E-commerce Returns

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Online shopping is convenient, fast, and usually cheaper than brick-and-mortar stores. Due to these reasons, e-commerce has been rising in recent years. However, one downside of online shopping is that it can be difficult to return items. This can be a problem for items bought during sales or from international retailers. In some cases, customers may have to pay for return shipping, and they may have to wait weeks or even months to receive a refund. As a result, many people think twice before making an online purchase. 

Nevertheless, e-commerce returns policies are gradually becoming more customer-friendly, and in some cases, returns are now free and easy. In addition, many retailers are starting to offer more personalized service, which can help to build customer loyalty. Therefore, while e-commerce returns may still be a pain for some shoppers, they are gradually becoming less of a hindrance.

Ultimately, while e-commerce returns may not be perfect, they are still a valuable part of the online shopping experience. Let us look into one of the crucial elements of e-commerce fulfillment and learn how to leverage e-commerce returns to work best for you.

E-commerce Returns: a Boon or a Burden?

The e-commerce return policy has become a topic of debate in recent years, with some consumers feeling that it is too lenient and others arguing that it is too restrictive. While it is true that e-commerce returns can be a hassle for both retailers and customers, there are also several advantages to having a return policy in place.

Returns give customers peace of mind since they know they can always change their minds after making a purchase. In addition, returns help to build trust between retailers and customers, as well as encourage repeat business. Research suggests effective return policies boost sales without raising the number of returns. A business that retains at least 40% of its customers is likely to have 50% more sales than a business with only 10% repeat customers. Alternatively, returning customers are important to your business.

Why Do People Return Items?

E-commerce has made shopping more convenient, yet it still has a big problem. According to a study, 20% of items purchased online are returned by customers, as opposed to only 9% of items purchased in a physical store. Those who shop online cannot view, touch, or otherwise interact with the things they buy, unlike customers who shop in physical storefronts. This makes e-commerce companies more susceptible to high returns. 

A buyer may return an item for many reasons. The first step in resolving or minimizing the problem of e-commerce returns is identifying these causes.

  • Damaged or faulty items – The leading cause of returns is receiving defective or damaged items. Products, particularly delicate ones, may become distorted or destroyed while in transit. In this situation, the customer would undoubtedly desire a return and refund/exchange. A study indicates 5% of the returns are solely based on receiving damaged products.
  • Poor quality – Many e-commerce businesses struggle to maintain the consistency of their product quality, in contrast to big-name brands. If your consumer receives a subpar good, they’ll probably want to send it back. In addition, it raises the likelihood that they won’t ever return to the store unless you can replace the item quickly.
  • Misguided product description – Online shoppers anticipate receiving the ordered item according to the listing’s description. Sadly, this is not always the case. Sometimes when a product is delivered, it differs from the description or image. This is quite upsetting and results in buyers returning their purchases. Additionally, it can often cause a loss in sales and degrade customer loyalty.
  • Ordered one or more of the same item – Due to unclear product descriptions, customers tend to place orders for the same items in a different size to free up exchange times. Most commonly practiced in the apparel and footwear industry, this accounts for almost 52% of the ratio of the total returns in e-commerce.
  • Delayed delivery – The estimated delivery time plays a crucial role in providing the best shopping experience. An unhappy buying experience might occasionally result from delayed delivery. If the order doesn’t arrive within the anticipated delivery time, a customer who is happy with their purchase can change their mind and decide to return it.
  • Customer changed their mind – Sadly, internet sellers cannot resolve this issue. After making a purchase, buyers occasionally regret it. There isn’t much left to do in this situation aside from providing a refund and making the reverse logistics procedure as simple as possible for both themselves and the customer.
  • Reason not specified – In some unfortunate events, the customers tend to return the products without any specific reason. 

E-commerce Returns and the Holiday Season

The holiday season is crucial for every e-commerce business. Businesses experience a huge spike in sales during this period. This is because individuals tend to spend more money and buy more on these occasions.

For e-commerce businesses, customer retention is crucial because customers make up the majority of their sales. Greater sales do, however, entail more returns. While some online retailers can handle the stress of holiday return packages efficiently, others may find it difficult. Online stores are frequently plagued by returns, which lowers profitability ratios and conversion rates. This may even have a negative impact on overall consumer satisfaction (and retention rates).

The average return rate tends to increase by 10%, especially during festivities and holidays. Market study indicates most e-commerce brands face the highest return rate at Christmas and New Year, amounting to 3.23% and 80.65%, respectively.

Heavy sales generally result in delayed deliveries. Delivery delays are more likely to result in returns, especially if the order was COD, because COD customers are more inclined to rethink their purchase without considering the return policy. However, even with pre-paid orders, customers may cancel out of regret.

The COVID Impact on E-commerce Returns

Asia’s e-commerce sales were expected to increase by 22.4% from a whopping $1.36 trillion in 2020 to $1.92 trillion in 2024, according to Statista. With such a huge space for growth, it is anticipated that 61.4% of the world’s e-commerce market will be accounted for by Asian economies in the coming years. By 2027, user penetration is anticipated to reach 70.4% from its current level of 53.8%. However, this has also made way for an increase in online returns.

The decline is probably due to consumers wishing to avoid further stress during the pandemic. Returning a product requires leaving the house to go to the nearby shipping business, a risk many are hesitant to incur under lockdown, especially when instructed to self-isolate.

Many online merchants have extended their return period to 90 days to handle the new circumstances. As the deadline draws near, return rates are expected to increase. Others have added extra flexibility by enabling in-store returns of internet orders once they’ve reopened.

The Impact of Returns on Customer Loyalty

When customers wish to return their purchases online, the majority of retailers choose to reimburse the buyer for their original purchase price. About 18% of businesses provide exchanges, and about the same number offer gift cards to use on future purchases.

There are high customer expectations, regardless of the refund option a business offers. Approximately 62% of customers expect a refund or exchange within 30 days. However, if you make a mistake during this return experience, it will be harder for you to attract new clients. According to data, 25% of customers believe that a delay in processing their return makes for a bad experience.

If returns are correctly handled, 92% of consumers will come back to make more purchases. As a result, you’ll heighten the lifetime value of your clients and facilitate future purchases.

Strategies for Handling E-commerce Returns

Returns are a fact of life for any business that sells physical goods, but they can be incredibly challenging for e-commerce businesses. In addition to tracking the cost of shipping the returned item back, you also have to deal with the potential for damaged or lost merchandise. Nevertheless, you can employ a few strategies to handle e-commerce returns a little easier.

Most importantly, ensure you have a clear and concise returns policy prominently displayed on your website. This will help to discourage customers from returning items unnecessarily. Secondly, consider using third-party returns services to provide customers with pre-paid return mailing labels and handle the logistics of returning items on your behalf. Last but not least, offer incentives to customers who return packages. For example, a discount on their next purchase may encourage them to shop with the business again.

Following these strategies can make your e-commerce returns less daunting and keep your e-commerce business running smoothly.

  • Redeliver the goods to your warehouse

For companies that exclusively sell their products online and have no physical stores, it is the most common returns procedure. A consumer mails back an item they purchased online to the warehouse or fulfillment center when they want to return it. The merchandise division then examines the item and determines whether a refund is possible.

With return management tools, retailers can speed up manual returns. They’ll expedite the procedure, inform customers of the status of their returns, and instantly update the inventory management system.

  • Return products to the store

According to research, 62% of consumers are more willing to shop online if they have a physical location to exchange or return their purchases. Therefore, if you have a physical location to return packages, consider letting online shoppers return or exchange their purchases in person. After inspection, the returned goods can be restocked for incoming customers and further selling.

Store returns are more practical and encouraging customers into a store may deter further returns. Customers will have the chance to try on alternative sizes during their visit if they return a t-shirt that doesn’t fit, for instance. Knowing their size gives people more assurance when making future online and offline purchases.

  • Outsource reverse logistics

The process of managing returns is a drawn-out procedure. However, businesses may choose not to require to manage it internally. In third-party logistics (3PL), third parties handle all aspects of order fulfillment, including refunds on behalf of the company. Reverse logistics service providers keep a retailer’s stock at a third-party warehouse.

When customers return packages that the 3PL has already shipped, they arrive at the warehouse. They examine the merchandise and handle the return. Once the returned item has been approved, it is placed back on the shelf for another order to be picked up.

  • Include pre-made labels in the package

A shipping label with the seller’s address is a return mailing label. With it, customers may easily return products they bought online if they weren’t the intended recipients or if goods were damaged when delivered. Humans and machines, like QR code scanners or barcode scanners, can read the data on the label, streamlining the shipping process.

  • Offer paperless returns

The simplicity of an e-commerce return can be greatly improved by going paperless, which is a reasonably easy adjustment. For shops that mail return labels with every product they ship, investing in this can directly improve overall sales and eliminate the expense of label printing. This is because many consumers examine two or three retailers at once and make their final buying decisions on the simplicity of return.

  • Use Easy Return Solutions

The ERS (Easy Returns Solution) lets your customers drop off their returns at any branch of a national shipping carrier. Your customers can drop off their parcels at convenient locations with ERS, so they don’t have to travel long distances.

Ways to Proactively Reduce Returns

A Barclaycard study found that 30% of customers purposefully order more things than they require with the goal of returning the extras. For businesses, this might pose a real issue. Barclaycard claims in the same survey that an astounding 60% of retailers suffer from returns.

While there is no foolproof solution to stop returns totally, the best part is that many problems resulting in returns are avoidable. Let us examine some practical ways to lower the e-commerce returns for your business –

  • Implement quality control – Around 23% of returns happen due to incorrect items or bad-quality products. Quality control is an important part that needs to be addressed on behalf of the warehouse and shipping management. In the case of small retail businesses, the business can choose to carry out the packing and shipping operations manually. The hands-on approach is quite beneficial in reducing errors related to wrong packages, etc.

However, larger companies need to implement automation strategies to reduce the unforeseen events of product returns. A comprehensive warehouse management system and inventory management system can help a business minimize errors and manage storage quite efficiently.

  • Describe products accurately – A common reason for returns is the unpleasant “product not as described” problem. This may come up again and again in internet retail as products are off-limits to customers. They are compelled to examine images and spec sheets. As a result, it’s critical to adequately explain your products so that customers know what to anticipate when making a purchase. Some ways to improve product descriptions include – high quality, clear photos, exact product descriptions, customer images, reviews, etc.
  • Accurate sizing descriptions – A common issue faced by apparel and footwear industries, size fitting is one of the essential reasons for high e-commerce returns. A company can try to reduce size fit issues by implementing some tools or software like sizing charts, sizing software, etc, to help online customers have a clear idea and decide which ones to buy.
  • Encourage customer feedback and customer reviews – Encourage customers to give their own evaluations and feedback on the things they’ve purchased as one of the finest strategies to reduce the number of returns you receive. Customers tend to trust customer reviews more than product descriptions or marketing material, which is a great advantage.

Customers will discuss an item’s pros and cons, whether the sizing and description were accurate, and provide open feedback on the product in question.

It may be possible to further lessen return concerns by copying well-known brands’ return policies and adding a part where users can respond to inquiries from potential buyers. It’s time to think about incorporating consumer evaluations and comments into your website if you’re not already.

  • Prioritize proper packaging – As stated earlier, a significant number of returns are initiated due to damaged products. However, with some easy and efficient strategies, a business can avert the damage. Select solid and sturdy packing boxes to make sure the items are packed in properly and securely inside the box. This will make sure the customers don’t get damaged products and hence increase the customer satisfaction rate.
  • Increase the return time window – Nobody enjoys having a tight deadline. While most e-commerce businesses operate under stringent return time windows, organizations that extend their return windows are a breath of fresh air.

Additionally, giving your clients a longer return period makes it less likely that they will send the purchase back. Remember that customers need a 30-day return policy at the very least; therefore, having a 30-plus-day return policy can boost customer confidence and loyalty.

  • Recognize patterns in frequently returned items – The secret to expanding your organization is to comprehend client behavior and modify your brand accordingly. On the one hand, you can put a reactive strategy in place and look for patterns in returns; for instance, returns may happen as a result of a somewhat deceptive advertisement or manufacturing defect.

Instead, be proactive and design surveys to collect customer feedback after every purchase. Customers are allowed to participate actively in the process all the way through, which eventually lowers the number of returns. Additionally, combining these two strategies will help your brand succeed.

  • Automate the process of returning – Although facilitating consumer returns pays in the long run, expenses are still involved. Your company will undoubtedly experience a spike in product returns around the holidays, particularly as stated earlier.

Implementing an automated returns strategy is therefore vital; otherwise, the business will quickly become overburdened. As long as your company has internal resources to automate this process, you’re good to go, or else, outsourcing is absolutely something to consider in such a situation to provide accessible customer service.

  • Establish a gift return policy – According to a survey, returned gifts are rarely restocked and typically wind up in the trash if they aren’t sold to another vendor. Customer experiences will improve if they have the choice to return their presents. Customers are more likely to come back for more if the return period is extended and the return policy is further clarified.
  • Offer real-time live chat support – You can significantly reduce your return rate by stopping a future return before the procedure begins. A live chat application and real-time support can help a business accomplish such objectives. The customer can allow business representatives to try to fix the problem before the return procedure starts by using live chat and real-time assistance.

In addition, having real-time support allows you to avoid some returns by replacing the existing product without requiring a return or giving the full amount back.

What is a Return Policy?

Return policies are the guidelines set up by businesses to control how customers return or exchange previously acquired goods that are undesired or damaged. Return policies expand the customer service companies offer, and as a result, they are frequently quite lenient. Because of this, many customers have the false impression that they may always return anything for a full refund, no matter what the situation. 

In truth, both traditional and internet retailers have a lot of freedom to create unique regulations. Some retailers can implement stricter rules on product returns due to the rise in return frequency and expense.

Why are Return and Refund Policies Important for a Business?

People are frequently reluctant to make purchases online, which can result in low conversion rates and overall sales. The fact that individuals can return the item and receive a refund if their expectations aren’t satisfied while making an online purchase helps to lessen their hesitation. 

It has been established that having return and refund policies on your website will improve the number of visitors who ultimately make purchases. Additionally, having a clear and comprehensive return and refund policy in place will help in saving money on delivery returns. According to Statista, on average, the return deliveries cost $550 billion, which is a 75.2% increase over five years.

Customers may, of course, be dissatisfied with their purchase for a variety of reasons. It can be delivered in poor condition, be the wrong size, or fall short of their expectations. They could ask for a replacement or a reimbursement.

Without a method to manage them, these requests can become too much to process. Consider the amount of time and money a business may need to spend responding to customer support communications and replacing the returned item.

However, having solid e-commerce returns policy can help a business handle these problems with ease. A company can keep returns and exchanges much less of a hassle by creating and publishing a solid return and refund policy for the website. Additionally, businesses can build client loyalty and produce new revenue by doing this.

What to Include in an E-commerce Returns Policy

A return policy needs to include important information regarding the accepted returns, return conditions, and just how to handle refunds. Consumers are not prone to reading lengthy, dull legal paperwork online. However, it is imperative to include all pertinent details. The return policy should be broken down into manageable chunks. The paper will be simpler to understand and protect the business legally while assisting clients in finding what they need.

When deciding what to include in the return policy, keep in mind that there are several benefits to making sure it is customer-centric. Innovative companies understand the value of a customer-focused return policy as a marketing strategy.

According to data from UPS, 63% of online buyers check the exchange and return policies of a website before they make a purchase. To boost conversion rates, several businesses advertise that they provide “free,” “simple,” and “no-hassle” exchanges and returns. In other words, the data demonstrates that companies with favorable return and refund policies typically have higher rates of returns than those without such policies.

A return or exchange can cost the company money on the initial purchase. A better customer experience, on the other hand, will result in increased retention rates and sustained revenue growth.

Requirements for Developing a Hassle-free Returns Policy

A company’s e-commerce returns policy should address key areas to help clients understand the restrictions. A return policy sets forth what customers can return to the company and how they will be refunded.

Following are the steps to help set up an easy return window:

  • Establish a timeframe for returns – Informing your customers of the return deadline is critical. Generally, 15 to 30 days are typical, while some businesses choose 90 days. In either case, taking refunds after that period will not benefit you.

If you don’t specify a return window, buyers may try to ship items back months after they have been acquired. Internet business owners would not benefit from this. Due to losses incurred by some significant companies due to open-ended return policies, most have since implemented stronger regulations.

  • Define the anticipated return conditions – Accepting a return for a product that the consumer is instantly dissatisfied with or that has a flaw is one thing. Accepting a return for a product the buyer has used, damaged, or otherwise decreased in value is entirely different.

Establish the circumstances in which a product must be returned to be accepted when drafting your company’s return policy. Customers may attempt to return goods that are in too poor of a condition to be resold if you forget to include this information. A company will be compelled to accept a loss in this situation.

  • List the necessary returns – Customers must be made aware of any conditions that must be satisfied before completing any refund.

Depending on the business, returns may need to be unopened and/or in original packaging. Customers should be informed if they require a purchase receipt, mailing address, authorization number, etc. Clearly express the terms for everyone to see, whatever they may be.

Utilizing a Return Merchandise Authorization (RMA) system is one straightforward approach to handling this. This enables businesses can ask the client for details and pictures. If they accept the return, they will receive authorization. If the company pays for return shipping, provide the customer with a shipping label.

  • Choose refunds or store credit as options – Before returning goods, every customer wants to know how the business intends to compensate for their loss. Many people will ask for a complete refund, while others could accept in-store credit. An e-commerce business must choose between the two. 

If the returned item satisfies the return policy’s standards, it is advised to give clients a complete refund. A business may choose to provide store credit for specific returns at its own discretion. However, they need to make sure to detail the specific conditions in the policy. Store credit may improve and streamline the returns procedure when used properly.

Drafting a Return Policy 

Return policies must not only include the specifics but also express them clearly and clearly to avoid misunderstandings. Your return policy should be simple and should cover every aspect.

  • Use simple and clear language – When writing a return policy, it is essential to keep the language simple and to the point. There is no need to use overly legalistic or technical language. The goal is to clearly state the terms of the return policy so that customers can understand what they need to do to return an item. Additionally, it is important to be clear about any restrictions that may apply, such as time limits or required documentation. By being clear and concise, you can help avoid confusion or misunderstandings.
  • Indicate any return-related costs – Returns are a necessary part of online shopping but can also be costly for retailers. That’s why it’s essential to be upfront about any return fees while writing your return policy. By disclosing fees early on, you can avoid frustrating customers later on. Returns can incur various fees, from restocking fees to shipping charges. Sometimes, retailers may even charge a fee for processing the return. By disclosing these fees upfront, you can help customers make informed decisions about whether to make a return.

    At the same time, you can also avoid the appearance of being deceptive or hidden fees. Ultimately, being upfront about return fees is the best way to create a transparent return policy.
  • Promote your policy – It is essential to have a return policy that is clear and concise. At the same time, you want to ensure that your return policy promotes your brand and reinforces your company’s message. For instance, if you are a company committed to sustainability, consider including a statement in your return policy that encourages customers to return items they no longer need. This way, you can ensure that those items are put to good use and don’t end up in a landfill.

    Similarly, if you are a company that values customer service, you might want to include a statement in your return policy that guarantees a hassle-free return experience. Having these kinds of messaging in your return policy can help promote your brand while providing clear customer instructions.

What is an E-commerce Return Rate?

An e-commerce return rate is the percentage of online orders that customers return. Numerous factors can lead to a high return rate, such as poor product quality, incorrect product descriptions, and sizing issues. In addition, many customers take advantage of free returns policies by ordering multiple colors or sizes of the same item and then returning all but one.

By understanding the causes of high return rates, e-commerce businesses can take steps to reduce them. This may include improved quality control, better product photography, and more detailed product descriptions. In addition, offering free returns can also help to encourage customers to make purchases in the first place.

While the average return rate for all industries is around 8%, the e-commerce return rate can vary depending on the type of product being sold. For example, clothing and footwear have a higher return rate than other items because customers often buy multiple sizes or styles to find the perfect fit. Electronics also have a relatively high return rate, as customers may change their minds after using the product.

However, return rates can vary significantly from one company to another, so it is imperative to do your research before committing to a purchase. Returns can be costly for businesses, so choosing an e-commerce platform with a low return rate is essential. By doing so, you can help to keep your costs down and ensure that your customers are happy with their purchases.

How Is E-commerce Return Rate Calculated?

To calculate the return rate for e-commerce, divide the total number of sold items by the number of returned items and multiply the number by 100.

Return Rate = ( Orders Returned / Total Sales) x 100

For example – If you sold 20,000 units within six months and had 5,000 units returned in the stipulated time, then,

Return Rate = (5000/20000) x 100

                    = 25%

If the overall return rate is below 30%, it is a good sign for an e-commerce business. However, if the overall return rate exceeds 30%, a business might need to rethink its operations and services. 

What Is the Average Return Rate for E-commerce?

The return rate for online purchases has always been greater than for physical establishments. This is partially caused by consumers’ inability to inspect and test things beforehand. Consumer behaviors, however, differ significantly from offline consumer behaviors due to significant variations in the online buying experience. According to CBRE’s report, the typical return rate for online purchases is 30%, amounting to $70.5 billion,  as opposed to 8–10% for physical locations.

General Return Rate Recent Statistics – 

  • According to NRF and HubSpot, The average e-commerce return rate is 18.1%.
  • Due to e-commerce returns in 2021, merchants lost $218 billion, according to Multichannel Merchant.
  • Statista indicates, by 2025, it is anticipated that the e-commerce sector will represent 24.5% of all retail sales worldwide. Between 2020 and 2025, e-commerce is anticipated to grow by 6.7% from its estimated 17.8% share of retail sales in 2020.
  • Over 60% of online customers, according to statistics on online shopping trends, study a product’s return policy before making a purchase, according to Parcll.
  • Barclaycard Research indicates 30% of shoppers purposefully overbuy and then send back undesired goods.
  • ReBOUND Returns Consumer Survey finds that 62.58% of online shoppers expect retailers to accept returns within 30 days.
  • A lousy return experience would cause 84% of online shoppers to say goodbye to a retailer, according to Klarna.
  • Apparel returns are, on average, 12.2%, as indicated by the National Retail Federation.

How Return Rates Affect Customer Experience

Any business that relies on customer sales understands that customer experience is key to maintaining a loyal customer base. Managing customer expectations around product return policy are critical in delivering a positive customer experience. A UPS research found that 66% of consumers look at a retailer’s return policy before even considering a purchase. In addition, customers satisfied with the e-commerce returns process have higher chances of remaining loyal to the company and are more likely to make future purchases.

On the other hand, customers with a negative experience with e-commerce returns are more likely to take their business elsewhere. Therefore, companies must balance making their return policy too restrictive and lenient to deliver the best possible customer experience.

Impact of a High Return Rate

Online retailers strive to provide customers with a positive shopping experience from start to finish. However, even the most diligent businesses can end up with unhappy customers and products that need to be returned. While a certain level of returns is expected, a high return rate can significantly impact an e-commerce business. For one thing, it can lead to increased costs, as companies must pay for shipping both ways and may need to offer refunds or replacements.

In addition, increased returns can lead to a decline in customer satisfaction and loyalty. As a result, businesses need to know about the potential impact of a high return rate and take steps to keep it under control. By offering clear product descriptions, providing excellent customer service, and providing easy means for customers to return items, businesses can help minimize the negative impact of returns.

  • Initial front-end expenses of return – Costs associated with returns include lost revenue, refund fees, round-trip transportation costs, and product disposal fees. The returned item is examined and either sold again or liquidated. They are liquidated and sold for a significant discount to what they were originally purchased for.

A high return rate also indicates that the business will need to hire more staff and pay them salaries to handle the influx of return requests.

  • Multiple unilateral charges – In contrast to front-end costs, these costs are more challenging to measure. These include the back-and-forth contact with the client and the lost time and effort of the delivery personnel.
  • Impact on customer turnover and brand perception – Poor customer service might turn away potential customers, which is crucial given the constantly rising client acquisition rate.

Additionally, shoppers frequently add to the current online shopping experience by posting their purchases and thoughts on social media. Many additional customers may decide not to visit your shop after having a bad experience.

Frauds Against Returns and How to Handle Them 

E-commerce returns fraud is a severe problem that can cost businesses billions yearly. Statistics state for every $100 returned, a company tends to lose $5.92 to return frauds. There are a few different ways that criminals can commit return fraud, but the most common is by returning items that they have stolen. People returning stolen goods, claiming they never received them, or using the item and then returning it later costs retailers more than $18 billion annually.

To protect your business against e-commerce returns fraud, it is essential to have a solid returns policy in place. Your policy should clearly state what items can be returned and how long customers must return them. It should also specify that a valid receipt must accompany all returns. By clearly defining your returns policy, you can help to deter criminals from attempting to commit return fraud. Additionally, you should inspect returned items carefully to ensure they are not damaged or stolen. If you suspect that a return is fraudulent, you should contact law enforcement. By taking these precautions, you can protect your business against e-commerce returns fraud.

Separating the different categories of returners and automatically tracking them is essential. Establish refund thresholds depending on the quantity of returned products or the monetary amounts per order.

Some ways to save your business from fraud are – 

  • Identify and segment consumers with tags.
  • Email or slack your customer care department to inquire.
  • Create a section for such consumers in the onsite customizing tool to keep them out of free delivery and/or full refund promotions.
  • At checkout, create a Shipping code based on one or several of the customer tags to prevent them from receiving free shipping.
  • Pick a delivery service that offers to track information or delivery confirmation.
  • Replace shop credit or exchanges with cash refunds.
  • Offer a wider window for exchanges compared to your return policy.
  • Put an end to free return shipping.
  • Only accept returns for items with a receipt or other evidence of purchase.
  • Accept no clothing that has been returned if the protective seal or tag has been removed.

Tackling Returns: Innovations in the Market

Returns are a necessary evil for most businesses, but they can be costly and time-consuming. Many companies are turning to innovative new solutions to reduce the impact of returns. As e-commerce continues to grow, so does the need for efficient return policies.

Some retailers are using innovative technologies, such as RFID tags and barcodes, to track inventory and streamline the returns process. Others are offering customers more flexible return options, such as in-store returns for online orders.  For example, some companies offer customers the chance to return items for store credit instead of a refund. This allows the customer to get what they want while allowing the company to recoup some return costs.

Other companies are experimenting with ways to make returns more convenient for customers. This might include offering free return shipping or allowing customers to return items at physical locations such as grocery stores. By making returns more convenient and less expensive, businesses can reduce the negative impact of returns while still providing excellent customer service.

Here are some intriguing e-commerce returns innovation analyses – 

  • Machine learning and AI technologies – Artificial intelligence (AI) and machine learning are new and developing technologies that significantly improve how businesses analyze consumer behavior and offer suggestions based on previous choices. They may also assist firms in lowering returns by providing size advice, particularly for products that have had a high volume of returns due to fit issues. Even before they purchase an item, AI may assist customers in predicting that they will return it and urge them to make a better choice.
  • Anticipating returns after placing an order – E-commerce companies may make advance preparations for refunds and inventory management using AI and machine learning. These systems may create a profile of each client based on previous order history, credit ratings, historical return rates, and reasons for returns (such as the wrong size), which will suggest the ‘risk’ of the return. Users may use this to better manage the logistics and shipping procedures, plan stock levels, modify pricing, and adapt marketing.

Ultimately, businesses can boost satisfaction levels and build loyalty by making it easier for customers to return items. In the competitive world of e-commerce, those who can successfully manage returns will be well-positioned for success.

Conclusion

It’s no secret that 10.6% of all online sales ultimately end up back at the retailer’s warehouse, which means e-commerce returns cannot be ignored. E-commerce returns can be a nightmare for businesses. Not only are they costly and time-consuming to process, but they can also damage relationships with customers. Returns are often the result of inaccurate product descriptions or poor packaging, so it’s essential to do everything you can to prevent them. Remember that a small number of returns cannot be avoided, so it’s essential to have a returns policy that is fair and efficient. 

When returns do occur, provide customers with updates on the status of their return and consider offering store credit instead of cash refunds. If returns are becoming too difficult to handle in-house, consider outsourcing reverse logistics. The returns process might end a customer’s journey with you, but it is as essential as any other part of their shopping experience. 

FAQs

E-commerce returns: a pain or advantage?

E-commerce returns can be a pain for businesses, yet, despite how unsatisfying the e-commerce returns procedure is, it offers businesses a fantastic chance to foster consumer loyalty and please them—resulting in more sales and consumer satisfaction.

What to expect from e-commerce returns in the (near) future?

With the evergrowing and ever-changing market scenario, it is very well anticipated that e-commerce returns will be more practical, secure, and easygoing for both the business and the customers. Businesses will be expected to scale up their policies and operations as per requirement and more sustainably, like labelless returns, secured and locked returns, convenient carriers, green return policies, etc.

Free returns – are they still a “thing”?

For businesses, there are several advantages to providing free return shipping. Most consumers favor supporting businesses with lenient return policies and are considerably more likely to return to a company if the return procedure is quick, free, and straightforward.

How many online businesses can offer a competitive return policy?

Many online businesses offer a competitive return policy. This is usually done to keep customers happy and coming back. Some companies will only allow returns if the item is defective or was not as described. Others will allow returns for any reason within a specific time frame, often with no questions asked. Some businesses may even offer free return shipping. While this can be convenient for customers, it can also be costly for businesses. 

As a result, many online companies carefully consider their return policy before offering it to customers. By doing so, they are providing the best possible service while also minimizing their own losses.

How should small businesses approach their return policy?

Make sure you handle consumers fairly, accept the same goods, and don’t alter the regulations without informing the customers. Post your policy so that both customers and staff can see it. To ensure that the consumer has a copy, it is a good idea to include it on the receipt.

How do I manage e-commerce returns?

First and foremost, you need to stick to a solid return policy for your business. Additionally, it’s essential to have a clear and concise return policy prominently displayed on your website. This will help to avoid misunderstandings and set customers’ expectations from the start. Customer satisfaction is the main priority, Based on the transaction and the return, you may offer a full refund or exchange the product based on their requirement.

What is a good refund rate?

A good refund rate is usually considered below 5% for a business with optimal performance. The lower the refund rate, the better the performance.

Do stores lose money on returns?

Yes, as most businesses offer free returns when a customer returns a product, the company has to bear all the expenses. Thus, it costs them a lumpsum amount of money annually.

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