eCommerce Returns Management: Tips + Best Practices

eCommerce Returns Management Tips + Best Practices blog image

In the dynamic landscape of eCommerce, effective management of returns has become an important aspect for businesses aiming to provide exceptional customer experiences.

eCommerce returns management is more complex than returns at a brick and mortar store; the rate of product return is higher with online store, so ensuring your return system is efficient is pivotal in fostering customer satisfaction and loyalty.

In this article, we discuss eCommerce returns best practices, offering insights and tips to streamline the return process and enhance overall customer satisfaction.

Takeaways
  • Gain insights into average eCommerce return rates, their variations across product categories, and the reasons behind returns
  • Explore the eCommerce returns process, from how returns work for customers to the fate of returned products
  • Learn about costs associated with eCommerce returns, including labor, reselling, transportation, and the impact of free return shipping
  • Discover practical tips for handling eCommerce returns, reducing return rates, implementing effective policies, and exploring the best eCommerce returns management software
  • Streamline and automate ecommerce operations and enhance customer satisfaction

What Is the Average eCommerce Return Rate?

Understanding the average return rate in the realm of eCommerce is essential for businesses to gauge customer satisfaction and optimize their operations. According to recent industry data, the average return rate for eCommerce hovers around 20%, emphasizing the significance of effective returns management strategies.

eCommerce Return Rates by Category

The return landscape varies across product categories, influencing the overall return rate for eCommerce platforms. Let’s delve into the specifics of return rates for different product categories:

  • Clothing and Apparel - Clothing and apparel often witness higher return rates, with approximately 30% of items being sent back. Sizing discrepancies, style preferences, and fabric concerns contribute to the elevated return rates in this category.
  • Electronics and Gadgets – Electronics have a relatively lower return rate, averaging around 15%. Despite the precision in product descriptions, issues related to functionality and compatibility remain key factors influencing returns.
  • Home and Furniture – Home and furniture items exhibit a return rate of about 25%. Factors such as color variations, dimensions, and overall aesthetic appeal contribute to the return frequency in this category.

eCommerce Product Return Rate by Reason

Understanding why customers initiate returns is crucial for tailoring effective returns management strategies. Here are some common reasons behind eCommerce product returns:

  • Broken or Damaged Product - Approximately 23% of returns stem from receiving damaged or broken products. Proper packaging and robust shipping protocols can significantly mitigate such instances.
  • Product Not as Described - Around 18% of returns occur when the delivered product does not align with the customer’s expectations based on product descriptions. Enhancing product information and imagery can help address this issue.
  • Poor Quality Product - Approximately 15% of returns result from customers perceiving the product as poor in quality. Improving product quality or providing clearer expectations can mitigate this concern.
  • Delivery Problems  Issues related to delivery, such as delayed shipments or packages getting lost in transit, contribute to around 12% of return cases. Ensuring reliable shipping partners and transparent tracking mechanisms can help alleviate these problems.
  • Product No Longer Wanted - A common reason for returns, representing about 20% of cases, is customers changing their minds or finding a better alternative. Clear return policies and hassle-free processes can enhance the customer experience in such situations.
  • Customer Ordered More Than One Product - Approximately 12% of returns result from customers accidentally ordering more items than intended. Streamlining the ordering process and incorporating order confirmation mechanisms can help reduce this occurrence.

eCommerce Return Statistics vs. Brick and Mortar Stores

Comparing eCommerce return rates with those of brick-and-mortar stores provides valuable insights into consumer behavior. Surprisingly, eCommerce platforms generally experience higher return rates compared to physical stores.

The convenience of online shopping, coupled with lenient return policies, contributes to this discrepancy. While brick-and-mortar stores often witness return rates ranging from 8% to 12%, eCommerce return rates are notably higher due to the unique challenges of online retail.

Understanding return rates can help ecommerce businesses aiming to optimize their processes, enhance customer satisfaction, and build long-term brand loyalty.

For further insights into eCommerce return rates and comparisons with brick-and-mortar stores, readers can explore additional resources at National Retail Federation (NRF) - a leading authority in retail research and industry trends.

Understanding the eCommerce Returns Process

From supply chain management to product management, managing returns efficiently for returns to online retailers is vital for maintaining customer loyalty and for maintaining customer satisfaction. Learn more about the eCommerce returns process below to gain insights into how online stores manage returns and set up a return policy.

How Do Returns Work in eCommerce?

eCommerce returns play a vital role in customer satisfaction and operational efficiency.

Customers initiate the process by submitting return requests, articulating reasons for dissatisfaction. This interaction is crucial for a transparent and convenient experience. The evaluation phase involves the eCommerce business examining factors like the reason for return and product condition.

The delicate decision-making process, whether to approve or deny the return, balances customer satisfaction with business interests. If approved, guiding the customer through the return procedure, often with an eCommerce shipping label, can enhance brand perception and foster loyalty.

What Happens to eCommerce Returns?

The fate of eCommerce returns is determined by factors like product condition. Undamaged items meeting specific criteria are typically restocked for future resale. Thorough inspection during return acceptance is crucial for maximizing value.

For damaged items, businesses may choose refurbishment or repair to make them marketable. Alternatively, liquidation at discounted rates helps recover part of the initial investment. When these options aren’t feasible, responsible disposal methods are considered. Managing this returns aftermath strategically contributes to inventory optimization and operational efficiency.

How to Handle eCommerce Returns

Effectively handling eCommerce returns demands a thoughtful approach, and businesses can explore various strategies tailored to their operational dynamics.

Post the Items Back to Your Warehouse

One common method involves bringing returned items back to the business’s warehouse or distribution center. This approach provides the advantage of centralizing control over the returns process.

Once the online returns are received, they undergo inspection, and businesses can decide whether to restock, refurbish, or adopt alternative strategies based on the condition of the products. The in-house management of returns offers businesses greater visibility and control over the entire process, from inspection to the final disposition of the returned items.

Return Items to Store

For an ecommerce business that also has physical retail locations, returning items to the store can be a viable option. This strategy is particularly beneficial when the eCommerce and brick-and-mortar aspects of the business are integrated.

Online returns can be directed to the store, where they can be assessed, and decisions regarding restocking or refurbishment can be made. This method leverages the existing infrastructure of the physical store, potentially minimizing transportation costs and streamlining the returns process.

Outsource Reverse Logistics

Outsourcing reverse logistics is another avenue for handling eCommerce returns. Partnering with a specialized logistics provider can offload the complexities of managing returns, from transportation to processing.

These third-party services often have established networks and expertise in handling returned items efficiently. This option can be particularly advantageous for businesses looking to optimize resource allocation and focus on their core competencies while entrusting the intricacies of returns management to dedicated professionals.

Cost of Returns to eCommerce Business

Effectively managing returns in eCommerce involves not only operational considerations but also understanding the associated costs that can impact the bottom line. Here are key cost components that businesses need to factor into their eCommerce returns management strategy:

  • Labor: The processing of returned items requires manpower for tasks such as inspection, restocking, and potential refurbishment. Labor costs play a significant role, especially in businesses dealing with a high volume of returns. Efficient processes and automation tools can help mitigate some labor-related expenses.
  • Reselling: The reselling of returned items, if possible, is a common strategy to recover costs. However, businesses must consider potential markdowns for refurbished or open-box items. Additionally, the time and resources invested in preparing returned items for resale impact the overall costs.
  • Transportation: The logistics of returning items to the warehouse or other locations involve transportation costs. This includes shipping fees for customers returning items as well as the internal transportation of returned items within the business’s operations. Minimizing transportation costs is a critical aspect of optimizing the returns process.
  • Costs Associated with Free Return Shipping: Offering free return shipping, while a customer-friendly policy, adds an additional layer of cost for the business. This includes the actual shipping fees, packaging materials, and processing costs. Businesses need to carefully evaluate the financial implications of such policies and find a balance that aligns with customer satisfaction and operational efficiency.
  • Damaged Goods: When returned items are damaged or unsellable, businesses face financial implications. The cost of handling damaged goods includes disposal or recycling fees, potential write-offs, and the environmental impact associated with responsible disposal methods.

Understanding and quantifying these costs is essential for eCommerce businesses to make informed decisions about their returns management strategies. Balancing customer satisfaction with cost-effective practices is crucial for long-term success in the competitive eCommerce landscape.

Visit Online Retail Today for comprehensive resources and in-depth analysis. Stay informed and optimize your eCommerce returns approach for sustainable business growth.

eCommerce Returns Best Practices

1. Choose the Right eCommerce Returns Policy

Crafting an effective eCommerce returns policy is a critical aspect of managing returns efficiently and enhancing customer satisfaction. Consider the following best practices:

  • Clearly Communicate Policies: Ensure that your returns policy is easily accessible on your website and communicates key details such as the timeframe for returns, condition requirements, and any associated fees. Transparency builds trust with customers.
  • Offer Flexibility: Balance customer satisfaction with operational feasibility by offering a reasonable return window. Providing flexibility, such as extended return periods during holidays, can positively influence customer loyalty.
  • Free Return Shipping: Consider offering free return shipping, especially for items with a higher return rate. While this incurs additional costs, it can significantly enhance the overall customer experience and encourage repeat business.
  • Refund Options: Clearly outline refund options, whether in the form of store credit, exchanges, or full monetary refunds. Providing various options accommodates different customer preferences.

2. Use an eCommerce Returns Management Software

Investing in a robust eCommerce returns management software can streamline the returns process, reducing manual efforts and enhancing efficiency. Consider the following tips when choosing the right software:

  • Integration Capabilities: Select software that seamlessly integrates with your existing eCommerce platform, inventory management system, and other relevant tools. Integration ensures a cohesive flow of information across your business operations.
  • Automation Features: Look for software with automation features that can handle routine tasks, such as return authorization, communication with customers, and restocking updates. Automation minimizes the risk of errors and accelerates the returns process.
  • Analytics and Reporting: Choose a platform that provides comprehensive analytics and reporting capabilities. Insights into return trends, reasons for returns, and processing times can inform strategic decisions to optimize your returns management strategy.
  • User-Friendly Interface: Opt for software with an intuitive and user-friendly interface. A system that is easy to navigate and understand reduces the learning curve for your team, ensuring smoother implementation and utilization.
  • Scalability: Consider the scalability of the software to accommodate your business’s growth. A solution that can adapt to increasing volumes and complexities ensures a long-term and cost-effective investment.

By implementing these return management process best practices, eCommerce businesses can meet customer expectations with a returns processing technology.

Customers expect to be able to return a product they buy when shopping online, so online merchants can turn the returns process into an opportunity to build trust and loyalty with customers, so they will make future purchases.

3. Aim to Reduce Returns in eCommerce

Reducing returns is a proactive strategy that not only saves costs for the business but also enhances the overall customer experience. Consider the following tips:

  • Aim to Achieve Customer Satisfaction with Online Shopping: Providing a positive and accurate representation of your products online can set realistic expectations. Customer satisfaction reduces the likelihood of returns driven by unmet expectations.
  • Make Product Information Accurate and Easy to Find: Clearly present detailed product information, including specifications, sizing guides, and high-quality images. Accurate and accessible information helps customers make informed purchasing decisions, reducing the chances of dissatisfaction upon receipt.
  • Use 3D/AR on Your eCommerce Website: Implementing 3D or augmented reality (AR) features on your website allows customers to visualize products in a virtual space. This technology enhances the online shopping experience by providing a more realistic representation, helping customers make confident choices.
  • Pack and Ship Items Securely: Invest in secure and protective packaging to minimize the risk of items getting damaged during transit. Well-packaged items not only reach customers in good condition but also create a positive unboxing experience.

4. Follow Other eCommerce Returns Management Tips

Effective returns management goes beyond the basics. Consider the following additional tips:

  • Make Your Returns Process Sustainable: Implement eco-friendly packaging and disposal practices. A commitment to sustainability aligns with consumer values and can positively impact your brand’s reputation.
  • Keep Customers Informed About the Status of Their Return: Provide real-time updates on the status of return processing. This transparency instills confidence in customers, reinforcing a positive shopping experience even when returns are necessary.
  • Offer Exchanges or Store Credit: Providing alternatives to monetary refunds, such as exchanges or store credit, encourages continued engagement with your brand. It can transform a return into an opportunity for future purchases.
  • Utilize Reviews: Actively seek and showcase customer reviews. Positive reviews can influence potential buyers, and addressing concerns in reviews demonstrates your commitment to customer satisfaction.
  • Make eCommerce Returns Policy Easy to Find: Ensure that your returns policy is easily accessible on your website. A straightforward and prominently displayed policy sets clear expectations for customers.
  • Protect Your Business Against eCommerce Return Fraud: Implement measures to detect and prevent return fraud, such as false claims or the return of used items. Vigilance in this area safeguards your business and maintains the integrity of your returns process.

By incorporating these additional tips into your eCommerce returns management strategy, you can create a more resilient and customer-centric process that aligns with the unique needs and expectations of online shoppers for your eCommerce store.

For further insights into optimizing your eCommerce returns process and implementing effective management strategies, explore additional resources and expert guidance on Practical eCommerce.

Best eCommerce Returns Software to Try

Effectively managing returns is crucial for the seamless operation of an eCommerce business.

These eCommerce returns management tools are designed to streamline the returns process, enhance customer satisfaction, and provide valuable insights for continuous improvement.

A good eCommerce returns software can help the business manage customer feedback and customer concerns, keep track of online sales and customer behavior, create a return label for returns, and even implement cash refunds for hassle-free returns. Evaluate the features and pricing of each tool to find the one that best suits the unique requirements of your eCommerce business.

If you do not have the resources for a full customer service team, these return softwares can help you manage your commerce returns. Explore the following eCommerce returns management software solutions, each with its unique features and capabilities:

1. Happy Returns

Happy Returns is one of the best eCommerce returns management softwares on the market to streamline the returns management process for eCommerce retailers.

Key Features

  • Streamlined return processing with a focus on in-person returns
  • Multi-channel return options, including retail locations
  • Real-time analytics and reporting to track return trends

Pricing

Happy Returns offers customized pricing based on the specific needs and scale of your business. Contact their sales team for a quote.

2. Loop

Loop helps eCommerce stores manage eCommerce returns, allowing easy customer returns for online purchases.

Key Features

  • Automated returns management with a user-friendly interface
  • Integration with various eCommerce platforms for seamless operations
  • Comprehensive analytics for insights into return reasons and trends

Pricing

Loop provides custom pricing based on business size and requirements. Contact Loop for a personalized quote.

Final Word

Managing eCommerce returns can increase customer satisfaction and operational efficiency for online businesses.

By understanding return rates, implementing best practices, and leveraging reliable returns software, businesses can boost eCommerce sales, build customer loyalty, and turn the return process into a positive customer experience.

Choose the right strategies and tools to optimize your returns workflow, ensuring your eCommerce business thrives in the competitive online landscape.

Next Steps: What Now?

  • Explore the best eCommerce platforms to elevate your online business growth and discover effective strategies
  • Whether you’re building your first eCommerce website or aiming to enhance an existing one, choosing the right eCommerce hosting platform eCommerce hosting platform is important
  • Learn how to avoid common eCommerce mistakes by selecting the hosting solution that best aligns with your brand’s needs and aspirations

Learn More About eCommerce

Frequently Asked Questions

What is the future of eCommerce returns?

The future of eCommerce returns lies in advanced technology integration and sustainability. Expect innovations like virtual try-ons, reducing return rates through improved product visualization. Additionally, a heightened focus on eco-friendly practices will reshape how returns are processed and managed.

What is a good return rate for eCommerce?

A good return rate for eCommerce varies by industry but generally falls between 15% and 30%. However, it’s crucial to analyze your specific business metrics and industry benchmarks to determine an acceptable return rate for your online store.

What products have the lowest return rate?

Products with specific sizing (like electronics) or those with accurate product descriptions (such as books) tend to have lower return rates. However, industry dynamics, customer expectations, and effective eCommerce returns management strategies play significant roles in influencing return rates across product categories.

Sonja Vitas
Edited By:
Sonja Vitas
Content Editor

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