Fintech Insights

Turning the tide of eCommerce returns

Gareth Goodridge - Digital Marketing Director, Worldpay

July 31, 2019

The new "normal" for online shoppers is a big problem for online retailers. We're talking about eCommerce returns. At least 30% of products ordered online are returned, compared to 8.89% of products purchased in brick-and-mortar stores. Furthermore, shoppers want a choice of return methods — from mail, to collection point, to in-store, and 79% of consumers want free return shipping.

Which industries are more vulnerable to eCommerce returns? How do returns affect eCommerce businesses? And most importantly, what can eCommerce businesses do to reduce the level of returns? Let's take a look.

Trends in eCommerce returns

Worldpay transactional data indicate that some industries (fashion, for example) experience higher than average returns. Nearly 1 in every 5 online fashion purchases in North America is returned to the retailer. On the other end of the spectrum, Worldpay data show that consumer electronics have the lowest rate of return, less than 1 percent.

Overall, Barclaycard research revealed that 19% of shoppers order multiple versions of the same item so they could make their choice when the items are delivered, and 30% of shoppers deliberately over-purchase and return unwanted items.

How returns impact eCommerce business

Returns aren't great for business, taking time and money away from daily operations. According to Barclaycard's survey, 57% of retailers said that dealing with returns has a negative impact on their business, and 20% would increase the price of their products to make up for the cost of processing returns.

eCommerce returns can also impact customer loyalty— shoppers that have a negative return experience are less likely to return. Younger shoppers are the least tolerant— 60% aged 18-25, and 57% aged 26-35 said they would not shop with a retailer again after a negative return experience.

How to minimize returns

Reducing the level of returns can help improve customer satisfaction and cash flow, and help reduce costs. It can also help minimize fraud— approximately 6.5% of eCommerce returns in 2017 were labeled fraud or abuse of store return policies.

Here are some ways to help reduce eCommerce returns and mitigate the negative impact on business.

1. Make your returns policy obvious

A clear and concise return and refund policy goes a long way to build customer confidence in your business and your products. Make sure your return policy is located in an obvious place on your site like your main menu, and include it in all customer correspondence such as order confirmation, shipping, and notice of delivery emails. Be sure to indicate whether you offer exchange, store credit, or cash back, or all three options.

You should also be sure your time frame for returns is clear. To gain more control of your inventory and forecasting, you can keep the return time frame relatively short. But, be sure to consider the impact on your customers. For example, for some items, if your return window is too short, consumers may be more hesitant to make a purchase.

2. Identify and remove repeat returners from mailing and sales notification lists

You can work with your payments processor to identify which products or categories are most likely to be returned by analyzing purchase and return data. You can also determine who your most prolific returners are, by individuals and shopper types. Armed with this information, you can devise a strategy for accepting returns.

One option is to steer your marketing efforts toward those who less likely to return items, getting existing customers to buy more and attracting new customers with similar profiles. Alternatively, you can look at why certain customers are returning such a high volume of purchases and offer help, such as personal assistance to overcome issues.

3. Provide online tools

When it comes to fashion eCommerce, it's key to help customers find the right-sized item. New virtual technology is helping solve this problem. "Virtusize" is one tool designed to reduce online returns by allowing customers to compare the measurements of an item they are considering buying with something the already own.

4. Gather customer preferences and information upfront

Getting information from customers upfront can help reduce the likelihood of a return. Take online fashion retailer Thread for example. The company asks customers to input their measurements, list items in their wardrobe, and select their preferred styles for different occasions. Thread then emails suggestions from their "personal shopper." Customers can choose what they like or don't like, allowing Thread to compile customer preferences from which they can make recommendations over time.

5. Feature videos and images of your products

As with most things, visuals help sell. But instead of displaying items as a flat image, show the item in use. 3D imagery allows customers to view the item from all angles, and get a better idea of how the item will look or fit. Videos are even better.

6. Ask for customer reviews

Customers trust reviews. They're viewed as impartial. So encourage customers to review their purchases. Ask for ratings on criteria. For example, fit of a garment, or how well the item matched their expectations. Ask customers to submit photos or videos of themselves using or wearing the purchase. Post reviews along with the product listings to help customers make more informed decisions.

Reducing eCommerce returns is a win-win for consumers and online merchants. Consumers can feel confident that the business really cares about delivering the products that are right for them. Businesses can reduce costs, gain better control of their inventory, and attract more loyal customers.