Among the many ways Amazon has changed the rules of the game for retail is the way it’s shifted consumer expectations about returns. For the nation’s 100 million Prime members (and remember, the U.S. has only 128 million households) returns are free unless otherwise noted.
Retailers that want to compete with the Everything Store feel pressured to offer something similarly enticing — but doing it wrong can wreck a company’s bottom line.
Consider the stats: while brick-and-mortar returns hover at between 8% and 10% of purchases, returns from e-Commerce purchases range from 20% to 40%. The number is closer to 50% for high-end goods.
In 2018, Americans returned a whopping $400 billion worth of inventory, about $90 billion of that right after the holidays.
Worse, retailers often can’t resell returned items at full price. While some may sell at a discount, as much as 25% of returned merchandise goes straight to the landfill.
This isn’t sustainable. Even if you’re managing to keep pace now, the world’s mega-retailers will eventually change the game again, and you’ll have to recalibrate your margins all over.
Luckily, there are things you can do to win the battle of online returns. Here are four strategies that will keep returns from wreaking havoc on your bottom line.
1. Look At Customer Reviews
If you don’t already have a way to capture and analyze customer reviews, make this a priority. Pay special attention to those who didn’t love the product and those who returned it.
Are people complaining that your shoes run narrow, for example? Update the product description to reflect this, or give users a way to rate the fit of every model.
Are people surprised about the size of your products? Add more images to show scale and make measurements more prominent.
If you’re already capturing and analyzing customer reviews, make sure you have a process in place for regularly evaluating your products and shopping experience based on what you’re hearing. Over time, addressing the most common concerns should help you reduce your return rates.
2. Review Your Return Policy
I led off by saying retailers know they’re competing with Amazon when it comes to return policies. Research backs me up: 11% of cart abandonments happen because shoppers find a return policy to be “unsatisfactory.”
And now it’s time for some counterintuitive advice: to decrease returns from online orders, consider making your return policy more generous. That’s right: give customers more time (up to 90 days) to return a product.
Why? Because the longer we have something in our possession, the less willing we are to give it up. This psychological phenomenon is sometimes called the endowment effect and sometimes called loss aversion. Whatever you call it, though, it means that, once people get used to seeing something around the house, they’re less likely to want to send it back.
And even outside the tricks our minds play on us, offering a generous return policy sends the message that you’re trustworthy and you want your customers to be happy, which is never a bad look.
3. Invest In Better Product Imagery
As many as 22% of returns happen because the customer got something that looked different than what they saw on the website. Put differently: nearly a quarter of online returns happen because of inaccurate product information.
The bad news? This number is way too high. The good news? This problem is 100% within your control.
By investing in better product imagery, you can both increase your sales (higher quality and even larger photos have been correlated with higher conversions) and decrease your returns.
And the more information you can provide with your imagery, the better:
- Offering images from multiple angles is better than offering just one angle.
- Offering images that let shoppers zoom is better than non-zoomable images.
- Offering 360-degree spinning images is better than offering still images — in fact, we’ve seen returns drop as much as 30% with 360-degree spinning images.
The more accurately you can communicate to your customers what your products will look like when they arrive, the fewer returns you’ll have. Not only that, but your negative reviews should decrease significantly — when shoppers will be seeing exactly what they’re going to get, they’re less likely to be dissatisfied when it arrives.
4. Automate Or Outsource Returns And Return Logistics
Despite the fact that returns plague online retailers, only 23% of companies are using any kind of software to deal with return logistics.
If you’re among the 77% of companies not using software, now’s the time to consider it. Even if you keep your return rate flat, automating or outsourcing part of the return logistics process will likely free up employee time that can be spent more productively in other areas.
And if you choose a company that can help you liquidate or resell your returned merchandise, you’ll likely enjoy additional benefits. One expert in the space estimates that, by adopting some kind of system for returns, retailers can expect to add approximately 5% to their bottom line.
Not sure where to start? A few players in the space include Happy Returns, Optoro, Return Logic and Returnly.
Cutting Returns Will Save More Than Money
Retailers have plenty of financial motivation to reduce returns from online purchases. Beyond your bottom line, though, reducing online returns can help reduce carbon emissions and their contribution to climate change.
In 2016, emissions from transportation exceeded those from power plants for the first time since 1979, largely because of the “last-mile” driving required by the delivery and return of online goods. Couple that with the 25% of returned goods heading to landfills, and the problem is obvious.
The point is, reducing returns is in everyone’s best interests: customers will be happier, your bottom line will be stronger and the planet will be healthier. So what are you waiting for?
Jeff Hunt is an online marketing veteran who has been involved in technology industry for over 25 years. It was at his former workplaces Scene7 and Adobe that the concept of Snap36 came to fruition, clients wanted a simple, scalable and cost-effective way to do 360°/ 3D photography. Snap36 provides spin photography technology and services that boost conversions and lower returns.