5 killer tips to turn your ecommerce returns into revenue

5 killer tips to turn your ecommerce returns into revenue

Julie Cauville

Julie Cauville

January 13, 2023

Ecommerce returns can be a major challenge for retailers. In 2020, consumers returned products worth a staggering $428 billion, representing more than 10% of total retail sales. The National Retail Federation estimates that the returns costs to retailers is a staggering $101 billion.

Returns and reverse logistics are inescapable for ecommerce brands, and if not properly managed, they can be a major problem. Returns can aggressively attack profit margins, gut conversion rates, and ultimately threaten the success of a business.

However, if properly managed, returns can also be a blessing in disguise, helping retailers to improve their products, build customer loyalty, and drive sales.

In this article, we'll provide our tips and best practices for successfully managing ecommerce returns and turning them into a positive experience for both you and your customers.

1. E-commerce returns in 2024: An overview

As e-commerce continues to thrive, so too do the number and cost of returns. They can happen for a variety of reasons, such as receiving the wrong item, receiving a damaged product, or simply changing one's mind about a purchase.

In 2024, it's more important than ever for retailers to understand how to effectively manage product returns. One important factor to consider is that return rates can vary significantly depending on the type of products you sell.

1. Ecommerce return rates depending on your industry

Products in the fashion and apparel industry tend to have higher return rates due to the subjective nature of fit and style. On the other hand, products in the electronics and home goods industries tend to have lower return rates.

Returns of online purchases by category in the UK in 2022 Source: Statista

2. What are the reasons for returning items?

There are many reasons why people return items they have purchased online. According to a study by Narvar, the top reasons for returns among online shoppers are receiving the wrong item, receiving a damaged product, and the quality of the product. These three reasons alone account for nearly 84% of all online returns.

Other common reasons for returning items purchased online include receiving a product that is different from what was expected, receiving a product that does not fit properly, and encountering issues with the product upon use.

A study by the National Retail Federation found that 42% of online shoppers have returned an item because it did not meet their expectations, while 34% have returned an item because it did not fit as expected. These types of returns can often be avoided with better product descriptions and sizing information, as well as improved quality control processes.

3. Ecommerce returns and the holiday season

The holiday season is a busy and profitable time for many ecommerce businesses, but it is also a time when returns are more common. According to a study by Optoro, returns during the holiday season can be up to 30% higher than the rest of the year. This increase in returns can put a strain on a company's resources and bottom line, as well as potentially impact customer satisfaction.

There are several ways that businesses can use their online shopping returns policy during the holiday season to convert more customers. Here are a few strategies that can be effective:

  1. Offer extended return periods: During the holiday season, many people are shopping for gifts that may not be opened until after the traditional return period has expired. By offering an extended return period, businesses can give customers the peace of mind that they can still return an item if it is not suitable.
  2. Make the return process easy and convenient: Customers are more likely to make a purchase if they know that returning an item will be easy and hassle-free. Businesses can make the return process more convenient by offering free return shipping, providing clear instructions on how to return an item, and processing returns quickly.
  3. Promote the return policy: Many people are hesitant to make a purchase online because they are worried about the possibility of needing to return an item. By prominently displaying the return policy on the website and in marketing materials, businesses can reassure customers that returns are easy and hassle-free.
  4. Use the return policy as a selling point: The return policy can be a differentiator for businesses, particularly during the holiday season when there is increased competition. By highlighting the benefits of the return policy, such as an extended return period or free return shipping, businesses can attract more customers.

4. How returns affect customer loyalty

Returns can have a significant impact on customer loyalty. A study by Invesp found that 67% of customers are less likely to shop at a store again if they have a negative return experience. This is because the return process is often seen as a reflection of a company's customer service, and a frustrating or difficult return process can damage the customer's perception of the business.

On the other hand, a positive return experience can actually improve customer loyalty. A study by Narvar found that 49% of customers are more likely to shop at a store again if they have a positive return experience. This is because a smooth and hassle-free return process can increase customer satisfaction and build trust in the company. In fact, the same study found that 85% of customers say that a seamless return experience is important for maintaining their loyalty to a brand.

2. Effective strategies for managing ecommerce returns

Managing ecommerce returns efficiently is crucial for businesses to reduce the cost and burden of returns, as well as improve customer satisfaction. One way to do this is by using Bigblue’s automated return portal, which can streamline the process and reduce the workload for customer service teams by allowing clients to start a return request online.

Another effective strategy for managing ecommerce returns is to offer a variety of return options to customers. This can increase the likelihood that they will follow through with the return, as it makes the process more convenient for them. For example, businesses can offer the option to return items to a physical store or to use a prepaid return shipping label. A study by the National Retail Federation found that offering in-store returns can increase customer satisfaction and loyalty.

Analyzing data on returns can also help businesses improve their products and processes. By identifying patterns and trends in the data, businesses can take steps to address issues that may be causing returns and reduce future returns. In addition, having clear and fair return policies that are prominently displayed can increase customer trust in the company and encourage more purchases.

Some additional strategies you can implement to improve your returns experience are:

1. Post the item back to your warehouse

One strategy is to allow customers to post the item back to the warehouse. In addition, offering free return shipping can improve the customer's return experience and increase their satisfaction with the brand. A study by the National Retail Federation found that free return shipping is the most popular return policy among online shoppers, with 74% saying that they prefer this option.

2. Return items to store

Another strategy for handling ecommerce returns is to allow customers to return items to a physical store. This can be a convenient option for customers, as it allows them to easily return an item without having to worry about packaging and shipping.

3. Outsource reverse logistics

A third option is to outsource reverse logistics, which refers to the process of managing the return and disposal of products. This can be a cost-effective solution for businesses, as it allows them to focus on their core competencies while outsourcing the handling of returns to a third party.

By outsourcing reverse logistics, businesses can benefit from the expertise and resources of the third party, as well as potentially reduce the overall cost of returns. According to a study by Optoro, outsourcing reverse logistics can lead to cost savings of up to 75% compared to managing returns in-house.

3. Top software solutions for managing ecommerce returns

There are several software options available for businesses looking to efficiently manage ecommerce returns. These include integrations with the main CMS (Shopify, WooCommerce, Prestashop, among others.

  • Bigblue: this platform allows customers to initiate a return request autonomously and online, streamlining the process for both the customer and the business. Bigblue also offers features such as real-time tracking, data analytics, store-credit and the ability to set up personalized return policies.
  • Happy Returns: is a returns management platform that allows customers to initiate a return online and drop off their return at a physical location.
  • Loop: a platform that allows businesses to set up a branded returns portal for their customers. This platform offers a variety of features, including the ability to initiate a return online, track the status of a return, and manage returns data. Loop also offers integrations with major carriers, making it easy for businesses to process returns.

4. Five best practices for managing e-commerce returns

1. Provide accurate item information on product pages

By providing clear and accurate information about an article directly on the product page, businesses can reduce the likelihood of returns due to misunderstandings or expectations not being met. This can include information about:

  • the product weight and dimensions,
  • Materials used,
  • size guides,
  • and the return policy.

In fact, a study by the National Retail Federation found that the most common reason for returns is "items not as expected," with 46% of returns falling into this category. By providing detailed and accurate product information, businesses can help to reduce the number of returns due to this reason.

2. Reduce damaged parcels with secure packing and shipping

This can help to reduce the risk of damage during transit, which can be a common reason for returns. To ensure that items are properly protected, businesses can use protective materials such as bubble wrap for delicate packages and add Fragile labels to parcels with easily breakable items inside. A study by Shorr Packaging found that approximately 25% of returns are due to damage during shipping, making secure packing and shipping an important factor in reducing returns.

3. Make your returns process sustainable

This can include using eco-friendly packaging materials and implementing a program to recycle or reuse returned items whenever possible. This can help businesses to reduce their environmental impact and fit with your customers' values. According to a study by Accenture, 63% of consumers say they are more likely to purchase from a company that is environmentally responsible.

A fourth best practice for managing ecommerce returns is to make the returns process sustainable. This can include using eco-friendly packaging materials and implementing a program to recycle or reuse returned items whenever possible. By taking steps to reduce the environmental impact of returns, businesses can appeal to customers who value sustainability and help to build customer loyalty. A study by Accenture found that 63% of consumers are more likely to purchase from a company that is environmentally responsible.

Bigblue uses 100% plastic-free packaging and works with partners like Hipli to offer reusable packaging options for our merchants. By implementing sustainable practices like these, businesses can not only reduce their environmental impact, but also differentiate themselves in the market and improve customer satisfaction.

4. Keep customers informed about the status of their return

By providing updates and tracking information, businesses can help to reduce customer frustration and improve the overall return experience. This can include sending emails or notifications to customers to let them know when their return has been received and processed. By keeping customers informed and providing transparency, businesses can build trust and improve the customer's return experience.

5. Protect your business against ecommerce return fraud

Return fraud occurs when a customer fraudulently claims to have returned an item in order to receive a refund or store credit. This can be a significant problem for businesses, as it can lead to financial losses and damage to the company's reputation. To protect against return fraud, businesses can implement measures such as verifying the authenticity of returned items, requiring proof of purchase for returns, and setting limits on the number of returns allowed per customer.

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