There’s a costly crisis brewing in online retail today: product returns.It is the result of a lethal combination of omnichannel shoppers and bad product data .
As more and more consumers take to shopping across multiple digital channels, online brands and retailers are hardly able to keep their product information accurate and engaging on each. If they slip up, they can be sure it’s going to cost them in the form of an expensive return and a bad review to boot.
Let’s look at the impact returns are having on modern ecommerce businesses and explore several tactics to reduce returns from the get go.
The Crisis in Ecommerce: Returns Grow as They Become the “New Norm”
Returns are a sickness to businesses. They go straight for the profit margins and conversion rates to swiftly put the health of your entire business in danger.
And, unfortunately, returns are becoming quite normal in the online shopping world.
In the U.S., Statista predicts that the cost of delivering returns will reach $550 billion by 2020. That’s a 75 percent increase over just four years! And that number doesn’t even account for the restocking expenses or inventory losses that can wreak havoc on a bottom line.
Why are we seeing the instances and costs of returns rise? Because many online consumers are actually buying with a plan already in mind to return some—if not all—of their order.
In fact, free returns and exchanges are the second-most powerful factors in convincing a consumer to shop online (after free shipping, naturally). And over 60 percent of shoppers buy again from a brand that offers these free returns and exchanges.
96 percent of shoppers say they’d visit a retailer again if their return experience was pleasant yet nearly 70 percent would be deterred from a seller that asked them to cover return shipping or restocking fees.
What’s the impact the returns have on the business?
Brands that experience growing returns rates—which is most of the “successful” ones, ironically—have to bring on more employees, rent or buy more physical space in which to handle returns, and establish an entirely new process or even departments to manage the logistics and minimize the losses caused by returns.
In a nutshell: Online shopping returns are now considered normal and even factor in to the customer’s overall shopping experience. And, they can be downright deadly to businesses—if they aren’t managed correctly.
Benchmarks: Refunds, Reasons, Carriers & Costs
In order to see how you stack up against your peers and competitors, Return Magic surveyed 1,000 businesses in multiple industries and compiled data from over 800,000 Shopify customers.
Consumer preference-based return reasons (e.g., size, fit, style, etc.) tend to drive around 72% of all returns in fashion product categories. Non-preference-based reasons (e.g., defective) and “not as described” account for 10% in total.
Top reasons for returns
- Size too small: 30%
- Size too large: 22%
- Changed my mind: 12%
- Style: 8%
- Not as described: 5%
- Defective: 5%
- Other or not specified: 18%
Here are several tactics for decreasing return rates and positioning your products in a way that sets you apart from your competitors and maybe even boosts your bottom line.
4 Tactics to Sidestep the Product Return Crisis in Your Own Business
While some amount of returns will be inevitable as more and more transactions take place in the non-tangible digital world, with just a few marketing tweaks, lots of returns can be prevented.
In a large percentage of cases, returns happen because the product the consumer receives isn’t quite what they expected. Here are four tactics businesses can use to better set expectations and sidestep the $550 billion crisis that’s rocking the online retail industry.
Deploy Accurate, High-Quality Product Imagery
Over 20 percent of returns are made because the real-life product doesn’t look like what the website displayed. Thankfully, the solution here is pretty straightforward—use the most accurate, high-quality resources you can to display your products!
As they say, a picture is worth a thousand words. Imagery is one of the most important steps in capturing and then engaging an omnichannel shopper. While this certainly includes awesome photos, today it goes well beyond static imagery to 3D photography and product videos.
Whatever level of technicality you choose to go to, just be sure your imagery is detailed (Yes, we really want to see every angle!), clear (You better believe I’ll zoom in to see the stitching!), and above all so accurate that shoppers continue to choose you over your competitors because they trust they’ll always get exactly what they want and expect.
Incorporate Product Reviews (and Other Forms of Social Proof)
“Social proof” boils down to a psychological reaction where people seek to adopt the actions of others due to the innate instinct that what “the rest” are doing is correct. When shopping online, sources for social proof can range from accredited experts to celebrities, influencers, peers, and beyond. Social proof itself can take the form of user testimonials, endorsements from well-known figures, case studies, media mentions, social media reactions, and of course the product ratings and reviews that Amazon has made so ubiquitous.
Nearly 80 percent of U.S. consumers consider reviews an important factor in their purchasing decision. Almost 90 percent trust online reviews from strangers just as much as they would a recommendation from their own friends or family.
A Boston University study found that reviews that specify details about product quality and usage contribute significantly to higher sales and lower returns . For example, an animal supply retailer Petco found that including customer ratings and reviews on their online product pages reduced returns by over 20 percent.
Set Clear Expectations with Detailed Product DescriptionsNearly half of returns are a result of products not matching consumer expectations . However, this kind of return is completely avoidable. All a retailer has to do is provide the most accurate and descriptive product details possible, right? The problem is that, in this day and age, countless details across thousands of SKUs on tens of sales channels means that’s way easier said than done. There should be a fine balance between needed quality and often imposed quantity.
You should also be as detailed as possible when describing sizes:
- Provide all possible sizes (often different countries have different sizes)
- Give sizes in all the systems (e.g. inches and centimeters, ounces and grams, etc.)
- Provide more information than just sizes (e.g. for shoes, in addition to size, provide the length and even width of an inlay)
Avoid Surprises When it Comes to Those Few, Inevitable Returns
Retailers must accept that some returns are going to happen. The best thing they can do is put clear policies in place to avoid surprises that can lead to damaged trust and tanking sales.
If you choose to offer free returns to set yourself apart from your competitors, just be sure you have the logistics and runway in place to back up the level of returns you’re inviting. While this strategy has certainly been shown to work for online footwear retailer Zappos—who found their most profitable customers are also the most return-happy—it did take them a while to become profitable as a company.
Or, you may decide to go the way of Amazon, which recently began to enforce a policy that permanently bans serial returners from shopping on the platform.
Whichever path you choose, just be sure it’s clear. When over 60 percent of customers review a business’ return policy before they make a purchasing decision, there simply isn’t an excuse not to have one. You need to be as transparent with your return policy as you are with the awesome product imagery and descriptions that drew shoppers in in the first place.
Sure, some degree of product returns is becoming the new norm in online retail. However, these tactics for deploying top-notch imagery, implementing peer-based proof, providing engaging descriptions, and outlining clear rules for those few inevitable returns will set the stage for your business to sidestep the $550 billion return crisis—and maybe even make a little money in the process.
PS. Be careful, a friction-free return policy to grow your customer base — one that offers at least a 30-day window for free returns — can very easily lead to commercial demise. It’s not a good tactic for any business, neither a new one, nor an established one. But especially not for a new one.