Product Returns in E-Commerce

Many customers buy online with an explicit plan to immediately return some or all of their orders. As a result, a niche-industry of Reverse Logistics is growing within the 3PL space. So why do people return products? And how do product returns impact customer loyalty? Lastly, How can sellers reduce the rate of returns? This article explores answers to these product return questions and more on how to understand customers and reduce their product returns.

Why Do People Return Orders?

What goes on in the head of a buyer that buys a bulk order only to send some, if not most, of it back? Here’s the short answer: When a client knows they can get their money back just as easily as they spent it – they’ll spend with less fear. Let’s look at how that manifests itself in the online shopping experience:

They Want Convenient Shopping – That Includes Easy Refunds

Did you know that brick-and-mortar stores on average experience a rate of 9% on product returns. For online shopping that jumps to 20%. The reason is clear – customers can touch, feel, and try on products at the store. Those contact points with the product not available when shopping online. As such, online customers need the flexibility to try goods out and see what works. They need to do so without the fear of financial reprisal i.e. being charged for returns.

Make no mistake – there is one category above all that experiences the more returns than the rest – Apparel. Let’s explore how this looks and what we can do to reduce return rates.

Why Do Customers Return Apparel?

Ever wonder why clothing purchases don’t work out? Here’s a short list of reasons why apparel specifically gets returned:

1. Size too small: 30%
2. Size too large: 22%
3. Changed my mind: 12%
4. Style: 8%
5. Not as described: 5%
6. Defective: 5%

Online shopping is tricky for clothing – specifically for women. Too many different body types to match with two many different ‘size definitions’ across too many brands. If you’ve ever been shopping with a female partner or friend, you know this to be true, especially in store.

What Products Get Returned the Most?

After apparel, which category gets the most returns? Lets look at the e-commerce economy more broadly, by product return.

Per the IMRG Quartey Benchmark of Q4 in 2020, clothing and footwear are returned more broadly than home goods or electronics. However, we can see that other industries get returns at a rate significant enough to impact bottom lines. When profit margins are measure in percentage points, its important to understand how returns affect your growth. So outside of the apparel industry, why do people return products?

9 Most Common Reasons for Product Returns

Stepping back from apparel and looking at e-commerce holistically, lets review why product returns take place.

Damaged Products From Design Flaws & Shipping

Your products have most likely traveled over 9,000 miles from the factory to your clients doorstep. You think there’s any opportunity for damage a long the way? You’d be right to assume so. That journey can damage product packaging or units inside alike.

Damaged products can be a result of poor industrial design of packaging or the product itself. For example, if a customer ships a glass product built as is – it will surely crack at some point due to poor packaging. In this hypothetical, the pre-installed glass is subject to higher risk of breaking because it is only supported by screws. However, if the seller elects to package this tightly (and uninstalled), this allows the unit to ship safely. In turn, the customer pieces the product together after delivery – where all the parts will be in tact and undamaged by transit. This design option will sure reduce return based damage.

Defective Products in Product Returns

Despite professional packaging designs, products are often defective right off the manufacturing line. This typically happen under three conditions:

1. New Product Launch – never brought this product to market before? Odds are your production process has not been quite perfected at scale yet. Yes, the sample looked good. But that does not ensure quality control for your entire Purchase Order.
2. New Manufacturer – perhaps you chose to switch suppliers. That’s okay! They could be closer to port and/or build the units for lower cost. No worries. However, to ensure you enjoy the same scaled product quality, you will need a standard operating procedure to ensure the manufacturing transition is smooth. For example, they will need to know where to give extra attention to detail during the production process, if your products need specific accommodation.
3. New Materials – maybe you found a way to build the same product cheaper by using a new materials supplier. Great! Just make sure your products are stress tested and examined for quality control. This will make sure you are getting the value you want out of the newer and cheaper materials.

Overall, the key to preventing product returns based on defective products is to employ a Product Inspection process either at the begging, middle or end of your production cycle. This will minimize risk and ensure quality production to reduce the rate of defective returns. Ask Momentum Warehousing about inspection services – we off them!

Products Arrived After An Event

Some orders are time sensitive! If it takes too long to fulfill or deliver an order, the need for the product my vanish. For example, if you are ordering goods for an event like a wedding, but they don’t show in time – you no longer need the goods. Make sure you partner with a fulfilment center who offers same day order fulfillment like Momentum Warehousing. This will reduce product returns based on late delivery times.

Product No Longer Needed

Oftentimes, a customer purchased a product with a specific need in mind. And oftentimes, the circumstances behind that need change. Its not the sellers fault. Its not the fulfilment centers fault. It is what it is. You can’t control that and that’s okay. But what you can control is the experience the customer has when returning their purchase order. If it is a quick and free process – they will take note and bring business back in the future.

Buyers Remorse

Similar to the last circumstance, it’s difficult to undo ‘Buyer’s Remorse’. Take this as an opportunity to collect constructive feedback from the customer and also earn their trust by providing excellent service during the return process. In turn, this will boost the opportunity for future sales and reduce the rate of future returns.

Product Listing vs Product Experience

You might have done too good a job of promising a product that will deliver what the consumer wants. When your sales copy sets expectations high, be sure the the unboxing, product quality, and marketing materials deliver a 5-star experience. Make sure the product matches the description in your product listing! In otherwards, do not over promise and under deliver.

Gifts as Product Returns

This is always an easy way to market your goods. And where the buyer might be excited at the idea of this gift; it does not mean the gift recipient will be just excited about it. In the event the giftee wants to return the product – you have an opportunity to earn their trust and build a relationship with you brand’s customer service via the return process. Perhaps they just need a new size, or what to exchange it for something else – great – its not a loss then. There’s still the opportunity to limit the return rate on gifts if you give the client additional options to explore your brand.

Customer Found Better Prices

This is less common than most reasons, but still pops up on our radar. It also dove tails with the notion of buyer’s remorse. Just make sure that your client can return the product easily. At the end of the day, if they are purchasing a cheaper quality product, they’re going to have a 2-3 star experience rather than the 4-5 star experience your brand offers. Let them come back with their tail between their legs at a later date, when they bring their business back to you!

Fraudulent Charges and Product Returns

In 2020, over $25 Billion in fraudulent returns were processed. That’s about 6% of all returns! Returns can occur to launder money from stolen credit cards. How does that work? The scammer purchases order with the stolen card. Afterwards, they return the item for cash. If you can implement a policy on only offering refunds to the original card or in-store credit, you can protect yourself from this scheme.

How Do Product Returns Affect Customer Loyalty?

Anyone is business knows its much easier to keep a current customer than find a new one. In other words, the cost of client acquisition is much higher than client retention. What’s more is that on average, 65% of a firm’s revenue comes from existing clients. Wow! Customer loyalty has its perks as a seller. That loyalty is built with trust in a brand. And trust can either be built or broken during a product return process. So to ensure you retain customers, instead of chasing new ones, make sure you over a return process that’s easy and reputable.

Product Returns and Customer Loyalty

The experience of returning a product can determine whether a patron will ever trust you with their business again. Why?

Getting The Right Shopping Outcome

First, The notion that the customer can’t find the right product with your brand can cause them to shop elsewhere for that purchase. That’s okay. They can still come back for future purchases.

However, if there’s no solution to swapping out a product or getting a refund – then there’s no reason to do business with your brand in the future. Protect and preserve your relationship with buyers by providing them with a shopping outcome that keeps them whole and happy – not left in the dust with unwanted items or unwanted return shipping fees.

Product Returns Experience – Is It Easy for Customers?

Secondly, if the returns process itself is bloated with tasks and obstacles, the customer will most likely choose a path of lesser ‘return resistance’ moving forward. In other words, they shop elsewhere next time. So make sure your product returns process is easy, time effective, and light on resources.

In other words, do not make the customer procure a new shipping box and print a shipping label and drive across town to the post office. For example, Amazon Returns are very easy. Typically customers just need to pop in at a Wholefoods or UPS store with a digital barcode on their phone to be scanned.

How to Reduce Product Returns?

1. Improve Product Description – Set the right expectations for your customer by detailing an accurate product description. Do not over sell. Do not over promise. Make sure you measure product dimensions accurately.
2. Use Product Photographs – A picture is worth a thousand words. So start illustrating value via photos. This will help communicate product expectations with more clarity and integrity.
3. Include Product Videos – If a picture is worth a thousand words, than surely a video is worth 10,000 words. Highlight the product from different angles. Demonstrate its functionality in real time. Set a crystal clear expectation.
4. Secure Reviews – social proof goes along way in communicating expectations. If your product doesn’t speak for itself – hopefully fellow customers can do so for you.
5. Product Inspections – Make sure products are not defective from the factory. Conduct a mid-manufacturing inspection on the goods. Once goods are staged in the US, conduct a packaging inspection to ensure nothing arrived damaged.
6. Use a Repricing Tool – Some customers may simply return the product because they find it cheaper from another seller. This can be a hassle for you, and it may seem like there’s nothing you can do. But using an automated repricing tool like Repricer can help.
7. Invest in Customer Service – It’s often easier to ship out a new product than go through the return process on an old one. If this scenario applies to your products, make sure you have a method of collecting complaints in real time so you can handle them yourself.