Four Ways to Reduce the Return Rate in Ecommerce
Returns are a headache for any ecommerce brand. An estimated 30 percent of all products bought online are sent back to merchants, which is high compared to the 8.89 percent return rate for brick-and-mortar shops
According to Statista, estimated return deliveries in the U.S. will cost the industry about $550 billion in 2020. This figure does not even include inventory restocking expenses. And free delivery policies only serve to make the problem worse.
Unfortunately, customers are unaware of the consequences product returns bring to merchants. For companies, even as large as Amazon, returned or canceled products are the stuff nightmares are made of. In addition to directly increasing the operational costs without generating ROI, they also may lead to negative reviews and lost inventory due to devaluation. Some companies deal with this by building a strong return policy, like Amazon's A-to-Z guaranteed returns process.
Returns are one of the most common ways the so-called “dead stock” is born.
Are there any ecommerce returns management strategies that can reduce the return rate along with all associated costs? Thankfully, there is, and the time to act is now.
4 Recommendations to Reduce Ecommerce Return Rates
- High quality images and videos
- Reliable and engaging product descriptions
- Inventory management improvement
- Protection from serial returner
1. Start by Investing in High-Quality Product Imagery and Videos
The road to fewer returns begins well before a customer makes a purchase and decides to send it back. According to Business2Community, one of the most common reasons for product return in ecommerce is the fact that “it looks different.”
22 percent is a huge number that translates into thousands of returned orders, which equals a lot of preventable costs.
One way to prevent this from happening is to get serious about product descriptions and imagery. This means doing the following:
- Using only high-resolution, high-quality images
- Providing zoom functionality for a closer look
- Providing views of a product from multiple angles.
Converse, a well-known shoe brand, is a great example here. Converse uses at least 6 images of a single product from different angles. Customers can also zoom in on each image.
While taking more quality product images doesn’t cost a lot, it can help with preventing much more in operational losses due to returns.
You should also try to take this one step further by using 360-degree product photography or product video. The first respective option is great because it provides a fun element of interactivity and shows a product from every possible angle. It doesn’t get better than that in terms of imagery.
The second respective option, product video, is also something to consider. This medium is performing the best in terms of customer engagement and product research. For example, here are some of the most interesting findings from The State of Video Marketing 2019 that support this:
- 96 percent of people report watching an explainer video to learn more about a product or service. This means that video is a popular method to do product/service research
- 81 percent of digital marketers say that video has been effective in generating leads
- 68 percent of people say they prefer to learn about a new product or service by watching a video.
Naturally, you shouldn’t make video-based explainers for every product you’re selling. Video can be particularly useful for complex products where customers might need additional assistance to avoid frustration and possible returns.
More and more ecommerce merchants are working to provide high-quality videos for products. Macy’s, for example, has been doing a great job; the company now has a link to a video on almost every product on their website, from puffer coats to coffee grinders.
As you can see in the below image, there’s a link below the product’s gallery section, so it’s easy for the visitors to spot it.
Even though a product above isn’t particularly complex, the company uses an appealing video to show how a customer can apply it (this also encourages the customer to imagine having the product).
High-quality visuals like these are a must for reducing the return rate, and they could help with that “product received looks different” problem.
2. Continue by Making Your Product Descriptions Reliable and More Engaging
Next stop, product descriptions. To make sure that they help with minimizing product returns, make sure that they meet these requirements:
- They should be as accurate as possible. Since 87 percent of shoppers now begin product research online, the information you’re giving them should keep your reputation intact as well as your product descriptions interesting. “The accuracy plays a critical role in the translation of product descriptions,” emphasizes Ashley Sinclair, an ecommerce translation expert from The Word Point. “Even one mistake can convince a customer to look for products elsewhere.”
- They should be as detailed as possible. This one’s simple: the more details customers have about a product, the higher the chance that they won’t be surprised when they receive it. To give you an ultimate example of a detailed product description, check out the outline of the La Marzocco GS/3 1 Group Auto Espresso Machine description by Whole Latte Love (note that each section comes with its own description):
- Features & Benefits: Coffee
- Programming Options & Recommendations
- Adjusting the Brewing Volume
- Cup Warmer
- Features & Benefits: Frothing and Hot Water
- Hot Water
- Features & Benefits: Care, Maintenance & Other
- Water Reservoir
- Preventative Cleaning
Obviously, not every product requires such a long description, but this shows that serious merchants are investing a lot to educate customers and prevent a lot of questions and returns due to lack of information.
- They are written in a natural, conversational tone. “If a product description sounds like a sales report or a computer-generated text, chances are many people will find it boring,” says Christine Rowe, an expert on ecommerce content writing at Best Writers Online. “The best way to go about it is to make it sound like a real conversation.”
- They inject some emotions with storytelling. For example, you can write about the ways a product can be used to improve a customer’s life, in a way that makes them imagine using that item. Here’s a great example of storytelling in a product description that comes from Nike.
3. Work on Improving Inventory Management
Now that we’ve taken care of the frontend, let’s turn our attention to the backend (see what I did there?)
This inventory-related problem in ecommerce is something that every merchant is familiar with. As mentioned above, 23 percent of product returns occur because customers receive wrong items, which suggests serious problems in the merchant’s inventory management system.
The problem is that there are too many mistakes to make when managing inventory. If you don’t manage it properly, the costs of running a business can go up pretty quickly, in addition to those related to buying, storing, and transporting inventory.
For example, one of the most common mistakes that both small and large ecommerce merchants make is failing to understand the costs that come with inventory management. If they did understand how to keep the cost of running inventory and meeting customer demand, strategies like Lean Warehousing wouldn’t have been invented.
Other popular mistakes that can be traced to ineffective inventory management include:
- The size of a clothing product is either too small or too large
- The color of a product is different from the one that the customer wanted
- The product doesn’t match the photos on the product page of the merchant’s website
- Delay of delivery caused by a lack of inventory or a lack of proper accounting.
Fortunately, it’s possible to minimize the impact of these mistakes with inventory management automation systems. The complexities of returns require the company’s top management to commit to continuous improvement and constant tracking of a wide range of inventory metrics, which is only possible with custom tools.
The beauty of inventory management software is that they provide the true inventory count so you can see where you’re running out and what creates more avoidable costs. Once installed, such software:
- Helps to maintain a true inventory count with a single product database and automatically update the amount when it changes
- Helps to prevent overselling and underselling by showing only a percentage of the available inventory. You can also set specific values for inventory counts to highlight scarcity for a product to create a sense of urgency in customers
- Provides access to critical performance analytics and KPIs. These include product analytics (top sellers, worst sellers, listing profitability, etc.), inventory analytics (inventory performance by warehouse, total value of inventory in a warehouse, estimated stockout dates, and more), and orders analytics (revenue from each sales channel, orders with the highest value, shipping trends).
Thus, by employing such a novel approach to inventory management, businesses can stay competitive in the ever-changing ecommerce industry.
4. Protect Your Business from Serial Returners
Serial returners are people who purchase a bunch of products and ultimately return many of them. They’re becoming a common problem for ecommerce businesses that also leads to numerous preventable returns and subsequent losses. When a customer in a brick and mortar store can try on multiple items before making selections, the return rate is obviously lower (check out our guide on ecommerce vs brick and mortar stores for more). But there are also unscrupulous customers who order multiple clothing items, wear them one time, and then return them.
With a total cost of returns hitting $550 billion in 2020, 6.5 percent of these are from serial returners who are fraudulently and/or otherwise abusing the return policies of many U.S. e-commerce companies. That 6.5 percent translates to $35.75 million.
To protect yourself from serial returners, you need to record every return they make to isolate them. Unfortunately, this is the only reliable technique, and even though it takes some time to get right, it’ll save you a lot of headache. For example, if someone returns a product, keep an eye on his or her returning habits.
If returns keep occurring, the best thing you can do is block them from buying from you. Make sure to indicate that in your returning policy, though, and send an email to politely notify such individuals about your right to enforce it if they continue.
Product returns are a huge problem in ecommerce that costs billions in added costs, waste, and lost profits.
However, they are a necessary part of doing business, so you need to have a working strategy to keep them from affecting your financial performance. Even though a business has the financial capability to minimize the impact of returns, there is no way to completely prevent them from happening.
By implementing the above tips, you can prepare both the frontend and backend of your brand - by this, I mean that you’ve fixed both your website (which is something that your customers see and interact with) and inventory management (that the customers don’t see and or care about).
Ultimately, they can help to prevent the long-term cost of product returns and avoid a lot of damage to your reputation. Make sure to keep the common root causes in mind: misinformed purchase decisions, a lack of details, and inventory management mistakes.
Erica Sunarjo is an experienced ecommerce marketing writer. In addition to running her own blog, 3to5Marketing, she contributes to popular websites by supplying actionable tips for building content marketing and SEO strategies for ecommerce businesses. Erica believes that every ecommerce business should try to use content to their advantage to improve online presence and attract more quality traffic to their websites.