As the holiday season wears off, brands are preparing themselves for an influx of product returns. Estimates for the 2021 holiday season have suggested that customers might return as much as $66.7 billion worth of online purchases in 2022.
That's thanks to the rise of online shopping. About 30% of all eCommerce sales end in returns, compared to 9% of all purchases from brick-and-mortar stores.
Brands shouldn't think of customer returns as revenue loss—instead, they can position themselves to build customer loyalty. If they can provide a high-quality customer experience, a return can mark the start of a long relationship with a customer.
On the other hand, the cost of returns can easily hurt a brand's bottom line. Depending on the product type, a return might cost between $5 and $15, which, at scale, adds up quickly.
Here are a few returns management tips to help eCommerce businesses handle the impact of high return rates:
Like what Amazon Prime offers, free return shipping remains the gold standard in the industry, but it isn't strictly necessary.
It helps improve customer satisfaction, but your profit margins may take a hit. Also, some customers are willing to pay a restocking fee to avoid return shipping costs.
However, if you can't afford to offer free returns, having a simple online return process with different options for customers is just as important:
Key to the return process is a descriptive eCommerce return policy. About two-thirds of customers check a return policy before making a purchase decision.
Not only should brands specify what their window for processing returns is, but they should also outline what condition a returned item needs to be in to be refunded.
Some brands don't want you to open the unwanted item, while others will allow a lightly used product to be returned.
No matter the policy, brands have to spell it out clearly. There is nothing worse than when a customer pays for a return, only to find out that their returned product is not in an acceptable condition.
Because outright refunds can be so costly, brands should find ways to encourage customers to exchange one product for another, so at least they can keep most of the money from the transaction.
One common strategy is to shift around shipping charges. Offer to ship back the returns for free if customers continue to buy from the brand or pay back in full and brands can charge a small shipping fee.
When one footwear brand took this approach, refund rates fell by 28%.
Even if you commit to paying back the customer for their entire purchase, exactly how that money is paid back makes a difference. Some brands can afford to refund the total amount in cash, while others will pay back via online store credit.
Few customers will complain about knowing too much about their order fulfillment status. Yet brands are not nearly as communicative as they should be about the reverse logistics process.
54% of online retailers don't send receipts when they receive a return from a customer, and 64% do not properly set customer expectations regarding how quickly their refund payment will be processed.
When you send out emails confirming the receipt of a return, you should be embedding other related products that will entice them to keep shopping.
The cosmetics brand Tarte, for instance, sends post-return emails with headlines like "We saw you looking at that" by reminding online shoppers that they put products into their cart but didn't proceed to checkout.
It's much cheaper to retain a returning customer than to find a potential customer, and someone who has already had a smooth return experience is very likely to buy from your eCommerce store again.
When your customers are initiating a return, you should also ask them why they are sending back the product in the first place.
Amassing large amounts of feedback from customers can help brands distinguish between a one-off problem—maybe the bath mat just didn't fit in a customer's bathroom—and a larger issue with the product.
If customers repeatedly say that the color of your bath mat isn't what they expected, that might speak to a larger issue with how you are displaying images on your product page.
Also, if customers find that your bath mat doesn't work as your website proclaims, your product descriptions may need some tweaking.
The other way to figure out what might be going wrong is to study the patterns in customer reactions to your product.
Chatdesk Trends analyzes social media comments, D.M.s, and customers' emails and identifies why returns are happening.