E-commerce returns: how to monetise them?

E-commerce returns: how to monetise them?

Julie Cauville

Julie Cauville

November 3, 2022

Returns can cost your business... According to the latest Shopify report, the cost of returns in e-commerce is indeed expected to peak at over $550 billion this year!

If you want to know how much the bill will be for your business, just multiply your projected sales volume by the average return rate (15%). And, of course, add in the cost of returns (if you are responsible for them), restocking fees, lost and damaged items, etc.

As expensive as it is, the bill for product returns is unavoidable. No matter how good an experience you provide to your customers on your site, you can't avoid these demands.

However, these requests do not mean the end of your relationship with a customer. On the contrary, if the customer has shown enough interest to place an order, all is not lost! Take advantage of this opportunity (even though it may seem like a poisoned chalice at first glance) to maintain contact. You may even succeed in increasing its Lifetime Value!

Yes, it is possible to turn the person wanting to return their product into a loyal and profitable customer for your brand. In this article, Bigblue explains how to monetise your returns!

Why monetising returns in e-commerce?

Like any business, the goal of your e-commerce business is to be profitable and maximise your return on investment.

However, the main expense of your online business is the acquisition of new customers. The figures are clear: acquiring a new customer can cost up to five times more than retaining an existing one. Your brand cannot afford to lose the consumers it has managed to attract to its site and convince to place an order!

On the other hand, the online shopping experience, despite many efforts to improve it, remains much more uncertain than the in-store experience. This is why one in two consumers consider the return policy as a determining factor in their purchase decision. This is perfectly logical, given that 44% of them have already returned an item purchased online.

Monetising returns is therefore an absolutely essential strategy for sustaining your e-commerce business. It will indeed impact your ability to convert potential new customers. But above all, it will enable you to build loyalty, since 72% of buyers are more inclined to buy from you again if they have had a good return experience with your brand in the past!

Monitor returns and choose the right strategy for your e-commerce

In order to monetise your e-commerce returns, it is crucial that you have a good understanding of why your customers may return a product.

Among the statistics that you should pay attention to are the following:

  • Overall return rate, but also for each item;
  • Variations in your return rate over certain crucial periods (such as holidays or any important period in your industry - sales, season, etc.);
  • Return rates for each product category or range;
  • NPS score of your e-commerce;
  • Return rates by geographical area;
  • Customer satisfaction rate after an interaction with your support.

This data will allow you to define key performance indicators, in order to monetise the returns of your shop. You will be able to focus your efforts on the weak points of your customer experience (product descriptions, image quality for better colour rendering, etc.).

1. Offer an exchange for a variation

On Shopify, 60% of returns are requested because the customer ordered the wrong size or style of clothing after browsing the e-commerce site.

If your online shop offers fashion apparel or accessories, you are likely to find yourself in this situation. Your customers will not be able to try on their item before checking out. Some have even taken to ordering multiple sizes, favouring e-commerce brands that make returns easy.

💡 The example to follow: Zalando allows its customers to return their items in the same packaging. The brand even communicates that they can try them on at home, and only pay for the clothes they like or fit!

Zalando shipping material are plastic free and reusable for returning the product

The advantage of this strategy for monetising returns is that it allows you to maintain the relationship with your customers as well as your sales revenue. Returning an item in exchange for a variation saves you the hassle of getting a refund, and ensures that your item ends up in your customer's hands. If they have a smooth and easy exchange experience, they will be more likely to recommend your site.

The downside is that this solution can also increase return requests, putting your business at risk. The key is to find the right balance to encourage your prospects to order (with the confidence that they can exchange their item if they need to). All the while, making sure they make the right choice the first time.

How can you monetise exchange-for-variant returns?

To reduce the number of exchange-for-variant requests as much as possible, be as clear as possible about the characteristics of your products. In the fashion sector, this means a very detailed description of the cut and composition of your clothes. But also high quality photos to render their colour as accurately as possible, etc.

Also make sure that the selection of colours and the visual display of your articles are as fast and fluid as possible. This will allow your customers to easily browse through all the possible variations of the same item. And choose the one that best suits them.

💡 The example to follow:  Adidas gives ultra precise sizing advice. For example, the brand indicates which models fit small, and shares recommendations based on a customer's previous orders.

Adidas super precise size table adapts and converts the sizes according to the standards of its customers

2. Offer an exchange for a new product

In addition to sizing issues, your customers may request a return because they are not satisfied with their order.

Don't panic: this doesn't mean that they don't like your brand. It just means that the shirt they ordered on your site doesn't fit, or that your mattress doesn't offer the support they were looking for.

To turn this negative experience into a positive one, and again avoid the refund option, your brand must be flexible. This means making it easy to exchange for another product on your site.

This approach will allow you to monetise returns and even increase your sales. When a customer knows they can return an item and exchange it for a product that suits them better, they will feel more confident about buying more or a higher value product.

But returns for another product are also a great opportunity for cross- or upselling. Because your customer has already had their product in their hands, they have a better appreciation of the quality your brand is likely to offer. They may therefore opt for another, more expensive model. Or even complete their order with additional items!

How to monetise returns with an exchange of the product?

Requests for exchange for another product increase the rate of repurchase from your brand by almost 34%. Use this data to your advantage by suggesting relevant similar or complementary items in your exchange management email (or via the customer area on your site).

💡 The example to follow: Tediber allows its customers to try their mattress for 100 days! A good way to encourage the decision to buy, and to allow people who don't know the brand to discover the quality of its products (or to opt for another model, if necessary).

Tediber details its returns in its reinsurance blocks

3. Manage refund requests by offering in-store credit

Sometimes your customers will not want (or need) to order from your brand again immediately. Again, your goal is to avoid at all costs that your relationship ends there, and that they ask you for a refund.

To give them more flexibility, and to give them time to discover the other products you offer, a good option is to suggest an in-store credit. This works in the same way as a gift card and above all boosts your strategy of monetising returns, as in-store credits result in immediate redemption from the brand in 40% of cases!

By offering credits in your shop, you give your customers more freedom to choose between a variation of their product or a completely different item. Above all, you give them the time to better immerse themselves in the world of your brand, and to choose a product that really suits them. In addition to retaining the revenue generated by the initial sale, this gesture of goodwill may also encourage them to increase the amount of their order by opting for more expensive products or complementary items!

How can you monetise returns with credit on your e-commerce shop?

If a customer returns to your shop to use their credit, this is an excellent opportunity to present them with new products that they would have missed on their first visit! So take advantage of this opportunity to show them your new collections (giving them enough time to use their credits).

Also, make good use of the data you have (and the comments you may have collected via your customer support or feedback form) to make ultra-personalised, and therefore more impactful, suggestions!

💡 Leading by example: Caval bends over backwards to offer as much flexibility as possible to its customers. Returned products can be refunded within 30 days. But after that time, the brand offers a credit to use in shop!

return portal offers the customer the option of exchanging their order or not
Caval uses the Bigblue return portal to offer its customers an easy exchange via store credit

4. Offer a refund

Refunding an order is the return option that offers the least value to your e-commerce business. Unfortunately, in some cases, your customer will not have been seduced by what your brand had to offer. They will not want to exchange their product for another or even a voucher. And you will definitely have lost the revenue from the initial sale.

However, this does not mean that they will not be able to recommend your brand in the near future. Or even recommend your products to friends and family to whom they might be better suited! So don't give up, and always take the opportunity to leave a positive impression of your company.

Offering a refund is also a good way to boost your conversion rate, as your customers will feel more secure.

How do you monetise returns for refunds?

To monetise your e-commerce returns, even when your customers demand a refund, be as clear as possible about the conditions under which you agree to refund them. This will prevent abusive requests and save your customer support a lot of time!

Never forget to specify :

  • How long it will take to process each customer return request;
  • When and how they will receive the refund in their account;
  • Whether you offer a full refund, or deduct a return fee;
  • When you refuse to refund an order.

💡 The example to follow: Amazon states exactly where and when its customers will receive their refund. As for the brand Asos, it has set up a blacklist of customers who have made too many return requests thanks to an algorithmic system!

Asos uses a pop-up to warn customers that the brand will investigate if too many returns are made

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