Online selling
Everything you need to know about e-commerce returns
Online selling

Everything you need to know about e-commerce returns

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March 29, 2023

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The average e-commerce return rate is two to three times that of physical retailers, so returns cost businesses a ton of resources. Should companies still provide them to customers? Can businesses reduce the return rates? Read the blog to find out.

Key Takeaways 

  • Many e-commerce brands, such as Casper, offer free returns to their customers
  • E-commerce brands can leverage visual technologies like AR to bridge the gap between what customers see online and what they receive
  • Brands like Overstock and Gunner Kennel have seen a fall in their return rate because of AR

Boosting sales rests heavily on offering a smooth CX for businesses. For brick-and-mortar stores, this means ensuring customers enjoy hassle-free shopping until checkout.

But e-commerce stores must provide a positive post-delivery experience as well.

That means addressing product-delivery concerns and remedying dissatisfaction by facilitating quick returns. But how far should brands go to ensure convenient returns? Should they provide their customers with free returns to improve their shopping experience?

Brands must look beyond providing customers with free returns

The American DTC mattress brand, Casper, offers a 100-day free trial. The company suggests that customers allow themselves a 30-night adjustment period. If they continue to feel uncomfortable, the brand accepts free returns. 

Besides, customers make more confident buying decisions when they are assured of being able to return a product.

Casper’s free returns strategy also helps improve customer loyalty. It communicates that the brand’s priority is customers, not profits.

But there is another side to free returns to bear in mind. Companies must factor in the pickup, sanitizing, and repackaging cost of e-commerce returns.

Further, companies run the risk of e-commerce return fraud. Customers might return used and defective items.

In either case, businesses neither earn loyal customers nor convert a sale. Besides, they spend extra on packaging and shipping, costing them up to a trillion dollars annually

For a smooth customer experience, brands must find a middle ground to the problem. Free returns can spike sales and even drive customer loyalty. But this can’t happen at the cost of the bottom line.

What are some common reasons for returns in e-commerce? 

The average e-commerce return rate is two to three times higher than physical retailers. Here are the top reasons.

Top reasons why customers return online purchases
  • The product is damaged
  • The product doesn’t match the online description
  • The customer didn’t like the product on delivery
  • The product took too long to be delivered
  • The product quality is low

Strategies to improve customer satisfaction while minimizing e-commerce returns

1. Optimise product descriptions

Online buyers miss out on the tactility of an in-store experience when shopping. They cannot try the product or observe how it functions, which can affect buying decisions.

This is why online buyers rely on product descriptions to make purchase decisions. But unfortunately, most brands do not optimize these.

Occasionally, e-commerce stores put up unflattering, blurry, or misleading product images. Sometimes they complement them with an inaccurate product description or incorrect product dimensions. 

Naturally, customers who buy products based on such descriptions return them.

Companies must create accurate product descriptions with proper dimensions and images. The materials and usage instructions should be specified.

Brands can also use augmented reality (AR) to make product pages more informative.

With AR, customers can view online products as if they were physically in the store. Before buying, they can rotate the product, zoom in or out, and even visualize it in different lighting and locations.

These features make AR important for modern online buyers shopping at e-commerce stores and 3D and AR companies like Enhance can help with it.

2. Optimize the return process

Providing a smooth return process creates a better customer experience, bringing shoppers back. 

Research finds that 67% of customers check the returns page before purchasing and 92% say they will buy again if the return process is easy. 

In order to optimize return policy, brands need to look at three factors:

  • Return policy

A return policy keeps the return process transparent. It communicates return management to customers and employees, eliminating confusion and misunderstanding. An effective return policy must include the following. 

  • What items can be returned
  • What can only be exchanged
  • When a purchase is considered ‘final’
  • How customers can initiate a return
  • The condition the product should be in for a successful return, etc. 

Return policies needn’t be final. They can be revisited periodically for updates and changes. But having a clear policy can help customers understand the process before initiating it. 

  • Return period

Brands must offer reasonable return periods. This can be 30, 60, or 90 days after the date of purchase. Offering a longer return period allows customers to consider the purchase at ease and not rush with the decision. 

Further research finds that longer return periods result in fewer returns. This has been attributed to the ‘endowment effect,’ which states that the longer an item is in your possession, the less you will let it go. 

  • Return method

E-commerce brands offer several delivery options, including expedited shipping for an extra cost. This can be applied to the returns process as well. Empower your customers by offering different methods of return. This could be in-store returns or through the third-party network.

3. Efficient customer service

Customers facing issues with the delivery time, product, or refund need prompt customer service. A customer might think there is a problem when there isn’t one. In such cases, well-trained reps can help reduce returns by resolving the issue before the return process has been initiated.

For instance, a customer receives a yellow couch instead of the black one they ordered. They might contact customer service to return the couch and cancel the purchase. However, customer service could instead persuade the customer to opt for a replacement instead of cancelling the order.

Customers feel understood and valued with this level of personalized service. And in turn, this helps e-commerce companies retain customers and build brand loyalty.

E-commerce brands that have managed to reduce their return rates

1. Overstock

Overstock’s augmented reality-enabled mobile app allows customers to visualize products in their space. Customers can position the 3D renders of furniture in their room through their mobile cameras. This allows them to see whether the product fits with their décor. 

The American furniture brand has witnessed a 25% fall in return rate. This is because augmented reality in furniture empowers customers to make more informed decisions. As a result, there are no unpleasant surprises on delivery.

2. Made In Cookware 

This American cookware brand extended its return period window over the recent holiday season. The e-commerce brand accepted returns for orders placed between 1 November and 31 December, or until 15 January – whichever was later.

Made In cookware usually offers a 45-day return period. But this extension brought the company’s return rate in the ‘low single digits’.

We think we have a really healthy return rate, especially relative to some of the sort of partner organizations that we keep in touch with.’ Chad Brinton, SVP of Operations, Made In Cookware

Wrapping up

E-commerce returns are an essential factor in e-commerce sales. No doubt, e-commerce brands must anticipate product returns and develop convenient policies for them. But there are strategies they can apply to reduce the return rate.

These include optimizing the return process, requesting reviews, and even leveraging AR tech. Brands such as Overstock and Made In Cookware have applied these strategies in innovative ways and witnessed a fall in their return rates.

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