12 Ways To Reduce the Cost of eCommerce Returns

Andrej Janev
Jan 11, 2024
5 min read

In ecommerce, products are returned often. Reported rates of return vary, but there's good evidence that between 20 and 30% of online purchases are returned. Think about your last 10 online purchases – it's not unreasonable to think that you returned 2 or 3 of them, right? Online retailers should offer a smooth purchase process and customer support that makes customers smile. In this post, we'll discuss 12 ways to reduce the cost of your ecommerce returns and keep your store profitable. These include using technology, ensuring your products are photographed and described correctly, offering loyalty rewards, and outsourcing your returns management. Let's take a look.

Invest in Technology

Investing in technology to help manage your product returns is a great way to reduce costs. Automated returns management software helps you track returns, generate RMA numbers, email your customer base about the status of their returns in real time, and more. This automates mundane tasks so you can focus on customer service and quickly get your products back in stock. It also helps you identify problems, such as products with high return rates or customers who repeatedly return items. This can help you better understand why your products are being returned and how to prevent the same thing from happening in the future. For ecommerce stores, investing in technology can help you manage returns better and will result in fewer future returns and lower costs associated with them.

Provide Reviews

The basis for many of the tips in this list is that when customers are better informed about the product they're purchasing, they're less likely to return it. You can help customers make an informed purchase decision by providing them with customer reviews. Reviews provide valuable information that customers can use to determine the right size and fit of a product, or if it's the right product for their needs. This reduces the number of returns due to mismatched expectations.An additional benefit of helpful customer reviews is that they are a form of social proof for people visiting your site. Positive reviews can help persuade potential customers to make the purchase.You can give customers an incentive to leave reviews by offering discounts or rewards after they complete the review process. This creates more positive customer feedback, initiating a positive feedback loop for sales.

Gather Feedback

Another way to reduce the cost of ecommerce returns is by gathering feedback from customers who have returned products. This helps you to identify which products are being returned most often and for what reasons so that you can work on improving them.When a customer returns an item, you can ask if they can provide feedback about the product. You can also offer them a discount for their next purchase in exchange for providing feedback or even send out customer satisfaction surveys to customers who have returned items.Customer feedback is invaluable for progress. For example, you might find that most returns are of products from one particular manufacturer, so you can look into finding a different supplier.

Proactively Communicate With Consumers

Much of the cost associated with returns is related to customer service. Humans like to see progress, so you should communicate with customers about the status of their products. This keeps them informed, reducing the likelihood that they'll be displeased with their purchase or feel like it's taking too long to receive their order. It also allows you to address issues before they become a larger problem.For example, if a customer is having difficulty returning an item, proactively offering help can prevent the customer from becoming frustrated and returning the item. Similarly, if a product takes longer than expected to ship, respond quickly with an explanation.

Provide Cross-Channel Purchases

Cross-channel purchases means customers can buy items from multiple channels (such as your website, mobile app, brick-and-mortar store, or even on Facebook and Instagram).This gives customers the flexibility to purchase items that are more likely to be a good fit for them, and in more situations (e.g. at the airport, in a queue, etc). Customers can take advantage of the information on your website, such as in-store measurements or product reviews.Providing cross-channel purchases also helps build customer loyalty. Customers who can move seamlessly between different channels are more likely to become repeat customers, resulting in increased sales and fewer returns.

Display Size Chart Guides

Size chart guides help customers make better decisions when buying clothing and apparel. These size charts inform the customer of the specific measurements of a product, so they know if it will fit them before they purchase it.Some ecommerce stores use apps that can recommend a size based on information the shopper provides. Fit Finder from fitAnalytics is a popular size recommendation app that uses information about clothing the customer already wears to suggest an appropriate size for the item they’re viewing. Super smart!Providing clear and accurate size charts can help customers make the right decisions when buying items, reducing the need for returns.

Display Good-Quality, Photographed Products

Consumers want to be sure of what they are buying and will often return items that look different from what they are buying. Therefore, ensure your product photos (or product videos) accurately portray the product. Using high-quality photographs can help customers better understand the product before they purchase it. You can also provide videos, 360-degree renders, and other visuals to help customers make more informed decisions.Some people will buy based on the color displayed on your site. If the color that's delivered is different, that could be a reason for the customer to return the item.

Write Detailed Descriptions of Products

Similarly to displaying good-quality photographs, you should provide accurate and detailed product descriptions. Customers like to know dimensions, weight, materials, compatibility with other products, features, and specifications. Provide it all up front! We mentioned how delivery of an item of a different color than expected might prompt them to return it. A great example is a power bank advertised as having a 20,000 mAh capacity that turns out to be 10,000 mAh on arrival. Try to obtain additional information about the product to what is detailed on the manufacturer's website. I've often scoured multiple product pages trying to find a detail that isn't listed anywhere because the manufacturer left it off their webpage. Don't copy and paste that description without checking if it provides everything a customer wants!

Offer Loyalty Rewards

If you assume that returns are an inevitable part of the ecommerce life cycle, offering loyalty incentives to your returning customers can be mutually beneficial.Some brands, like Amazon's Prime Wardrobe, incentivize returning by allowing free returns of 'Try Before You Buy' products within seven days. The premise here is that allowing customers to try clothes on without paying for them makes for more satisfied customers. Meanwhile, because this is only available for Prime subscribers, Amazon knows they'll be back eventually to make other purchases or even buy the correct size of the item they tried. Win-win!Other incentives are discounts, loyalty points, and free shipping. If each purchase and/or return offers some loyalty reward, customers will be more inclined to return and continue shopping with you even if they return their first item.

Offer Exchanges and Store Credits

Another win-win scenario is allowing customers to exchange items or providing store credits for returns. It means you don't lose out on the sale in case of a return.So for the two or three purchases out of ten that result in returns, you gladly allow the return, but you do your best to get that customer to take another size or use store credit for another item. Should they opt for a straight exchange, you retain the revenue from their purchase, and all you've incurred is the cost of the return. But you now have a happy customer who's likely to shop again! If they opt for the store credit option, you retain the revenue; chances are they use it to buy something that costs even more! Here are a couple of to-dos:

  • Make the exchange and return policy abundantly clear.
  • Remind customers when they have credits to use.
  • Notify customers of upcoming credit expiry.

Consider Outsourcing Returns Management

Returns management is one of those administrative tasks that doesn't directly contribute to growing your business, but that nevertheless needs to be done.One way to outsource some of the returns life cycle is to use a third-party logistics provider. This company handles the return process from when the item is returned to the warehouse, to when it gets resold or disposed of.Of course, this is only the section of the journey after the returned item gets to the warehouse. What about the section from the customer to the warehouse? Dedicated returns management software – like Rich Returns or Narvar – can help. Software of this sort removes the hassle of dealing with returns: use it to create shipping labels, track the shipments of returns, and issue and process refunds, among other tasks.

Improve the Online Shopping Experience

First, ensure your website is easy to use and intuitive to navigate. Make information regarding shipping, refunds, and your returns policy abundantly clear – an informed customer is a happy customer. Ensure you use suitable address validation in your checkout process. A correctly addressed parcel is quickly delivered, and customers love quick delivery. Provide alternatives or suggestions for incorrectly entered addresses. For returning customers, have them double-check the address you have on file, as it may have changed since they last shopped. As you can tell, these are all steps you should put in place to ensure the experience of online shoppers is as smooth as possible.Lastly, it's a good idea to give the customer accurate and timely shipping or tracking information – for both the initial delivery and the return.

Reasons For Returns

Let's look at three of the major reasons customers return items. Knowledge is power, and perhaps being aware of these common reasons may help you prevent returns related to them.

Not Pleased with the Product or Quality

This type of return is largely inevitable – some people will just not like what they receive or may have changed their minds by the time it arrives.

Incorrect Product Variation

Most customers are not going to let this one slide. Receiving the correct product in the wrong size, color, or style will make your ecommerce operation appear sloppy. Check out the tips in the next paragraph for ideas to avoid this.

Wrong Item Delivered

This one almost feels more understandable – perhaps the customer will think you have a very busy, complex logistics operation, and there was a mix-up. And in real life, that's probably the case. But it can help to have built-in processes for checking the correct product goes to the correct recipient, like:

  • Have the name or model of the object clearly visible on the outside of the packaging.
  • Have an operator use a checklist to monitor outbound items.
  • Include a packing list with the product delivery.

The Importance of Assessing Returns in eCommerce

By now, we know that returns will happen. Yes, some returns are avoidable, but there will always be a subset of returns you can't avoid. Doing your best to prevent whatever returns you can is in the best interest of your online store. Some of the negative effects of returns include:

  • It'll cost you. You'll have to cover shipping, restocking, refunding, and other costs.
  • Poor customer experience. Yes, the customer is initiating the return. But it might still be inconvenient for them to arrange it; unfortunately, that only reflects badly on your store.
  • Reputational issues. If too many people return your products, and word gets out, potential customers might be deterred.

Want to reduce this negative impact? The best way to do it is to find out why your customers are actually returning your items. This process is known as returns assessment or analysis, a common feature of returns management software. ShippyPro has an extensive list of reasons to analyze your returns here.

Bottom Line

Ecommerce returns are both costly and inevitable. We've considered several best practices you can use to reduce the cost and effect of product returns on your business. These include using technology, being open and transparent with your customers, providing as much accurate product information and photography as possible, and incentivizing repeat purchases even after returns by awarding loyalty points and other offers. Rich Commerce, an all-in-one software solution for reducing returns, that allows you to analyze, coordinate, and optimize your returns process. Rich Commerce, specifically Rich Returns, provides crystal-clear insight into why products are being returned, helping you reduce product return rates and retain your profit margins. Ready to get started? Read more here about why you should go with Rich Returns in your ecommerce business.

Andrej Janev
April 17, 2024
7 min read