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Guide to E-Commerce Returns: What Online Retailers Need to Know

Online shoppers return products three times more often than in-person shoppers, mainly because they can’t see or touch merchandise like they can in a brick-and-mortar store. Also, it’s much easier to shop impulsively online, which can prompt buyer’s remorse or shopping outside one’s budget.

While returns are an unfortunate side effect of doing business online, there are steps retailers can take to lower their return rate and increase profitability. We’ll cover everything you need to know about e-commerce returns in this article, including:

How to Evaluate Your Current Returns Process

When evaluating your current returns process, start by calculating your overall return rate, which is the total number of times you had to provide a refund or exchange.

Be sure to gather the raw numbers as well as the percentage. For example:

1,000 returns / 10,000 total orders placed = 10% return rate

Next, quantify returns more specifically by calculating the return rate for each of these categories:

  • Refund Return Rate: Total number of refunds divided by total number of orders placed.
  • Exchange Return Rate: Total number of exchanges divided by total number of orders placed.
  • Error Return Rate: Number of refunds or exchanges due to errors on your end.
  • Shipping Return Rate: Number of refunds or new items issued due to shipping problems divided by total number of orders placed.

Calculating and monitoring return rates by the four categories above can help you identify problems specific to that category. For example, if your shipping return rate is high, it could indicate an issue with your packaging or the carrier.

When you strive to improve your e-commerce order return rates, it’s not enough to simply say you want to do “better.” Set a precise numeric goal for your business, such as “reduce total returns by five percent and increase refund conversions to exchanges by three percent over the next two quarters.” Be realistic and work to uncover why these returns are taking place, so you can implement specific changes to meet your goals.

Best Practices to Reduce E-Commerce Order Returns

Use high-quality images and accurate descriptions on your website.

Improving an e-commerce order return rate starts with your website. When shoppers view your merchandise in your storefront, are they getting an accurate picture of it? Give them a shopping experience that most closely replicates real-life buying, including:

  • High-resolution images.
  • Photographs taken from multiple angles.
  • Closeups of product details.
  • Videos.
  • Thorough product descriptions and specifications.
  • List of colors, sizes, and other options.
  • Precise sizing charts.
  • Buyer reviews.

Providing this information will not only help reduce returns; it can reduce shopping cart abandonment rates too.

Virtual try-on.

Some e-commerce vendors have gone a step further with virtual ways to test merchandise, whether trying on clothing (Walmart), sunglasses (Warby Parker), makeup (Sephora) or viewing a piece of furniture in your own living room (Target). Consider upgrading your website technology to offer these features if you get a lot of returns that could be alleviated by more knowledge about the product in advance of it arriving in your customer’s home.

Try before you buy.

Stitch Fix gives customers the opportunity to try clothes before they buy them. A prepaid label comes with each box of clothing, so it doesn’t cost anything to exchange or return unwanted pieces. And since customers aren’t financially obligated to buy the clothes, they’re less likely to leave a negative review about the company or product.

Fashion retailer Lamoda gained popularity by hand-delivering items to customers. They were given 15 minutes to try on the merchandise. Depending on the outcome, the delivery person would then process either a final sale or a return.

Don’t blame the customer if their order was never delivered.

Things get a little dicey when shoppers claim they never received a package. Was it delivered to the wrong address? Snatched by porch pirates? Scanned as delivered. but lost or pilfered by the carrier?

In these instances, the worst thing you can do is put the onus on the customer to be the detective. As seen in many angry social media posts, customers get extremely frustrated when an online retailer tells them to contact the shipper without providing assistance. Even if it is the shipper’s fault, the online retailer should be the intermediary here.

In the event, parcel tracking (which you should be using) isn’t helpful and the package cannot be found, it’s usually wise to give the customer the benefit of the doubt–unless they exhibit red flags of false claims. To prevent issues, such as a postal carrier who constantly fails to deliver parcels to an apartment complex, for example, offer to change the carrier or require a signature on delivery to prevent angry customers.

Transparency about shipping methods and extra expenses.

Prior to checkout, your customers should know how returns are handled. Clearly stating your carrier partners and shipping options can reduce the number of returns and refunds because they know upfront what to expect. If a customer knows that UPS doesn’t deliver to their rural home, and that’s your default carrier, they can either enter a different delivery address or select a different carrier, such as USPS.

Ask customers to double-check their address and use address verification programs to cut down on returns for packages that fall into a delivery black hole.

For international shipping, you need to collect detailed and accurate address information. You should also calculate and charge customs fees, duties, and taxes to avoid delays at the port of entry and let the customer know in advance what they are paying for.

What Does a Good E-Commerce Return Policy Look Like?

It’s important for e-commerce businesses to establish and post a return policy that simultaneously protects your business and keeps customers happy.

You can’t make returns so easy that people abuse your process, but you want to make the process as seamless as possible. And you need to crunch the numbers to see what’s possible for your unique business.

How long of a return window can you afford to offer? Who pays to return products, and do you offer packaging materials and return labels?

Some e-commerce companies have clever reusable packaging and pre-printed return labels to facilitate returns.

Other online retailers have stopped asking customers to send back merchandise they are returning, especially if there is something legitimately wrong with it. For example, Amazon handles order errors by telling the customer to keep the incorrect item and they’ll just send the correct replacement. This trend is growing with major retailers but is often not a realistic expense for smaller e-commerce businesses to shoulder.

Even small e-commerce businesses need to assess the cost of return postage, returns processing, restocking, and storing merchandise that may be out of season or interfere with more current items.

So, which retailers have the best and worst returns policies? Here are a few examples to take note of, keeping in mind that major chains can often weather longer return windows and more generous policies than smaller ones:

  • Target and Walmart both provide free shipping for online returns.
  • Nordstrom has no time limit for a full refund and Bloomingdale’s gives you a year.
  • Athleta and Kohl’s accept returns without a receipt, as does online shoe retailer Zappos.
  • TJ Maxx and Marshalls provide extra return time for online orders.
  • Apple and Best Buy only give 14 and 15 days, respectively, for returns. Ouch.
  • Overstock only provides free return shipping for defective items.

While the specific details of a return policy are up to you and what’s best for your business, your business and your customers will benefit from incorporating these elements into your returns policy:

  • State upfront which items cannot be returned for legal or hygienic reasons, such as alcohol, swimsuits, beauty products, etc., especially once the internal packaging has been opened.
  • Be clear about common customer abuses, like wearing clothing and then returning it, stating that signs of obvious wear will prevent refunds unless there is a defect with the product.
  • Post clear standard details about returns, including the time window, process, who pays for shipping, if a receipt is required and when refunds will be credited.
  • Consider charging a restocking fee for items that are expensive to process as returns, such as large furniture. This protects your business and discourages frivolous returns.
  • Get ahead of bad reviews by not letting return issues escalate. Don’t shift the blame on the carrier or make the customer track down their merchandise, as stated above. For customers with valid complaints, offer discounts, exchanges or replacements to keep them in your good graces.

Last, it’s important to understand that some customers just aren’t going to be happy. If they post a bad review because they try to return an item a year after they bought it, which is outside your window, there’s not much you can do, other than to reply to their review politely explaining your policy. You can, of course, make quiet exceptions to your policies for long-time or high-volume customers.

E-Commerce Returns Made Easy with GLF

Even with the best policy in place, returns are a headache to manage in-house. They’re costly, time-consuming, and, when not done well, can result in negative reviews and lost customers. This is why online retailers frequently partner with an e-commerce fulfillment service.

The same company that stores, picks, packs, and ships your orders (along with many other tasks) can also handle your returns. This takes a lot of stress off your plate, including:

  • Dealing with return shipping logistics.
  • Hiring staff to physically inspect and process returns.
  • Managing most customer service calls regarding returns.
  • Restocking or disposing of items.
  • Tracking down lost parcels.
  • Negotiating with shipping carriers about late or missing deliveries.

If you’re struggling with returns, GLF E-Commerce Fulfillment is here to help. For 20 years, we have helped online retailers grow their businesses with our all-in-one solutions for e-commerce fulfillment. Contact us today to learn how we can create a custom fulfillment solution for your business.

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