How to reduce returns? Your comprehensive guide to optimizing Ecommerce returns 2022!

What is considered normal? There are a lot of variables, product category, payment types, buyer’s remorse, etc. If you do your research online, there are plenty of misleading statistics, some of which are out right ridiculous. You will find a few useful charts I reckon are a closest representation of an Ecommerce store to help you understand.

 Source: Shippo Ecommerce Benchmarks Report

Apparel: 10.01%

Beauty: 4.99%

Electronics: 8.28%

Health and Wellness: 4.20%

Jewelry: 8.31%

Sports & Outdoors: 6.10%

Generally speaking, return rates vary greatly depending on the types of ecommerce category. As an example, electronics could be within 5% - 10%, whereas apparel could be within 10% - 20% from store to store. It is very important to understand your own category average and whether your current return rate is within norms using statistics as an indicator.

Here are a few other statistics worth reviewing.

Interesting statistics conducted in a study from June 2021: 

“67% of consumers consult your return policy before making a purchase.

58% want to make a return easily, with all the useful instructions and without wasting time sending email to request information.

A negative return experience induces over 30% of consumers (with a peak of 60% in the 18-25age group) to avoid an online store for future purchases.

47% of people appreciate that the return label is easy to print.”

2.  Diagnosing the Problem

Now that we have a firm grasp of what return norms are, you will need to collect that data from your own store. You can setup a Shopify Refund Policy (or respective platform you are using) and include instructions on return reasons for tracking purposes. If you are tech savy and big on automation, you can also invest into an Ecommerce Returns Management system, there are plenty of options on the app store, which will let the customer process it themselves.

Ideally, we will need to have a decent sampling size, enabling us to breakdown and prioritize the highest return reason in which we can control. (Example: Something you cannot control would be the seasonal backlog of couriers).

3.  Common Return Reasons and Solutions

Item damaged or broken

Packaging, Shipping Services and Warehousing

Proper Packaging – As a former logistics consultant, part of the job was to create throw proof packaging and huck things at the wall! It might be worthwhile to conduct 6 foot drop tests to ensure your product survives the journey.

Shipping insurance – Most services you use will have a shipping insurance, if your ask your representative from the service company, they should be able to provide a guideline and claims timeframe for you.

Additional shipping insurance – Would only recommend this option if you are using express couriers exclusively, this option is only applicable with a fully end-to-end tracking.

Consider Changing Warehouses – Warehouse staff may not be trained properly on how to handle products and lack customer oriented pick packing procedures. Also, do not get sucked into the free packaging, it is a common pitfall for inadequately packed products.

Poor Quality Management / Supplier Selection

Quality Control – Consider using Quality Solutions like audits, inspections and production monitoring to oversee production and/or post production (like SYON-ASIA, there is no shame in self-promoting, I regret nothing).

Item does not match description

Sample and Production Quality Issues

Keep Your Suppliers Accountable – Most companies have experienced this once or twice, primarily new Ecommerce merchants. Samples look good, however mass-produced units barely resemble the original. Now you have thousands of units sitting in your garage or    warehouse, or God forbid, you are running a Kickstarter / Indiegogo project and have already shipped everything (I’ve got plenty of horror stories).

Conduct audits and inspections to prevent the same pitfalls that many Ecommerce stores experienced and potentially save yourself thousands of dollars.

Improve Listing Quality

I. Photos – You should have at least 1 or 2 scenario shots with the product in use to avoid misconceptions. Can also include real life application for products to help consumers visualize owning the product.

II. Content Writing – Add a bit of character, the customer experience should be light hearted and able to captivate them emotionally. Take your time to write out the feature, advantage and benefits and also include additional material like tutorial, size charts, specifications, etc.

Received the wrong item

1. Order Management System – Not to say that with an OMS (Order Management System) that you will have a 100% accuracy, but it will definitely be lowering the chances of making a blunder while packing the order. You will want to invest into one which offers a pick and pack feature which enables you to scan items as you are packaging them.

2. Warehouse Agreement Terms – Prior to cooperation, review Terms of Service or agreements to ensure human error issues are compensated. Warehouse should compensate the following, loss and damage, return shipping, restocking, resend shipping costs.

Gifts & Seasonal Gifts

This is going to be a big one considering we just got past Christmas, a lot of merchants will be experiencing a spike in returns. Unfortunately, this will be one that you will not be able to effectively reduce, but there are some tricks around it.

1. Provide Gift Card Options – You can include a digital / physical gift card which can be used within your store. This does not make you completely refund immune, but it does help avoid people receiving things they did not want and they can pick from within your inventory to spend, ultimately saving you some shipping costs.

2. Seasonal Return / Exchange Policies – Not necessarily a hack to save costs, but does help you maintain your sanity. Logistics in general will be absolute gutter around this time, it would be advisable to update your policy to include a return / exchange for January – February and forewarn the lead times.

  4.  Conclusion

Ultimately, there is no one medicine that can cure all sicknesses, this holds true for the world of Ecommerce Returns. We have to do our best to diagnose the problem to proactively remedy the issues.