‘Tis the (Return) Season Part 1: What You Need to Know to Reduce Returns’ Frequency in E-Commerce
E-commerce carries a higher rate of returns than brick-and-mortar stores. Depending on the source, brick-and-mortar retailers have an average return rate of approximately 10 percent, notes Shopify. E-Commerce returns can be as high as 50 percent, depending on the period analyzed. Unfortunately, returns represent an added cost of operating in modernity, and retailers fall victim to a misconception that they have few options to reduce returns’ frequency in e-commerce. Supply chain leaders that take the time to understand the costs of e-commerce returns and the role of detail-oriented structure in order fulfillment can successfully bring returns under control.
The High Costs of Returns in E-Commerce
More than $400 billion worth of merchandise will be returned following the 2018 holiday shopping season, notes Retail Dive, and that figure will swell to more than $550 billion by 2020. In addition, returns from online purchases have a notoriously high rate, often cited at 30 percent. However, e-commerce return rates around the holidays soar to 50 percent, if not more. Unfortunately, failure to understand the problem contributes to its worsening. For instance, even 100-percent accurate orders will still be subject to some returns.
The Key to Reduce Returns’ Frequency in E-Commerce Turns on Accuracy in Fulfillment
E-commerce returns are the result of customer and retailer actions. When a customer purchases a product with the intent to return one or more items, such as the case for ordering variations of product sizes or colors, retailers need to find a way to prevent this from happening. For this example, providing more details about fitting and product specifications can help.
Although colloquialisms have been coined for shoppers with routine returns’ practices, such as the “Try It On” Consumer, the “Wardrober,” and the “Fitting Roomer,” it is important to continue offering a hassle-free returns’ policy. However, tracking information about customers’ returns can help identify these instances so that they may be managed proactively.
For example, notifying consumers of past purchases that were similar, as an attempt to discourage the purchase of an item that will be returned.
Also, another factor can be derived from reviewing the reasons why consumers return merchandise. Up to 22 percent report receiving inaccurate orders, so optimizing order fulfillment to reduce this aspect of returns is essential.
Best Practices to Reduce E-Commerce Returns
Some of the best ways to reduce returns’ frequency in e-commerce, explains Peter Sobotta of Return Logic, include:
- Offer Hassle-Free, Incentivized Returns.
- Use Data to Refine Product Selection.
- Make Customers See and Feel Online Purchases.
- Make Customer Reviews Visible.
Exert Control Over E-Commerce Returns at Last
E-commerce returns do not have to be an expensive cost of doing business, and retailers can take steps to reduce returns’ frequency in e-commerce. However, such reductions require retailers connect with customers on a personal level, provide more detail and information about products, leverage data to understand returns’ causes and frequency, and encourage consumers to keep what they order. Ultimately, it all depends on visibility into the entire supply chain and marketing strategy. If retailers can help consumers pick and receive the right product from an online purchase, returns’ rates will decrease. Therefore, retailers must upgrade their systems, connect them, and work to increase communication and collaboration throughout the supply chain.
Veridian, a Manhattan Associates, HighJump, and JDA warehouse management system implementation company, can help you realize your supply chain success. Fill out the contact information below in order to schedule a consultation call with one of our supply chain professionals.
