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    October 20, 2022
    8 minute read

    Why Customer Returns Are Increasing (and What To Do About It)

    by: Nicole D'Angelo

    Ecommerce shopping has exploded in popularity over the past few years — but the downside to this boom is an increase in returns, cutting into profits and disrupting businesses’ attempts to manage their inventory.

    Reversing this trend of rising customer returns requires careful understanding of who’s returning purchases and why. Once equipped with that knowledge, brands and retailers can implement strategies to help customers find the right product the first time.

    Why Do Customer Returns Occur?

    In general, ecommerce shopping tends to result in more returns than in-person shopping. For example, 16.6% of all merchandise purchased in the U.S. in 2021 was returned, according to the National Retail Federation (NRF). That number jumped to 20.8% when considering just online sales.

    This disparity is understandable; it can be harder for a shopper to determine whether a certain product meets their expectations when they can’t interact with it in real life. This likely explains why apparel has one of the highest return rates — ecommerce customers can’t try clothing on before purchasing. Power Reviews’ “Consumer Survey: Returns in Retail in 2021” found that 88% of shoppers have returned apparel.

    There are also many customers who’ll buy several similar products with the intent of comparing them in real life and choosing to keep just one. This is called “bracketing,” and Business Insider reports that it can cause a massive headache for retailers.

    Who Returns Items the Most Often?

    The rate at which a customer returns items is informed in part by demographics. The Power Reviews survey found that higher-income households are more likely to be interested in returns than lower-income households. A potential explanation for this is that higher-income shoppers are more likely to shop for fun or take chances on products they haven’t fully researched.

    Similarly, wealthier countries are more likely to have high rates of returns. U.S. shoppers return 20.8% of online sales, as mentioned earlier, while FashionUnited reports an ecommerce return rate of 29% in the U.K.

    Germany, due to both its relative economic strength and the leniency of many sellers’ return policies, leads the European Union in returns, according to a recent study from the University of Bamberg.

    This data suggests that many people who return products frequently are enthusiastic shoppers excited to explore what you have to offer them. The key to reducing returns is to help these shoppers better understand which of your products is best suited to their needs.

    Strategies for Reducing Customer Returns

    In many cases, customer returns can be reduced simply by providing more high-quality product information to shoppers. Here are a few strategies for doing so.

    Create More Enhanced Content

    Enhanced product content helps shoppers truly understand what they’re buying and how it will fit into their lives.

    Depending on your product, the ideal portfolio of enhanced content may include 3D models, videos, detailed product descriptions, galleries, and more. Generally speaking, the more detail you can provide shoppers, the better.

    Include a Sizing Chart

    The type of product returned most often is apparel, and most apparel returns occur because the fit wasn’t correct. Including a sizing chart that details how brands determine their sizes can help avoid this type of return.

    Encourage User-Generated Content (UGC)

    Reviews and user-answered questions let customers share the kind of specific details that only arise when using a product in everyday life. They also allow for a higher level of engagement, as customers who are happy with your product can encourage others to purchase it.

    Show Related Products in Your Checkout Flow

    Most ecommerce platforms show related products on product pages to increase sales. A potential strategy for reducing returns is to also show shoppers related products while they’re checking out.

    This gives them a final chance to compare what they have in their cart to similar products — and consider switching it out for something that might better meet their needs.

    Consider Augmented Reality (AR) 

    It may sound futuristic, but AR for ecommerce is part of the present. Several brands and retailers are experimenting with AR to help shoppers visualize how something will look or function in their real lives.

    For example, some organizations are developing AR “fitting rooms” that help customers understand how apparel will look when worn. As CNBC reports, Walmart is working with virtual fitting room startup Zeekit to let users see how clothes will look on them — and has already rolled out a feature that lets users construct digital models with their height, weight, and skin tone.

    Other examples of AR in ecommerce include an app from Ikea that lets users see how furniture would look in their living space, a Dulux app that helps shoppers virtually try out paint colors, and a “Virtual Artist” experience from Sephora that lets shoppers see how makeup shades would look on them.

    Grow Sales With a Good Return Policy

    The above measures can help reduce returns, but returns will still inevitably occur from time to time. When they do, it’s important that your return policies are straightforward and user-friendly.

    Allowing for free and easy returns may seem counterintuitive — after all, fewer returns is the goal — but if a customer feels stuck with a product that they’re not happy with, they’re unlikely to shop with you again. If they have a pleasant experience facilitated by an easy return, however, they’ll be willing to come back.

    Craig Adkins, vice president (VP) of services and operations at Zappos, told Fast Company that “Our best customers have the highest return rates, but they are also the ones that spend the most money with us and are our most profitable customers.” The option of easy returns seems to make customers more enthusiastic about shopping with a brand or retailer.

    To create this kind of pleasant experience, try making your return policy clear and easy to find on your website and in order confirmation emails. Offering small perks like free shipping or pre-made return packaging can go a long way toward improving the customer experience. The Power Reviews survey found that free returns was the second-most desired perk among online shoppers, with 79% ranking it as important.

    Finally, a tried-and-true strategy for reducing the financial impact of returns is to try to convert them into exchanges by suggesting other products the customer may enjoy. This prevents you from losing revenue while also guaranteeing that the customer gets a product that’s right for them.

    Reducing Returns With Excellent Customer Experiences

    Online shoppers return items at a rapid rate, and that rate seems to be only increasing. However, there are plenty of actions you can take to reduce returns.

    The key is to create winning shopping experiences with high-quality, interactive enhanced content, and pain-free customer service. These strategies increase the likelihood that customers will buy products that work for them, and that they’ll come back to you even if they don’t.

    Interested in more expert tips on creating high-quality ecommerce experiences? Download “The Complete Guide to Building Winning Shopping Experiences.”DOWNLOAD GUIDE

     

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