The e-commerce industry keeps steadily growing and isn’t showing any signs of slowing down any time soon. This is good news for online stores around the world, although this steady growth also has its negative side effects.
Online purchases, as opposed to purchases made in-store, carry the risk of being the wrong size, looking slightly different than expected, or being damaged during shipping.
This means that the e-commerce industry’s growth also causes a growth in overall returns. E-commerce managers should approach this issue in a smart way. Clever approaches can help you reduce the total number of returns and build a sustainable business model.
We figured out for you how to lower your return rate using 7 easy-to-implement tips.
No time to read? You can download these 7 handy tips to reduce your return rate. Download here.
High return rates are costly business
Consumers often find free shipping more important than fast deliveries. This should also apply to your returns policy. iIf you want to drive sales and grow your e-commerce business, you will need to offer free shipping.
This also means chances are likely your return rates will rise. Customers who can return items for free are more likely to make riskier purchases. This will translate into a larger amount of returns for your business.
The one bearing the costs of these returns is you. It’s important to make sure this doesn’t get out of hand by getting your return rates under control.
How do you calculate your shop's return rate?
The return rate is calculated by dividing the number of products returned by the total number of products sold and then multiplying by 100%.
The formula is as follows: return rate = (number of products returned / total number of products sold) * 100%.
For example, if you received 23 returns and sold 367 products, you can calculate the return rate as follows (23/367) * 100% = 6.3%.
Does the return period affect the return rate?
If the return period is longer, consumers are more likely not to return a product. This phenomenon can be explained by several factors. First, the emotional attachment to the purchase may become stronger as time passes.
Moreover, the urgency to return the product quickly may be lacking. Consumers may therefore postpone or even forget the thought of returning a product.
Research shows that online stores that allow customers to return products within 14 days have an average return rate of 47%.
If the return period is extended to 30 days, this rate drops to 37%. If the period is longer than 30 days, the return rate is as low as 25%.
This suggests that extending the return period may be an effective way to reduce returns (Source: Thuiswinkel.org).
7 tips for lowering your return rate
1. Write clear and thorough product descriptions
Reducing your e-commerce return rates starts even before the final purchase is made. By adding clear product descriptions you can influence these return rates at an early stage.
Your customers want to know what they’re buying. This implies that the more information you give them prior to the purchase, the less likely they are to return the product.
When you’re writing clear and thorough product descriptions,make sure to keep the following in mind:
Always keep your ideal customer in mind when you start writing
Use product descriptions to answer frequently asked questions before the purchase
Add as much information about the product as possible
Tell your products’ unique story in an imaginative way
Add a lot of social proof, like visual reviews (more on that later)
Make sure product descriptions are easily scannable
Remember to optimize the descriptions for search engines (SEO)
Add information about sizing and fit
If you take the above factors into account, your product descriptions are guaranteed to contribute to a lower return rate. This will also positively influence your sales figures.
2. Use high resolution pictures and videos
You don’t want your customers to be disappointed when they finally unbox their purchases. By using high resolution product imagery, you lower the risk of customers not getting what they thought they ordered.
Make sure to always add multiple high quality images of your products. It helps to use pictures that are taken from several different angles.
Even better: if you can, try to use 360-degree images, or even short product videos. You still need to make sure these images are of high quality, of course.
If you sell products that have complex use instructions, you can add instructional videos. In these videos, go through the instructions step by step, so customers know exactly what to do when they receive their purchase.
Using these types of visuals in your online store will increase both your conversions and customer satisfaction, while also minimizing your return rates.
3. Allow customers to write product reviews
Yet another way to match a customer's expectations of a purchase is through reviews. Why customer reviews are so important for lowering your return rate?
First, it is important to consider why customer reviews are a form of social proof that is crucial for any e-commerce business. Underlying customer reviews as social proof are the following three principles:
Insecurity. When customers aren’t sure whether to make a purchase, they’ll look for other customers’ opinions first. Reviews can appease this sense of insecurity.
Similarity. People are social beings and will often act similar to people they identify with. Potential customers will identify with your customers more than with you as seller.
Authority. When in doubt, people will look to experts or figures of authority for guidance. Previous customers have experience with your products, so they are experts on the topic.
You can see customer reviews like a type of user-generated product information. By adding these to your product pages, potential customers run even less risk to be disappointed or surprised. This will be reflected in lower return rates.
Again, product reviews will make your sales figures climb. Research shows that if you show 5 reviews compared to none at all the chances of a purchase being made will increase by 270%.
4. Create an excellent customer service experience
E-commerce returns are unavoidable. Return rates are also higher in e-commerce in general, as opposed to traditional retail, mostly because in physical stores, customers can hold a product in their hand before deciding to make a purchase.
Eliminating e-commerce returns entirely is simply not going to happen. Decreasing your return rates to 0% is nothing more than a pipedream.
Apart from that, it’s crucial to make your customer service department easily reachable. Even before a purchase is made, customers might have questions about your products.
By clearly demonstrating that your customer service is willing to answer these questions, you will be left with a lower return rate later in the customer journey.
5. Analyse your data and optimize where needed
To keep your return rate as low as possible, it is important to analyze your data as thoroughly as possible. Start by examining your return flow. With data insights down to the SKU level, you can visualize which products are returned more frequently.
Use these insights to dive deeper into the reasons for these products being returned more often. Check customer reviews for these specific products as well. Perhaps you’ll have to investigate whether there are possible improvements in product quality, too.
With this data-driven process, you can find out which products aren’t performing well. This gives you the opportunity to change your product and/or online store to fix these issues, causing your return rates to decrease accordingly.
We asked 2,519 consumers what would be necessary for them to make a repeat purchase in an online store. Download our Industry Report 2021 to find out about their answers.
6. Optimize your customer experience for mobile devices
Between 2016 and 2021, mobile commerce saw an average 29.8% year-over-year growth. This means it’s necessary to keep in mind your mobile customer experience during store design.
Make sure to ask yourself the following questions during the optimisation process:
Can product and measurement information be found as easily on mobile as on desktop?
Can potential customers contact customer service as easily on mobile?
Are all product pictures and videos optimized for mobile devices?
Optimize your online store for the above requirements and more. It’s crucial to streamline your online store’s desktop and mobile customer experiences as much as possible, so that mobile users won’t cause a disproportionate increase in your return rates.
7. Encourage exchanges
Each and every return request offers an opportunity to turn into an exchange. For instance, consider the fact that 52% of returns are requested because of wrong sizing.
Every exchange is one less return, thus helping to lower your return rate. That's how you turn a potential cost into revenue retention.
You can also download these 7 tips to lower your return rate download to review later at your convenience.
Do you also want to reduce your e-commerce return rates?
With Returnista’s return software you can encourage exchanges by syncing your live inventory. Customers can directly request exchanges during the process of requesting a return.
With this software you can also get in-depth information on the flow of your returns, all the way down to SKU-level. This helps you analyse returns and make data-driven decisions and optimizations. This also helps you reduce return rates in no time.