Rising Return Rates Are Bad for Business. Here’s How to Prevent Them

To get ahead of this year’s holiday shopping season, retailers should prioritize reducing online returns now so customers aren't disappointed later.
To get ahead of this year’s holiday shopping season, retailers should prioritize reducing online returns now so customers aren't disappointed later.

Over the past year and a half, shoppers turned to e-commerce to avoid in-person shopping. But the products that arrived at their doorstep weren’t always what they expected. This was especially true during the 2020 holiday shopping season as returns rose 41% year over year.

To get ahead of this year’s holiday shopping season, retailers should prioritize reducing online returns now so customers aren't disappointed later. Fortunately, there are a few things you can do to prevent returns, boost customer loyalty and increase your bottom line.

The High Cost of Online Returns

In light of the pandemic, customers increasingly relied on e-commerce to do their shopping. E-commerce is a great way to reach shoppers, especially if a business lacks a brick-and-mortar presence. But online shopping typically results in more returns at a higher cost for the retailer, which contributed to the surge in returns over 2020.

Thirty percent (or more, depending on the category) of online purchases are returned. That’s about three times the rate of physical stores. Online returns are also more expensive than returns done in person due to the cost of shipping, handling and restocking. The Wall Street Journal notes online returns can cost brands between $10 to $20 (excluding freight) depending on the item.

[Related: Retaining the New Consumer Through the Power of Technology]

To add insult to injury, most returned items can’t be sold at full price and a quarter aren’t sold at all, instead, ending up in a landfill. Aside from a loss of revenue, throwing out perfectly usable products can damage your reputation given the increased importance of sustainability.

For some items, like inexpensive or bulky products, brands lose money by processing returns. It’s often cheaper to refund customers the purchase price and let them keep the items. This was particularly true of last year when supply chains were strained due to COVID-19.

Returns aren’t just bad for your bottom line; they can impact customer loyalty. If shoppers experience multiple retailer-caused returns, 42% of customers will stop shopping at that retailer and 72% will leave a negative rating.

A major culprit for the high number of online shopping returns is inaccurate or incomplete product information. When customers are in a store they can physically see and handle the item, but when online, they’re beholden to the information provided. If the online description or images don’t match the in-person product, consumers won’t hesitate to make a return or leave a negative review.

Luckily, product information is something brands can control. By investing in the production of better, more accurate descriptions and images, retailers can prevent returns from online purchases at the source.

How to Prevent Online Returns and Satisfy Customers

Reducing online returns can make a significant impact on your bottom line and customer experience. By giving consumers the necessary product information at the point of purchase, you can ensure the item that arrives at their home is the item they expect to receive.

Here are three steps to prevent returns and keep shoppers happy:

1. Analyze your existing content

Today’s marketers have more data at their disposal than ever before: Use it to your advantage. Analyze your products’ digital content and performance — or lean on a trusted product content partner to do so — to understand content quality issues and what improvements to make.

See what items have the lowest and highest return rates and compare that against industry leaders. You’ll likely discover some common trends such as unclear product descriptions or fewer online images.

2. Solicit customer feedback

Seventy-one percent of retailers don’t understand the root cause of returns. Make sure you have a way to capture and analyze customer feedback. Give customers the option to leave comments on why they returned the product.

[See also: Evolution of How Consumers Shop]

Also check customer reviews, social media and call center data. For example, are people complaining that your shirts run large? Are they surprised about the size of your products? Addressing these concerns and making improvements to your content can help reduce your return rates.

3. Upgrade product imagery

The more accurately you can communicate what products will look like when they arrive, the fewer returns — and negative reviews — you’ll have. In addition to product descriptions and photos, 360-degree spinning images and videos are highly effective. We’ve seen returns drop as much as 30% with 360-degree spinning images and 76% of consumers report purchasing a product after watching a video.

Artificial reality can also be a helpful tool for consumers to visualize what products look like with added context. Companies like IKEA, Target, Sephora, Warby Parker and more allow consumers to upload a picture of themselves or their space and overlay the desired product. Interactive features like 360-degree spinning images, videos and AR ensure items purchased online meets shoppers’ expectations in real life.

Don’t Let Returns Diminish Your Bottom Line

As e-commerce continues to make up a larger share of total retail spending, we can expect retail returns to increase. But brands can reduce online returns by investing in better product descriptions and imagery to ensure shoppers get exactly what they bargained for. By acting on shopper feedback, you can provide high-quality, more accurate content that reduces returns, boosts revenue and improves customer experience.

TJ Waldorf is VP, marketing and customer experience at 1WorldSync.

More on Returns Management