Reducing eCommerce Returns: A RevLifter Guide - RevLifter

Reducing eCommerce Returns: A RevLifter Guide

by | Nov 25 2022

We’ll be straight – reducing eCommerce returns is no easy feat. 

Most online brands have to offer a way of returning items purchased from their website. As well as being a legal requirement in many countries, it’s part of a basic level of customer service.

Not long ago, consumers had to jump through hoops to return their items. They’d often have to cover the cost of postage before waiting weeks to see their refund.  

These days, with eCommerce retailers facing increased competition, returns have become a way for brands to set themselves apart. Many have turned to offering free shipping and returns on orders above a certain amount, complete with a simple process to send the items back. 

Customers in markets like the US expect such luxuries. Here, 51% of consumers avoid shopping with brands that don’t offer free returns. 

Unfortunately, the ease of returning items has led to this service representing something of a false economy. For example, only 12% of consumers claim they “never” return products bought online, with the majority (59%) doing this “occasionally”.

Graph showing portion of consumers that return items bought online

 

Recent estimates show that around 5-10% of all sales get sent back to the retailer. This varies by industry, as we can see in the graph below.

Benchmarks for reducing eCommerce returns: percentage of items returned by industry

Refunds are generally a fact of life for online retailers, especially given the sheer amount of factors that are out of their control. 

That said, it’s never to address some of the most common causes on your way to reducing eCommerce returns. 

Why customers return items 

Customers return items for lots of different reasons. According to a recent survey from Power Reviews, the most common cause is due to it not fitting.

Of course, this only applies to fashion brands, which is why other sectors should take note of reasons like items being damaged (65%) or failing to match a description (49%).

The key to reducing eCommerce returns: remembering the reasons why consumers return items

Why eCommerce returns are bad for business

Retailers can drive huge sales volumes around key events like Black Friday. But if a large chunk of these orders get sent back, the brand loses out.

Some of these behaviors may ring true with your own eCommerce business.

The customer gets lured in by a discount

When the retailer cuts the price of an item, the customer might be more inclined to gamble on it being worth their money. 

Cheap items require much less consideration. As such, they often find their way back to the retailer when the shopper realizes their mistake.

This reason is slightly different from buyer remorse, which we’ll raise next.

The customer decides against keeping an expensive item

Some purchases might come in a little over the shopper’s planned budget. By the time it arrives, the buyer might realize – in hindsight – they can’t afford it. 

These instances are likely to become less of a worry due to the explosion of buy now pay later services like Klarna, allowing customers to space out the purchase cost. 

Nevertheless, buyer remorse is still a big reason why items get returned. 

Multiple purchases

Considering that ‘item does not fit’ is the top reason for product returns, it’s no wonder that customers have found a way around the issue.

It’s extremely common for fashion shoppers to buy the same item in multiple sizes to see which fits the best. It’s then a simple case of sending the others back. 

On the one hand, the retailer often guarantees at least one sale from this process. But, on the other, they lose at least one sale they thought they’d landed.

It’s also tricky to work out fair refunds due to multiple purchases often helping the customer avoid shipping charges.

Reasons out of your control (well, almost)

Not all reasons for customers returning items are directly in your control. However, you are responsible for the people in charge of those areas, and there is always something you can do about it.

Damaged or defective

Items becoming damaged or defective in transit is rarely down to the retailer, and more to do with their logistics partner. Now you’re seeing that the process of reducing eCommerce returns is a team effort, involving multiple stakeholders. 

Naturally, any brand should inspect items before they leave the warehouse. In addition, all items should be packaged to prevent them from being damaged on a potentially long journey. 

Failing on both points could mean the item is either defective before it leaves or damaged when it arrives.

Item did not arrive on time

We’d also count the speed of delivery as an important reason to bear in mind. Here, items are returned because they didn’t show up on time, and the customer no longer has a use for them. 

The only real solution is to record these instances and use them as a gauge for how well your logistics provider is performing. For example, see whether their delivery times match what you’re promising and record instances of customers returning items due to delays. This could be a hidden issue for your brand.

Now we have a stack of reasons why consumers make returns, let’s go ahead and look at some ways of reducing eCommerce returns.

Basic ways of reducing eCommerce returns 

Some steps to improving your return rate are complex. They take time to implement but, from RevLifter’s experience, are well worth the investment. 

Others are so simple you’ll have wished you had considered them sooner. So here are our three top tips to start.

Provide clear compatibility and sizing information

In fashion, it’s common for shoppers to return an item that doesn’t fit. A similar issue is also prevalent in sectors like consumer electronics, where consumers frequently return items due to compatibility issues. 

Your solution starts with providing clear information about each product. In fashion, this involves supplying features like size charts and additional product information – like the height of the person modeling a garment – so the shopper can make an informed guess on whether it will fit.

Anyone selling electronics can follow the same path with their descriptions. For example, a retailer selling phone accessories should provide a list of compatible devices where necessary.

Review your providers

If the speed of delivery and damaged items harm your returns, it’s time to assess whether you’re with the right logistics provider. 

Of course, part of this issue could be how you’re packaging your items. But if delivery times are the main factor, you’ve got a solid reason to investigate further. 

Use your customers for good

Repeat after me: UGC.

User-generated content is a winning remedy for so many of your return woes. According to Power Reviews, two-thirds of consumers say having access to this additional evidence would make them less likely to return a product. 

As we can see from the below, Q&As, product pictures from real customers, and reviews are popular formats worth exploring. 

Top forms of UGC for reducing eCommerce returns

Advanced ways of reducing eCommerce returns

Now we’ve got the base of our action plan, it’s time to go granular with some data-driven solutions. 

Lowering discounts on items with high return rates

We mentioned earlier that discounting a product is one way to push through a purchase. However, this can result in consumers buying impulsively before processing a swift return.

Is the solution to avoid discounts altogether?

In short, no – not if they work for you. The solution is to find the products that are most likely to be returned and avoid discounting them. 

Maybe it’s a sweatshirt with a strange fit or a product that looks noticeably different in real life. Every retailer has examples of these on their sites. 

Your task is to improve the control of your on-site incentives to the point of being able to choose which products and categories qualify for discounts. Top tip: the same process can help you preserve margin by only applying reductions where you can afford to make them. 

Provided you have your data in order, you can tag your high-return items and ensure they can’t be discounted. These signals are then fed back to technologies like RevLifter, which decide which customers and products qualify for your deals. 

Trust us; when it comes to reducing eCommerce returns, 1-2-1 incentivization is key.

Avoiding incentives for customers purchasing two of the same product

Once your data is in order, you can apply similar rules in other return-heavy scenarios. Our favorite example is with customers purchasing multiple items. 

When a customer places more than one of the same product in their cart, you should have a technology like RevLifter to limit their use of deals.    

We’ve seen many brands having success with this strategy. However, you must provide in-depth product information as a compromise. 

Customers often buy multiple items because they want to be assured of a good fit. Therefore, you should make every effort to clarify what they’re buying before it’s placed in the cart.

Turn off buy now pay later

We’ll finish with a wildcard strategy you should undoubtedly test to gauge effectiveness.

They’re not as obvious as a discount, but buy now pay later services act as an incentive to purchase. It’s something that helps shoppers afford a purchase they can’t always afford to make. But what would happen if you took it away?

In a recent blog covering peak season trends, we talked about a brand that turned off BNPL to study the impact on returns. Rather than increase due to buyer remorse, they actually went down.

The logic is that BNPL reduces the quality of customer. Someone that really wants a product may budget for it. If they know it requires an immediate investment, they will ensure it’s exactly what they need.

BNPL implies less risk because it does not require a significant outlay at the start. Case in point: customers are more likely to shop on impulse and return a purchase they didn’t think through. 

Again, decisions like removing BNPL are bold and should be tested the moment they go live. But they are certainly worth exploring.

How to bring down eCommerce returns: a plan

The good thing about trying to bring down your eCommerce returns is that you already know why they happen.

Fashion brands will see most returns happening due to ill-fitting items or products not being as described. With home and garden, it could be down to product quality: consumer electronics – compatibility. Every industry has its own set of reasons and solutions to implement.

What’s important is that you’re checking off these fundamentals, which apply to most brands:

  • Provide in-depth product information
  • Supply content and reviews from real buyers 
  • Pack your items properly to avoid damage in transit
  • Review the performance of your logistics suppliers

After these steps have been completed, you can start to look into tackling scenarios where returns tend to happen.  

For example, with RevLifter, you can ensure that customers don’t receive your best discounts if they’re checking out with lots of the same item. You can also tag certain products to make them ineligible for deals.  

If you need further ideas for reducing returns or want to incentivize your customers intelligently, feel free to get in touch.

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