5 eCommerce Returns Best Practices: How To Minimize Loss Of Margin

Great service leads to loyal customers and an important part of this service includes returns. Although the process of returns ends in lots of hidden costs for eCommerce-based businesses, without the service, customers are likely to decide against purchasing items or will never return again to shop with that specific company. When it comes to loyalty with customers, burnt bridges are almost impossible to rebuild.

So how can you persuade consumers to not make returns or at least lower the rate of returns in general? This article will dive into some of the successful tips regarding how to deal with returns management in retail, specifically during a time where online shopping has increased and people are buying more than they ever have before.

The Hidden Cost of Returns

International firm KPMG recently reported that the effect of customer returns could end up being 3 times the cost of a consumer actually buying the product in the first place. This unfortunate circumstance is due to a handful of reasons including the way inventory is tracked, if the products come back damaged, or the origin of the supplier in reference to the consumer.

Despite this dilemma, many consumers get annoyed when companies don’t offer free returns; because of this, customers may choose not to buy from the brand in case they’ll eventually need to deal with an inconvenient return system. eCommerce brands not wanting to lose potential customers have to put this into consideration when thinking of their own approach along with brainstorming different ways to avoid returns in the first place.

5 Tips on How to Reduce RTO in e-Commerce

The pandemic has led many consumers to return materialistic items, as people are looking to buy necessities rather than spend money on clothing, jewellery, or other non essential products. Many industries have had to attract new buyers, in some cases building specific approaches such as an improved marketing strategy for luxury brands.

Along with trying to attract consumers, these companies are working on new methods for how to reduce RTO in eCommerce as it’s a large issue that needs to be addressed. As for your own brand during COVID-19, learning how to deal with returns management in retail or even predicting product returns in e-commerce can help prevent lost revenue during a crisis. Below are several tips on how to work at reducing product returns: 

1. Gift Segmented Consumers: A savvy method to persuade consumers to keep their purchased items is to offer discounts only to the customers that did not make a return. Your business will need to keep track of product return data by using either internal analytics tools or outside services. Only sending discounts to customers that have kept your products will create better customer loyalty with that specific audience, as well as defer high-risk customers away from your business.

2. Improve Visuals: Another approach on how to deal with returns management in retail is to make sure your online site has great visuals to represent each product. Consumers are likely to make a return when items they purchased don’t appear the same as they did online. For example, if you are a clothing retailer, be sure that all images of clothing match the exact colour and do not over-edit visuals as it may deceive customers relating to what they are buying. Around 23% of product returns are due to misleading or inaccurate images, making this a critical factor in visual marketing. Improving images could be done in the following ways:

1. Create a 3D-view of your products that allows consumers to rotate around the product. For example, automobile company Jeep lets customers fully rotate the outside of their vehicles to display all sides, as well as produces inside visuals for consumers to view the interiors of the car.
2. Create a video of your company's product to let customers see the inventory in motion. Clothing brand Nasty Gal has used this approach to produce short videos of models walking in their clothing to show customers how the product would look and move in-person.
3. Display products on social media to show different visuals your brand has listed on its site. A successful method to this could be having influencers on Instagram post photos in your brand’s clothing, as it is also a great way to attract a wider audience.

3. Customer Reviews: To help customers make decisions on whether or not they should purchase a product, customer feedback can be a strong factor in their final decision. Your brand may want to set up a section underneath a product page dedicated to customer reviews that others can read and help direct consumers while shopping. For instance, clothing brand H&M has set up a meeting where customers can let others know if the clothing is too small, true to size, or too large, along with a comment section where they can also speak about the items. Potential consumers can use this to make their own decision and help choose the correct size and deter away from having to make a return after buying the wrong size.

4. Quizzes: If your company were to set up a quiz with personalised results for consumers, this is likely to help in reducing product returns. Results can suggest customers products that will benefit them specifically and take the guessing game out of what a consumer may think would be the best product or model to buy. Makeup brand Il Makiage created a quiz for its customers to see which foundation would be best for their skin type; this is especially helpful to this brand since once these makeup products are returned, they can not be resold resulting in lost revenue.

5. Email Marketing: Email marketing to high-risk customers can help reduce the likelihood of returns. Predicting product returns in eCommerce can be tricky but through collected data, your company will be able to target these specific consumers and send them tailored emails to persuade them to keep purchased items. For example, even letting your consumers know during COVID-19 that their refunds may take longer due to some unforeseen circumstances may sway them to simply keep their new products through not wanting to wait.

Through the above tips, returns management can be reconstructed into a helpful service to offer to consumers and help reduce excessive returns and lost revenue. The way people shop will constantly be changing throughout the years but staying on top of different ways to market products and provide great customer experience will help businesses avoid this issue.

Conclusion

Overall, companies need to learn that great customer service is the number one solution to the problem of excessive returns and will help significantly reduce this issue. Whether a brand decided to include customer reviews, personalised experiences, great visuals, or savvy marketing, all of these factors go into creating quality customer service and will likely make a difference for businesses struggling with returns management. Consumer behaviour will continue to turn to online shopping as their preferred method, so businesses will need to prioritise the need for great customer service and experiences.