Are eCommerce Returns Costing You? Here’s How to Reduce Returns and Boost Revenue
As an eCommerce store owner, you aren’t going to be able to satisfy all of your customers one hundred percent of the time. Sooner or later, a customer will buy a product from you, find fault with it, and return the purchase for a full refund. This is an expected and natural part of doing business – especially since eCommerce customers usually do not touch or try the products before buying. Experts have found that around one-third of online purchases are returned, including 50 percent of expensive items. Online retailers get five times the returns of brick and mortar stores.
Returns are a part of the eCommerce space. But what if those return numbers start to put a serious dent in your revenue? Americans returned an estimated $32 billion worth of merchandise during the 2017 holiday season, according to CBRE Group Inc.
Returns happen, but there are some things online retailers can do to decrease their frequency. Here are the most common reasons for customer returns – and what you can do about them.
The Customer Bought the Wrong Item
Purchasing the wrong item happens to everyone, from choosing the wrong size to picking a product that isn’t actually what you wanted at all. You may think this is inevitable – everyone makes mistakes – but there may be more you as an online store owner can do to help. Poor pictures, inadequate product descriptions and missing information, like dimensions and item material, can all lead to incorrect purchases.
Solution: While there’s no way to guarantee that everyone makes the right choices with every transaction, the information you provide can increase the odds. Make sure to offer photographs – preferably ones taken using professional equipment and realistic lighting – at multiple angles for all items for sale, size charts and measurements for clothing, and improved product descriptions so that customers know exactly what they’re purchasing. One study found that 50 percent of online shoppers returned merchandise because it didn’t match the product description, so be sure the content on your site is on point. There’s no such thing as too much information, so be as specific and detailed as possible.
As your business picks up, fulfillment also scales upward. Suddenly, a large portion of your day is dominated by printing shipping labels, organizing inventory, and packing boxes full of merchandise to be shipped to your customers. And, as the demands on your time grow, so do the opportunities to make mistakes. Send a customer the wrong product by accident, and they will almost certainly send it back. This kind of error can be hard to stomach: a little absentmindedness is all it takes to cause increased shipping costs and disgruntled customers.
Solution: Solving problems in fulfillment takes a few steps, including tracking metrics like error rates on orders shipped as well as error rates on orders pulled to find out where problems originate. Further, you’ll need to create a streamlined process to follow with all shipments, from the moment a customer places an order until the second a package shows up on his porch. There shouldn’t be any ad hoc shipping: stick to the process and make sure every order is treated with the same level of care and precision. Take advantage of inventory management software and evaluate processes every few months to make sure things are operating smoothly. Make changes as necessary to keep fulfillment as precise as possible.
Free Shipping = Risk-Free Shopping
Free shipping is a great way to drive revenue, but without the proper safety measures, it’s also a great way to increase your return numbers. When customers know that they’re not on the hook for shipping, they’re more likely to buy things on a whim that may or may not work out. Although free shipping is a great incentive for online shoppers, free shipping can create bigger return issues to worry about if you offer it without looking at your store data and implementing it strategically first. This doesn’t mean you need to do away with free shipping entirely, but it does mean you need to take a logical approach to fulfillment.
Solution: While there’s no way to keep customers from returning merchandise they don’t like, there are ways to reduce costs on shipping so that inventory coming back to you won’t break the bank. This may mean a little due diligence in pricing carriers, such as, USPS, UPS and FedEx, and getting creative with packaging. Putting in this little extra effort up front can keep the costs of shipping from tanking your profit margins.
Item Arrives Damaged
A Forrester study found that 20 percent of returns are because the item was damaged when it arrived. Replacing damaged goods is one of the most expensive and frustrating scenarios for online merchants. When items are broken in transit, the raw materials used to make them are wasted and the entire supply chain is strained. It takes physical labor to process the return of the damaged product and send a replacement. The extra shipping squanders time, energy, and materials.
Solution: Fortunately, this is one of the easiest problems to solve. Using the right shipping materials can go a long way toward preventing breakage. Make sure boxes are the right size and have adequate padding. Test different shipping strategies and see which ones perform the best. It is also a good idea to insure packages with high-value merchandise.
Item Performance Isn’t Up to Par
Some items you sell may be the perfect size, color and fit, but if performance or quality aren’t as expected, your sale may be returned just as swiftly as a mistaken purchase. Unfortunately, this can be a common pain point for eCommerce store owners. With no way to physically evaluate a product, it’s easy to get things wrong.
Solution: Without a way to pick up, hold, try on, or sample inventory before purchase, how can you improve the information available? Leverage your customers. By adding a review option to your eCommerce site, customers can leave honest feedback about your products, including size, fit, color and functionality. This can help to normalize new customer expectations, increasing confidence in purchases based on authentic feedback. Further, reviews can boost overall sales on your site: 63 percent of shoppers are more likely to make a purchase if reviews are available. Customers trust reviews, too, with 70 percent of shoppers consulting reviews before making a purchase.
Returns are a part of doing business, but too many can send up red flags. The right approach can help you cut down on the damage to your bottom line, keeping return rates low and profit margins high. By investing the time and commitment to improve your website with accurate information, minimizing the burden of free shipping, streamlining fulfillment and utilizing customer feedback, it’s possible to see your return rates decrease and your profit margins increase.
By Laura Gayle, Business Woman Guide