With ecommerce margins under attack, the cost structure of your operations is becoming increasingly important. Talking about operating costs, you automatically talk about returns. Returns and a good returns and refund policy is an important conversion influencing factor. Yet, returns should not become your downfall. How to reduce returns without risking your business.
In 2022 the total value of ecommerce returns was $203.22 billion (in the US alone!). Per order this cost – on average - 21% of the order value.
It all starts with your returns and refund policy.
A good returns and refund policy is crucial as it plays a significant role in providing a positive customer experience and building trust with consumers. Here are several reasons why a robust returns and refund policy is essential:
- Trust and credibility: A transparent and fair returns policy enhances the credibility of your business. Customers are more likely to trust a brand that stands behind its products and offers a straightforward process for returns and refunds. It gives them peace of mind, knowing that if they are not completely satisfied with their purchase, they have the option to return or exchange it easily.
- Increased conversion rates: Knowing that they can return or exchange a product if it doesn't meet their expectations encourages customers to make a purchase in the first place. A flexible returns policy removes a significant barrier to conversion, leading to higher sales and conversion rates.
- Repeat purchases and customer loyalty: Providing a positive returns experience can turn dissatisfied customers into loyal ones. When customers have a seamless and hassle-free experience returning a product, they are more likely to trust your brand and make repeat purchases in the future.
- Online Reputation: Online reviews and ratings heavily influence purchasing decisions. A well-handled return or refund situation can result in positive reviews and testimonials, boosting your online reputation and attracting new customers.
It is clear that a good returns and refund policy is crucial for ecommerce businesses as it has the potential to increase conversion rates and drive repeat purchases.
Is it possible to reduce the number of returns without affecting the customer experience?
Reducing returns starts with clarity, make sure to be exhaustively clear when it comes to:
- Product information: Enhance the level of detail in your product descriptions. Include comprehensive information about product features, dimensions, materials, and any specific care instructions. When customers have a clear understanding of what they are purchasing, they are less likely to return the product due to inaccurate assumptions.
- High quality product imagery and videos: Arguable even more important than the written product information is the availability of high-quality images and video from multiple angles to help customers in visualizing the product accurately.
- Size guides and fit information: For apparel and other size-sensitive products, provide detailed size guides and fit information to help customers choose the right size. Include measurements, sizing charts, and guidance on how to measure oneself accurately. By addressing sizing concerns upfront, you can minimize returns caused by products that do not fit properly.
- Product reviews and ratings: Implement a robust product review and rating system on your website. Encourage customers to leave (visual) feedback about their purchases, as this can help potential buyers make more informed decisions. Honest and transparent reviews from previous customers provide valuable insights and can manage expectations, reducing the likelihood of returns due to dissatisfaction or mismatched expectations.
In addition, including the following 3 subjects in your returns and refund policy can help you to lower your return rates further, again without harming the customer experience.
- Increase your return period: Consider offering an extended return period beyond the industry standard. By providing customers with more time to evaluate their purchases, you reduce the likelihood of rushed decisions that may lead to returns. A longer return period has shown to decrease return rates.
- Charge for returns: A couple of years ago paying for returns was still a taboo in ecommerce. Because of sustainability and of decreasing margins this is no longer the case. More and more online stores including big names such as Zara and H&M are experimenting with it, with positive results. It turns out that it leads to a considerate reduction in return rates while sales volumes only show a slight decrease. Are you afraid of the consequences for your business? You don’t have to charge consumers for every return, you could work with free returns from a minimum order value (only if less than 25% of the order is returned). Online return platforms make these kinds of rules easy to apply.
- Pre-return support: Not necessarily a part of your returns policy but a good added service to offer, pre-return support can help customers who aren’t fully convinced about their purchase to change their opinion. Especially in the case of consumer electronics and any type of gadget this can make a substantial difference. Pre-return support can be offered by live chat, email, or phone. Trained customer service representatives can help the customer by providing additional information or advice. By assisting customers this way, you can prevent unnecessary returns.
In summary, although returns play a crucial role in the ecommerce customer experience, it is possible to reduce the return rate without damaging the customer experience and your business. Everything starts with clear adn transparant communication. Make sure your stores returns and refund policy is as clear and fair as it could be. In addition feel free to experiment with extended return periods and even with paid returns. Times have changed, paid returns are no longer a taboo. You will never get rid of returns as a whole – this should also not be the goal but returns sghould not be the reason your online business makes a loss.
