Returns are becoming more common than ever for online retailers. Even if you have the utmost confidence in your products, it’s inevitable that some customers will want to send their purchases back for a refund.
Ecommerce returns management can have a big impact on customer satisfaction. Shoppers may not be happy with the first items they purchase. However, if the return process is easy, they might be willing to try your store again another time in the future.
A strong return policy can improve your reputation and help you develop a loyal customer base. You should be aware, though, that return rates are very high for many online businesses.
It’s important for your website to be prepared to handle returns from both a customer service and a financial perspective in addition to the other site functions required for successful electronic commerce.
To create an effective strategy for managing returns, it’s important to know the average return rates for online purchases and the most common reasons that customers return items. This will help you to predict how frequently your store will have to handle returns and refunds.
Return rate for products purchased online
It can be difficult to calculate the return rate for all products purchased online. However, the percentage of orders returned is certainly much higher than the rate for brick-and-mortar retailers on average.
Invesp states that consumers return around 9% of the goods they buy from physical stores, but the return rate for online purchases is at least 30%.
Return rates for web retail vary throughout the year, too. For many years now, there’s been a surge in online returns at the beginning of the year as people return or exchange their holiday gifts.
In fact, UPS has reported record-breaking returns for seven years in a row on January 2. This date is considered to be the biggest day for returning online purchases.
Online product categories returned the most often
The most frequently returned products in the ecommerce industry are clothing and shoes. According to the Global Web Index, shoppers return 56% of these online retail orders.
This is most likely because shoppers can’t try on the items before buying them, so there’s always some risk when making the purchase.
Consumers return electronics at a rate of 42%. Electronics tend to be more expensive than other types of products, so it’s fitting that shoppers are so careful with which purchases they keep.
Accessories, watches, and jewelry are returned on 30% of occasions. Meanwhile, health and beauty products have a return rate of 22%.
Researchers from Statista found a similar ranking of returned products when they surveyed consumers about returning holiday gifts.
Clothing, electronics, and shoes were the most commonly returned items after the holiday season. At the bottom of the list was food, which only 6% of respondents returned.
Most common reasons for online store returns
With different types of ecommerce shoppers online, the reasons for returning orders can vary. However, returns can be a financial burden for your online business.
Understanding why shoppers return items will help you manage your return rates and find ways to increase customer satisfaction while staying profitable.
Many customers unfortunately buy things online with the intention of returning some or all of the order. With ecommerce, shoppers can’t actually see the product until after purchasing it.
They may be unsure about whether they want an item, so they’ll buy it just to try it out. Then, if they don’t like it, they’ll just return it right away.
According to Barclaycard, 30% of shoppers surveyed in the UK over-purchased items and then returned the ones they didn’t want. In addition, 19% of shoppers stated that they had ordered more than one version of the same product so they could choose their favorite and return the rest.
In many cases, though, customers return orders even though they weren’t intending to when originally making the purchase. The most common reason for returning an online purchase is that the item was broken or damaged, which typically happens during the shipping process.
Another common reason is that the product doesn’t match the description that was provided online. Online retailers are sometimes intentionally misleading in their photos or written descriptions of an item. This can severely backfire when the customer decides to return the product.
In other instances, the images or write-ups are simply unclear or incomplete, which affects the customer’s expectations. An online retailer can help reduce their return rate by taking the time to craft a clear, accurate description for every product on their site.
Customers also return items if they simply don’t like them. It’s harder to judge the value of a product when you view it online. Shoppers can therefore only make their final decision after completing the purchase and receiving the item in the mail.
Returns are such a common part of the ecommerce experience that it’s a deciding factor in store choice for some customers. Surveys have found that shoppers value free and easy returns and are deterred from stores that require the customer to pay for return shipping.
Factors leading to the increasing number of returns in ecommerce
Returns have always been common for ecommerce businesses, but they’ve been on the rise in recent years. There are a few likely reasons behind the increase in returns and refund requests for online retail stores.
Growth in online shopping
Online shopping as a whole has grown massively in the last few years. Digital Commerce 360 notes that ecommerce’s share of retail sales in the US rose to 16% in 2019 from 14.4% in 2018. Total sales for online retailers has risen year after year, too, reaching $3.76 trillion (USD) in 2019.
As the number of online orders increases, we should expect that the number of returns will grow as well. Ecommerce retailers should anticipate and account for a rise in returns that correlates with their sales as their business grows.
Furthermore, as ecommerce becomes more popular, some consumers have started to shop more indiscriminately from online stores.
Instead of only buying an item when they’re certain it’s what they want, shoppers often buy from online retailers without thinking as carefully about their purchases. This will lead to a rise in returns as customers buy more products that they aren’t entirely satisfied with.
Return policies are more relaxed
Over the years, ecommerce businesses have become more lax in their return policies. The industry is incredibly competitive, and new online stores open every day.
When one major ecommerce retailer sets a trend, others must follow suit to keep up. To avoid being overshadowed by your competitors, you may have no choice but to relax your return policy.
This trend has led to a change in expectations among customers, too. Because it’s now so common for retailers to offer lenient terms and free return shipping, customers view it as the norm instead of as a perk or a bonus.
As more customers start to expect hassle-free returns, more stores will continue to relax their policies. Now, buying products online with the intention of sending some back is the standard practice for many consumers.
Final thoughts
Managing returns can be difficult for online retailers. On one hand, easy returns are what ecommerce customers want nowadays. Offering free return shipping and a wide window for returns can help you win shoppers over.
On the other hand, these return policies can hurt your business financially.
Some returned products can be immediately relisted on your website, but many have to be repackaged, refurbished, or even thrown away. Losing out on these items can be financially devastating.
This is especially true if your business sells products that are frequently returned, such as clothing, shoes, and electronics. If you cover the return shipping as well, returns are even more challenging for your store.
To avoid serious issues with returns, you need to craft your return policy carefully.
Look at the return rates for products within your industry, and consider how much of the financial burden your business can handle. Keep a record of your returns so that you have data to reference if you later need to adjust your policies.
Ecommerce entrepreneurs should expect returns to be a part of their business operations. Unless your store has a no-return policy, customers will send goods back at least occasionally.
To be transparent with your shoppers, be sure to develop a clear, consistent, and viable plan for how you’ll handle returns.
