Managing the Inevitable Reality of E-Commerce Returns

Product returns are an unavoidable part of running an e-commerce business. They can’t be eliminated, so offering the option to return items can be a vital part of a business’s strategy.

As the adage goes: “If you have too few returns, you’re not selling enough.” Still, most e-commerce businesses would like to reduce the number of returns they need to process.

The E-Commerce Times spoke with several experts in online commerce to get their take on what causes returns, how to handle rejected orders, and ultimately keep them from happening in the first place.

“Many companies focus all efforts on the sales side but do not spend the same energy reviewing all the returns and how to make the experience better, which can have a better return on investment than simply increasing sales and marketing,” Nate Burke, CEO of Diginius, explained to the E-Commerce Times.

Since returns are a part of life in the e-commerce realm, dealing with them effectively is a critical component of any e-tail business plan.

“Returns cannot and should not be eliminated, but they certainly can be better managed,” advised Matthew Merrilees, CEO North America of Global-e. “They actually present an opportunity to build trust between the retailer and the customer.”

The Case for Reducing Returns

Returns cost money and time and risk damaging products or rendering them useless, so reducing them makes sense for most businesses.

“Just the nature of having to pack and ship products back and forth means that the more returns there are, the more chances there are for product to get damaged,” Lucy Kelly, artist and owner of bel monili, told the E-Commerce Times.

“As an e-commerce business owner, you want to be creating the best possible experience for your customer, which means they should be delighted with their purchase the moment they open it,” she continued. “By creating that expectation and experience, your customers will be much less likely to ask for a refund and much more likely to share their positive experiences with others.”

Taking steps to reduce the number of returns is good business for a variety of reasons.

“There are many benefits of reducing your business’s product returns,” offered Karina Shivdasani, founder and CEO of Common Assembly. “Returning can be a big issue in the world of e-commerce. It cuts your profit margins, has a negative environmental impact, and threatens your overall business.”

In addition, she noted, “It can cause you to have to hire more workers, increase your warehouse space or deal with wonky logistics. Bottom line: it damages your brand and profitability as a company.”

For that reason, having a clear return policy — and ensuring that policy is in a business’s best interest and ultimately minimizes returns — is a vital part of running an e-commerce enterprise.

“While offering a quality return policy and customer service processes is key for small businesses looking to build up loyalty in their consumer base, returns should be minimized as much as possible,” Jacqueline Snyder, co-founder with Minna Khounlo-Sithep of The Product Boss, told the E-Commerce Times.

“The extremely high rate of returns is a serious plague on retailers at this point, so there are financial costs and opportunity costs that should definitely be considered when establishing a policy,” she asserted.

Get to the Root of Returns

There are a variety of reasons why consumers return items, and e-commerce businesses must be aware of what’s causing their particular returns. Evaluating and understanding why returns are happening can help a business to create strategies to reduce them.

“Monitor all reasons for returns and resolve issues at the core, such as quality issues, product descriptions on the website, packaging problems, photography, better fitting guides, consistent measurements, and phone support,” explained Burke.

For products crossing international borders, there are many unique reasons why products might be returned, and businesses selling to international markets must take these into account.

“Our data indicates that the most common reason for cross-border e-commerce consumer product returns, by over 50 percent, relates to sizing and fit,” noted Merrilees.

“But other reasons for returns can be avoided. Sometimes, consumers receive a package only to discover taxes and shipping costs that they weren’t made aware of in advance during the checkout process. This results in higher return rates and very unsatisfied customers, not to mention logistical costs for the merchant for both the outbound and return journey.

“These returns can be prevented by providing international consumers with a calculation of all duties and taxes associated with their purchase and allowing them to be prepaid at checkout. Or, in many cases, an even better solution is to present international customers with prices inclusive of local duties and taxes according to the local pricing display convention of that market,” he explained.

How To Reduce Returned Orders

Once a business has a sense of why returns are happening, it can act to mitigate these occurrences.

Sometimes, it’s just a matter of making sure product photos and other sales and marketing materials are accurate so that consumers know exactly what they’re ordering.

“Make sure that you have clear, crisp product photos that accurately show the size, color, and use of your product,” said Kelly. “Scale is important. You want to be able to show how the product would fit in everyday use by having styled or lifestyle photos showing the product being used.”

Various measures can be taken by businesses to reduce returns, depending on why they are happening in the first place.

“There are several avenues that retailers can take when looking to diminish their product return rate,” explained Khounlo-Sithep. “We’d suggest beginning with quality control. Add an extra checkpoint for all packages to be reviewed once more before they are shipped out for any errors and/or product damages.

“If this is too much for you on your own, outsource. Bring in an extra set of hands or perhaps adopt a new inventory management software to help you fulfill orders with higher accuracy.”

Making sure products are described correctly can be another key to reducing returns.

“We’d recommend you re-examine your site to make sure the descriptions of the products match what you are sending out to customers and that you are representing the product accurately with high-quality images and/or videos,” added Khounlo-Sithep. “This can help tremendously with customer expectations and remedy some of the most common occurrences we see in retailers with high return rates.”

Finally, inviting customer reviews can help prevent returns in the first place.

“Encourage customer reviews with each purchase. These days, reviews can really make or break a product,” said Khounlo-Sithep. “Having real-life people write their candid experiences with [or when] using the product is an excellent way to help your customers make a more informed decision.”

Returns Management Process

In the end, since eliminating returns altogether is impossible, developing a return policy and system that keeps a business profitable is key.

“Depending on the business, returns can be fully automated into the online process,” said Burke. “Some companies wish to have interaction with the customer via phone support to authorize returns and try to work with the customer on another solution if possible.”

“In any case,” he concluded, “documenting all the processes and talking to the customers to identify the reasons for returns and how to handle them smoothly is crucial to a profitable online business that can scale.”