With free returns becoming the norm over the past few years, it’s no surprise that over a quarter of eCommerce retailers have reported an increase in their returns in the past two years. In fact, recent research has shown that a fifth of retailers have already taken steps to make their returns policy more stringent in the past year, with a further 19% planning to do so in the coming year.
As consumers increasingly tighten their purse strings due to the cost of living crisis, are retailers at risk of losing their customers as they introduce stringent returns policies? With 73% of consumers claiming that a brand’s return policy influences their purchase decisions, it’s more important than ever for brands to get their eCommerce returns policy right.
However, improvements to the cost of returns are not a binary option of free vs paid returns. There are other opportunities available to retailers to reduce the cost of returns.
Let’s explore our top 5 ways to reduce the cost of eCommerce returns.
Accurate marketing and sales information
A customer returns a product at its most basic level because it has not met its initial expectations.
This seemingly obvious fact is often the result of controllable factors such as inaccurate product descriptions, unrealistic photography or even product defects and faults.
In fact, 22% of returns are because the product differs from the description online.
However, it’s not just about ensuring the product meets customer expectations but also ensuring that the delivery experience is as expected. Providing clear and upfront information about shipping times allows eCommerce brands to manage customer expectations.
Reducing distribution errors
Another significant driver of eCommerce returns are issues arising within your fulfilment and supply chain. With 20% of returns resulting from receiving a damaged product, there are only two possible reasons: either the product was dispatched with a fault or damaged in transit. Both of these are preventable.
With a reliable Quality Control and eCommerce Fulfilment process, you can significantly reduce the likelihood that a customer will receive a defective product. Whatsmore, by investing in suitable packaging, you can ensure your products are dispatched securely, reducing the chances of being damaged in transit. Common packaging mistakes include using the wrong packaging size or investing in substandard or poorly designed packaging.
In addition to the above, 23% of returns are reported to result from receiving the wrong product. Improvements to your fulfilment process or changing to a reliable 3PL partner will eliminate this issue.
Incentives
As more buy-now-pay-later payment options continue to rise in popularity, customers are increasingly inclined to order more with the intention of returning items. One possible way to combat this is to provide reverse discounting.
The concept of reverse discounting is a relatively new concept that incentives customers to reduce their returns by providing them with a discount off their entire order if they keep all of their items. However, for retailers to truly capitalise on this, they must first tackle any internal issues relating to product accuracy.
Data Analytics
While we are aiming to reduce the volume of returns, the reality is that we cannot eliminate returns from eCommerce completely. However, we can be smarter with the information and data that returns provide retailers.
At its most basic level, using return reason data can help to identify issues and address them to reduce the volume of returns. On the other hand, purchasing and return data can also be a rich source of information, enabling retailers to spot trends and segment their customer base for more personalised marketing. For example, if a brand has data indicating an individual customer frequently returns a particular brand, they can use that information to exclude them from any promotional campaigns.
Likewise, if we can identify a specific brand or product that a customer rarely returns, targeted marketing promoting new products from that brand could be advantageous. You can also get really detailed, looking at obscure trends such as a customer always returning a particular colour or style of clothing.
Artificial intelligence
While 38% of shoppers said they would send back fewer returns if businesses had standardised clothing and shoe sizes, there is an opportunity for AI technology to overcome this.
One of the key challenges for eCommerce versus brick-and-mortar stores is the customer’s inability to see the product. However, AI and virtual reality technology advances are beginning to address this challenge. It’s becoming increasingly popular for brands to use AI technology to analyse a customer’s previous purchases and returns to suggest the perfect size for new items. Meanwhile, advances in virtual and augmented reality are paving the way for the evolution of the virtual changing room – a space where customers can try on products in a digital environment.
Support to reduce your eCommerce Returns
While it may seem counterintuitive that outsourcing your returns could, in turn, reduce the cost of eCommerce returns, the reality is that unlocking the expertise available through a 3PL partner proves invaluable.
For many brands, not only do they experience an improvement in the processing and handling of their returns, but they also experience a reduction in two of the most common reasons for eCommerce returns (damaged deliveries and slow deliveries). This is because they have the staff, processes and facilities to conduct quality control, package items securely and ship orders quickly.
An outsourced fulfilment provider also provides efficient and effective reverse logistics, including processing returns, recording reasons, inspecting items and repackaging products for resale. This attention to detail gives you more accurate data about your returns, helps you to identify and overcome any fraud and allows you to resell products to minimise loss or devaluation quickly.
Contact us today if you are interested in learning more about how we can help you decrease your return cost.
