Ecommerce Returns: 7 Best Practices For Keeping Returns to a Minimum

August 23, 2022

Rachel Go

Ecommerce Returns Best Practices For Keeping Returns to a Minimum FE ecommerce returns

What could be worse than a lost sale in ecommerce? A return.

Returns cost more than just the price of a single item. Returns cost your brand opportunity.

One less sale just means less revenue, but a return means lost revenue, missed brand opportunity, and a lesser buyer experience.

An item returned means you’ve lost not only the original revenue but any potential earnings you would have gotten from a happy customer.

Returns also create inventory that you may not want to resell—or cannot resell at the original price.

Fortunately, there are plenty of things merchants can do to help prevent online returns, such as better understanding their customer base, optimizing overall customer acquisition, adjusting their return process to set expectations, and more.

All of these tactics can go toward lowering your return rate and raising your repeat customer rate to save time and money.

In this article, I’ll go over:

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The dangers of a high ecommerce return rate

blank packaging box ecommerce returns
Image: Unsplash

The National Retail Federation found that the average rate of returns of online purchases in 2021 was 20.8%, up from 18.1% in 2020. That means roughly one in every five purchases will result in a return or exchange.

According to the Loop Returns’ 2022 Ecommerce Returns Benchmark Report, the breakdown of those returns is roughly 29.7% in exchanges and the remaining 70.3% as a refund (or a straight return).

Regardless of the breakdown, returns are bad for business.

They cost money, inventory, and customer loyalty. To add insult to injury, they also represent an opportunity loss. Instead of selling to a happy customer—who will return and make additional purchases, a return means you sold to an unhappy buyer instead—who may leave a bad review and spread their poor experience by word-of-mouth.

1. Less revenue for your business

Returns are worse than simply a lost sale. Unlike a warranty, a return means your brand owes money.

Any exchange of funds comes with expenses.

Whenever someone makes a purchase, you may owe a percentage of that sale to your shopping cart, card company, and other third-party vendors handling those funds.

What happens to those service fees in a return?

Your brand may have to shoulder them, which means a single sale ended up costing money instead of earning it. In high volumes, even small expenses add up to make big losses.

2. Less inventory for loyal customers

Returns cost inventory.

With tight supply chains, a high customer return rate means less inventory to serve your new and existing customers.

You risk selling out, and on top of that, you may then get items back that you cannot resell.

Even if you were willing to risk your brand reputation by selling items handled by another consumer and then returned, those SKUs were still out of commission when the original buyer held them.

The higher your return rate, the more valuable stock is tied up in an exchange that doesn’t benefit your brand.

What happens if you sell out and a loyal shopper has to go elsewhere?

Ultimately, the danger of a return is that it causes a brand to exchange a happy customer (whom you would have had the inventory to sell to) with an unhappy one (whom you shouldn’t have sold to in the first place).

3. More brand risk

As mentioned above, reselling returned items comes with a risk to your brand.

There is no way to tell what someone has done to an item that was in their possession, then sent back.

For example, in the case of wine, returned bottles could have been tampered with. When a game console is returned, external software could have been installed. If you’re dealing with furniture, pieces could have been removed or swapped out.

If you cannot afford to decommission your returned inventory, more returns mean more risk to your buyers and your brand reputation.

How to prevent ecommerce returns

With the many downsides to a high return rate, the best solution is prevention.

Instead of trying to fix something that went wrong—costing your brand and customer support team time and resources—you should work to prevent returns from taking place as much as possible.

To do that, let’s investigate the various reasons for returns happening in the first place, so we can deconstruct the solutions.

In 2021, Narvar surveyed 1,040 US consumers to learn about their return habits.

The survey found that the most common reasons for returns were fit and size issues (42%), damaged items (17%), and items that were not as depicted (13%).

Fortunately, retailers have the tools to fix these issues with proper planning and management.

1. Help shoppers find the right fit the first time

Bracketing refers to an increasingly common practice of consumers purchasing multiple sizes and styles of an item to try on at home, with the intention of returning what doesn’t work.

Narvar found that almost 60% of online shoppers surveyed participated in bracketing to find the right fit.

These are essentially shoppers who buy items, see if they look good, and return what they don’t like.

Thanks to generous ecommerce return policies, this may seem like a savvy shopping strategy for those who cannot try the items on in a retail store.

However, it costs merchants big time. And more than half of consumers are doing it.

To sell one item, you have to commit inventory of multiple sizes and styles, only to have them returned later.

How to do help shoppers find the right fit

  • To help reduce bracketing, consider employing virtual reality or augmented reality tools to give shoppers a way to try items on accurately.
  • You can also utilize live shopping to help answer consumers’ questions and give them more confidence in their choice of size, style, and color.
  • Allow shoppers to filter reviews that mention size. According to a 2019 McKinsey Returns Management Survey, one of the most effective shopping tools consumers found was reviews directly related to size.
  • Finally, include international sizing standards in your product description and give objective measurements when possible. For example, you can provide US, UK, and EU sizing for clothes and display the exact width and length of shoes alongside their size.

Example: Asics showcases reviews that include sizing

asics customer reviews ecommerce returns
Image: Asics

Above, the Asics product page showcases reviews that share whether the shoe’s fit runs small or large.

Likewise, it shows an aggregate of what buyers think about each shoe’s width, comfort, and quality.

This gives shoppers a general idea of how their sizes stack up and whether they should go a half-size up or down for the perfect fit.

2. Ensure items arrive in good condition

There’s nothing more crushing than getting excited for a package, then opening it up to find a broken item.

It’s detrimental to your buyer experience, hurts customer loyalty, and can result in some nasty online reviews.

If an item is broken or damaged upon receipt, you risk the wrath of a vocal and—what’s worse, rightfully—angry customer. And their network.

How to ensure items arrive in good condition

There are two parts to ensuring your buyers receive their items in good condition.

One is quality control throughout your supply chain, and another is protecting your items during shipping with the proper packaging.

As your items move through your supply chain, have multiple quality assurance checkpoints.

Inspect items as they come in for any defects. Continue with your inspections as they are prepped to catch broken items, missing pieces, or other defects. Then, inspect your boxes as they go out, keeping an eye out for potential damage.

The best way to do this is to work with a logistics partner who is detail-oriented and has a history of high service.

Alternatively, you may consider training your own in-house warehouse and prep team to do the same, but this route takes more time and effort.

Whenever you ship out items, test and use the proper dunnage.

noissue packaging ecommerce returns
Image: @lunacraftsonline

Pack your item in a box and drop it from at least three feet in the air on each side and each corner. Then, open up the box to see how your item fared.

Once you know the best way to pack your goods to avoid damage, record it in a prep guideline document and work with your prep partner to follow a strict packing standard.

Watching your supply chain and optimizing your packaging can help prevent damaged goods from getting to your customers and protect your buyer experience.

3. Depict items clearly and set expectations

Have you ever gotten an unbelievable deal on a new couch, only to get a dollhouse couch in the mail?

Shoppers who receive items that weren’t as expected may feel deceived. This risks any goodwill built up toward your brand on top of a return.

How to set clear expectations

  • To prevent confusion, it’s important to give shoppers a clear picture of your products from your product page. Utilize media such as videos, GIFs, and 360-degree images to showcase exactly what your product looks like. Consider adding lifestyle photos for scale.
  • On top of that, create comprehensive product descriptions that are easy to skim. Consider adding a bullet list of the important facts, followed by more detailed descriptions for those who want to learn more.
  • Finally, adjust your product page to address any common misunderstandings upfront. For example, if a relatively large number of shoppers return an item because they thought it was a different size, use a different colored font to highlight the product size.

Example: Desert Steel includes product dimensions in description

desert steel product page ecommerce returns
Image: Desert Steel

Above, the Desert Steel team shares the height and width of their solar light in the description in italics and includes a photo of the item in a garden to give shoppers an idea of size.

Their description also covers the item’s basics in a quick bullet list.

4. Ensure shoppers receive the correct item

Shoppers who receive the wrong item, even if it isn’t broken, still got something they didn’t want or pay for.

This is an internal issue that needs to be resolved, potentially stemming from poor inventory and order management.

Your buyer won’t want to hear excuses in the face of a mistaken shipment—all they will see is that they got something they didn’t want or need, and it’s your brand’s fault.

How to ensure the correct item is delivered

Sending out the wrong item starts with your own internal records and processes.

Implement an automated order management system that receives data from all your different sales channels in real-time and can sync with warehouses down to inventory level.

From there, you want to pair that software with a well-organized inventory in your in-house and partner warehouses.

Label items correctly, store them strategically, and put safeguards in place that will prevent pick-and-pack employees from getting the wrong item.

5. Encourage gift certificates instead of physical items

“Gifting will become easier for ecommerce, more personal, gifting campaigns will become a part of every marketing campaign a DTC brand runs — the dusty gift cards in your bedside dresser and archived in your inbox will finally get put to work.”

Caitlin Teed, Director of Partnerships at Govalo

Sometimes someone returns an item that was gifted to them.

Nothing was wrong with the product or delivery experience—it just didn’t suit them.

These returns can be more common after a gift-giving holiday, such as Mother’s Day or Christmas. Observe your return trends to see if your items are susceptible to this type of return.

In addition, picture this scenario—someone buys your best-selling item and gives it away.

That item then goes out of stock, causing a loss of sales and a missed opportunity to make more loyal customers.

The gift recipient decides they don’t like your item and returns it. You’re out a sale plus a product.

If the gifter had opted for a gift card instead, you would have more stock, and the recipient would choose an item they’re less likely to return for themselves.

Plus, even if you sold out anyway, your gift card recipient would have to choose from your other items, helping you move items that may be slower moving.

How to encourage gift certificates

An interesting counter-intuitive solution is to sell fewer products and promote more gift cards to those looking for presents.

Encourage shoppers to purchase digital currency instead, such as a gift certificate, digital gift card, or e-cash.

You can do this by adding a “This is a gift” checkbox, signifying the need for wrapping and a gift receipt. Then, when someone checks the box, trigger a call to action (CTA) that recommends a digital gift card instead.

Make the option more appealing with your messaging, saying “let them choose their favorites,” promoting “instant delivery,” and giving them the option to “customize your message.”

This is an excellent solution to reduce returns because it puts fewer products at risk and extends your cash runway.

Here’s how the gift card strategy benefits play out:

  • You receive the money and maintain your inventory levels.
  • Shoppers who don’t use the gift card have just given you free revenue.
  • Shoppers who use their gift cards are likely to spend a little more to get the full value of the gift card.

Example: Siete offers a gift card in their store

siete gift card product page ecommerce returns
Image: Siete

Above, the Siete team promotes their gift card by highlighting all the benefits of getting it instead of a physical product.

For example, if a shopper can’t remember exactly what their friend liked.

6. Convert on quality, not price

“The reason it seems that price is all your customers care about is that you haven’t given them anything else to care about.”

Seth Godin, Entrepreneur, Author and Blogger

Sometimes shoppers return an item because they found it cheaper elsewhere.

Price-conscious deal-hunters will go through the effort of a return, even if they are already holding the product they want in their hands, just to save some money.

These types of shoppers are a poor fit for your brand longevity since they are usually ready to switch their preferred brand depending on price and convenience. Rather than attracting bargain-hunters, you should instead focus on attracting brand-loyal customers who will boost your repeat customer rate.

How to convert on quality

If you are susceptible to these types of price-conscious returns, go back to your messaging and rethink your marketing strategy.

Rather than competing on price, your brand must compete on quality and unique value.

Don’t boast about cheap pricing or promise cashback if they find it cheaper elsewhere.

Instead, overcome price-driven returns by highlighting your unique value proposition, the high-quality materials you’ve sourced, your meticulous quality assurance processes, and other aspects that set you apart.

7. Set delivery speed expectations

Finally, you may run into buyers who return an item because it arrived too late. For example, if it was a gift they no longer need or an outfit for an occasion that has passed.

Shipping date estimates usually have a window, such as standard shipping within five to 10 business days. Within that five-day window, an entire week’s worth of activities would have flown by.

The birthday present that was needed two days ago, the bag of coffee beans that was already replaced by a trip to the grocery, and the pair of shoes that was bought on impulse for a last-minute event all stand to be returned because they arrived too late.

How to set delivery speed expectations

In this case, you want to invest in fast shipping. The standard is two-day delivery, and consumer expectations are getting even higher.

There are multiple ways to trim down delivery speeds, but the most cost-effective (especially for high-volume sellers) is to distribute inventory strategically according to demand.

Place stock as close as possible to your buyers so that by the time an order comes in, there will be a warehouse with items ready to ship within the same state or even city.

In addition, make your expected delivery dates crystal clear before allowing a shopper to check out to ensure it fits their schedules.

You can do this by putting the delivery date range in brackets beside their shipping options and restating those dates in their first confirmation email alongside an easy way to cancel their order within the next 24 hours.

Example: Bootstrap requires delivery date selection

bootstrap beverages cart ecommerce returns
Image: Bootstrap

Above, Bootstrap allows shoppers to choose their delivery dates as part of the checkout process.

This clears any confusion about whether an item can get there on time.

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3 Ecommerce returns management software options

Returns, like taxes, are inevitable in ecommerce—no matter how well you plan.

So, now that we’ve gone over the different ways you can prevent returns, let’s look at some different tools that can help you manage returns when they arise.

ReturnLogic

returnlogic tool ecommerce returns

ReturnLogic can utilize information from barcode scanners to manage returned inventory and integrate with 3PLs and warehouse management systems.

It supports multiple return methods and allows shoppers to print their return labels, monitor their return status, and collect images and other data to prevent return fraud.

Pricing: Starts at $300/month

Returnly

returnly tool ecommerce returns

Returnly helps create a branded return experience that gives customers control of the process.

It supports a return portal where customers can select, manage, and monitor their returns, get instant store credit, and continue shopping.

This tool supports exchanges as well as returns to try and save some revenue.

Pricing: Starts at $29/month

Loop Returns

loop returns ecommerce returns

Loop Returns provides a portal for shoppers to return or exchange items.

It also helps merchants discover the reasons for a return in the first place, providing valuable data for avoiding future returns.

In addition, their portal allows shoppers to display a QR code instead of printing a return shipping label, which helps to save paper and reduce resource waste.

Pricing: Pricing is not public; book a demo to learn more.

Reduce ecommerce returns by leveraging innovative strategies

Returns are your enemy, but they can serve a purpose as well.

By learning why people return your items, you can improve your product and buyer experience while helping you improve your bottom line.

Follow my tips above to help reduce your ecommerce returns and optimize your store for your most loyal customers.

 

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Rachel Go

Rachel is a remote marketing manager with a background in building scalable content engines. She creates content that wins customers for B2B eCommerce companies like MyFBAPrep, Flxpoint, Shogun, and more. In the past, she has scaled organic acquisition efforts for companies like Deliverr, Skubana, and Pipe17.

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