streamline this process.
The most common reasons for returns include:
- Product was damaged or dead on arrival
- Product was different than advertised
- Apparel item did not fit properly
- Wrong product was shipped
Reducing Returns
Forward-thinking retailers do have quite a few options when it comes to reducing online product returns. The most effective method is to integrate sizing apps into the shopping process. A variety of solutions are available that help shoppers better determine the right fit before they click the “buy” button and check out.
Ensuring that product descriptions are as informative as possible also goes a long way in slashing the rate of returns. Other takeaways from recent studies find that integrating product videos, adding features like a zoom button for images, and offering multiple image views of the products help cut down on the rate of returns.
Return Polices Get Read… A Lot
Commonly overlooked is the wording of the return policy. It’s nearly as important as the process itself. According to UPS’ “Pulse of the Online Shopper” report, 66% of shoppers actually take the time to read your return policy before they decide to buy. If the policy makes it clear that returning something to your store is difficult, there’s an 80% chance that shoppers will abandon the sale.
Shoppers view the return policy as an integral part of the online purchasing process, according to numerous studies. Most consumers want an easy and hassle-free way to send a product back if it doesn’t suit their needs. If a retailer makes this process difficult, shoppers will simply take their business elsewhere.
Standing out in a cluttered e-tail universe is what separates great online stores from the rest of the pack. In par with that is your online returns policy. To drive more sales, improve loyalty and retention, and engage increasingly picky shoppers, you need to ensure that your return policy is convenient, customer-facing, seamless and effortless.
A bit of research can help you better position your online store for success. Consider the following questions when determining what your return policy should look like.
- What are your competitors offering?
- What do your customers want?
- What are you offering?
- Can you afford to offer convenient online product returns?
- Do you offer onsite returns or third-party returns?
- Can customers print a return shipping label from your website?
- Do you charge return shipping and or restocking fees?
What Consumers Want
When consumers decide to shop at your store versus a local store, they are also aware that they won’t receive their item right away and will have to wait for it to be shipped. In some cases, they are fine waiting for receipt because they prefer your selection or pricing.
Regardless why they choose to buy from you, one of the primary reasons is because it’s convenient to shop online. You can order items in your pajamas if you so desire and enjoy front door delivery just a few days later.
But here’s where the buck stops: The return process.
With local purchases, consumers need merely stop by the store to return a product. It’s a rather straightforward method, in most cases, and one that is relatively easy for the consumer. For example, returns at Best Buy, Target and Wal-Mart require a short visit to the customer service counter. Provided the customer has adhered to the return terms listed on the receipt, they’ll get a fast refund.
It’s important to focus on this when writing your return policy. Ask yourself a few yes or no questions. Is my return policy easier or harder than a local retail store? Will my return policy deter customers from making future purchases? Is my return policy as easy as Amazon’s?
If you can say yes to these questions, then you’re already in good shape. If not, it’s helpful to know why making returns easy benefits your bottom line exponentially in the long term.
What the Facts Say
To help you better understand the importance of your return policy and its process, here are some of the most recent statistics about ecommerce product returns for you to glean:
- 63% of customers read your return policy before making a buying decision (comScore).
- 81% of customers want easy returns with no return shipping fees (UPS).
- 33% of products ordered online are returned by consumers (ABC).
- 357% increase in profits over 12 months when free returns are offered (CNBC).
- 81% of consumers won’t make a future purchase if they pay a return shipping fee (Upstream Commerce).
- Zappos gets 75% improved customer loyalty and repeat buyers from free returns, even though they charge more for their products (eCommerce Digest).
What Major Studies Say
Making returns easy does more than just help improve the customer experience, it also has been shown to have a tremendous long-term benefit to your bottom line. According to a Science Daily study that followed 26,000 customers over more than six months, easy returns have the potential to improve long term profits by 25% or more.
For the study, five groups were created alongside a primary model group. Some of the groups offered previous standards for online returns while the model group copied the Zappos method and made returns effortless. A variety of marketing strategies were used for each group and the results were monitored for three months. Strategies were then shifted slightly for another three-month observation period, while the model group maintained its status quo of offering easy returns.
The results: Profits improved when hassle-free returns were offered. At the end of the study, the model group grossed $1.8 million over six months versus the other groups, which grossed just $1.22 million. The difference in profits equated to around 25%, in favor of the model group.
Crafting a Great Return Policy
There you have it. The jury is out. Easy returns mean more profits for your online store in the long term. Need even more tips on getting your return policy in order? Read: The Ultimate Guide on Ecommerce Returns. Or get some helpful tips from this infographic we’ve included below that can help you improve your return policy in under 10 minutes.
