5 ways to reduce cost of returns

How Ecommerce Companies Can Minimize Product Returns and Costs

Ecommerce companies are about as common these days as people with ideas to sell things online – because it’s just that easy. It shouldn’t be all that surprising that the age-old business practices of having a good product and treating your customers well will get you to stand out from all these players.

As a small business owner, particularly in ecommerce, you’ll need to understand the significance of customer satisfaction to see how to make your business stand above the rest. And, as an ecommerce business owner, you’re likely well aware of the cost of returns on your bottom line. 

Customer satisfaction feeds directly into reducing the number of online returns your customers are making – and the cost associated with them.

In this article, we’ll explore several ways to reduce the volume of returned items generated after people have been online shopping at your store. We’ll discuss optimized product pages, personalized products, keeping availability data up to date, maintaining high customer service standards, and offering a tailored returns policy. Let’s dig in.

Understand The Root Cause Of Returns

Returns can be a frustrating and costly part of the business for an online retailer. But it’s unlikely you’ll ever be able to eradicate them completely – check out the difference between controllable and uncontrollable returns in this comprehensive article on returns we released previously.

There are a number of reasons a customer of yours might choose to return something, and in most cases, you shouldn’t take offense – they’re par for the course! Some of the most common reasons for higher-than-average e-commerce return rates include the following.

  • Wrong product descriptions. The customer typically has nothing else to go on besides what’s written in your product description, so if it turns out what they receive does reflect what was described, they might return the item.
  • Quality problems. If something is wrong with the product itself, you’ll receive returns from unsatisfied customers.
  • Problems with sizing or fit. Unlike in-store purchases in brick-and-mortar stores, sizing is much harder to get right when shopping online without a fitting room. In some cases, customers might even deliberately buy more than one size with the intention of returning the incorrect item(s).
  • Shipping damage. This goes without saying. Unless the courier’s got your back, damage in transit is bound to happen.
  • Customers who aren’t happy with the product. It may have nothing to do with the quality of the product itself. Some customers will just find the online purchase doesn’t but simply didn’t meet their expectations or needs.

The effects of returns include high costs due to shipping back and forth, restocking, holding inventory, and even customer refunds. Since the pandemic caused an ecommerce activity explosion, absolute numbers of returns are higher than ever.

When returns strike, you’ll also experience the following:

  • You’ll bear the brunt of the return shipping costs, including the administrative burden of reverse logistics and the increased emissions along the supply chain.
  • You’ll have to deal with the returned goods (storing them; disposing of them, e.g., in a landfill; or returning them to the manufacturer).

In the balance of this article, we’ll look at ways to reduce the cost of returns and ensure you’re running a smoother business.

1. Optimize Product Images And Descriptions

This is your best hope of ensuring that what the customer gets matches their expectations. Accurate product images and descriptions can help reduce the number of returns of wrong items sent (even if it’s just wrong in the customer’s eyes!) because it gives customers an accurate idea of what they are buying.

In the worst case, poor images and/or descriptions may deter a shopper from making a purchase at all. In the medium case, the shopper still buys but returns due to description misalignment, and in the best case, the shopper buys and doesn’t return because the description and images are an accurate reflection of the item. 

Here are some best practices for writing compelling and accurate product descriptions and including the best images.

  • Take descriptions directly from the manufacturer’s website. This is very helpful for product accuracy.
  • Keep descriptions short and punchy. People may not read long-winded copy on your website, so keep it brief to minimize wasted time on returns. 
  • Include product images from multiple angles and at different sizes. Include a zoom feature so shoppers can better understand the item they buy.
  • Avoid using stock photos; instead, use your own photographs or images of the product.
  • Include detailed measurements when appropriate for clothing and furniture items to reduce returns due to size problems.
  • Write descriptive titles and include keywords for which shoppers may search in titles and descriptions. This can help with SEO (Search Engine Optimization) as well.

As a final tip, browse a few listings on sites like Amazon and Zara to see how they’re doing things.

Provide product images and product descriptions

2. Offering Highly-personalized Products

Personalization can take countless forms, from allowing shoppers to customize items with their name or initials to offering a range of color and fabric options for clothing.

Personalization can be especially effective for apparel companies as it offers customers the chance to get an item that better matches their size and style preferences. Offering personalization can also reduce the number of returns due to sizing issues. 

If the level of customization goes beyond what’s available elsewhere, you’ll a) more than likely make the purchase and b) minimize the chance of that item being returned (due to its uniqueness and improved customer experience). Here are a few ideas for personalization of physical items:

  • Offering customized apparel with names or initials.
  • Allowing customers to choose different colors and fabrics for their clothing items. 
  • Creating customizable jewelry with engravings.
  • Making custom-sized furniture pieces or any other item that can be tailored to customer preferences.
  • Using 3D printing technology to create unique, one-of-a-kind items.
  • Providing bespoke artwork or furniture pieces made just for the customer.
  • Offering personalization services, such as monogramming, engraving, and more.
  • Aligning customization options with the time of year. For example, offering customization of mugs for Christmas, customized jewelry for Valentine’s Day, or other holiday season specials.

3. Provide & Update Product Availability Data

Managing product availability data is a surprisingly difficult task for online retailers. It’s a system with changes that affect stock values on four fronts: new stock coming in increases stock and availability, customers shopping decreases it, returns increase it, and exchanges tend to decrease it.

Though complex, it pays to have a system capable of keeping track of all these changes so that the availability a customer sees online is a true reflection of reality. Accurately reflecting product availability positively affects purchase decisions in real-time: if a shopper knows something is available, they’re more likely to buy it than if it’s out of stock or on backorder.

Here’s the effect that this all has on returns: if a product is out of stock or only available on backorder, but the system erroneously shows the customer that it is, in fact, available, the customer may purchase it, part with their money, and be given hope that the item will soon arrive.

When your operations team realizes there is actually no stock, the customer will need to be notified, a return logged, and, most likely, a refund or exchange processed. That’s a lot of unnecessary work that could be avoided if the system accurately represented availability data.

  • Employ real-time inventory tracking: Have a system capable of accurately keeping track of stock values on four fronts – new stock coming in, customers shopping, returns, and exchanges.
  • Automate order management processes, such as order confirmations and shipping notifications, to help reduce the chance of customers returning items because they didn’t get what they expected or because it took too long to arrive.
  • Monitor customer feedback and returns data: Consider what customers say about your products in reviews and social media. Analyze your returns data to identify any patterns in why customers are returning items, and use that information to make improvements wherever necessary.

4. Improve Customer Service Standards

Like we said at the beginning, treating your customers well is a tried-and-tested means of earning their trust and, as a result, retaining their customer loyalty. The positive spinoffs of a happy and retained customer include collecting positive reviews, more referrals, more sales, and higher average sales totals.

Some of the most important aspects of customer service, particularly in e-commerce, include the following.

  • Timely (and personalized) communication. This means responding to customer inquiries quickly and using their name or other information from the order in your response.
  • Effective issue resolution. If a customer has an issue with their order, you need to have processes in place that allow you to quickly and effectively resolve the problem.
  • Seamless order fulfillment. Is the process from a customer’s payment to the package’s arrival as smooth as possible?
  • Hassle-free returns experience (e.g., using a service like Rich Returns). Make it easy for customers to return their purchases with as little friction as possible. After all, 10–20% of online sales will result in returns.
  • Responsive support. Ensure you have an informed and trained team to handle customer complaints. You’ll drastically reduce dissatisfaction levels and return rates and improve profit margins.
  • Informative FAQs page, product videos, manuals, and other resources. Empower the customer by informing them, and they’ll be less likely to make a rash or incorrect purchase decision.

5. Offer A Tailored Return Policy & Process

A tailored return policy and process can go a long way in helping to reduce returns. It’s especially effective when combined with all of the other strategies we’ve mentioned.

Your return policy should always be based on your unique product, customer base, and operational capabilities. For example, some products can have a shorter return window than others (e.g., perishable items). Be sure to include clear information on the item page and in the checkout process. Some of the key elements of a successful return policy include the following.

  • Item eligibility for returns – can it be returned or not?
  • Return window – how long do customers have to return the item?
  • Refund time frames – how long does it take to process a refund?
  • Exchange processes – can the item be returned for an exchange?
  • Restocking fees – how much are you charging the customer for this return (if applicable)?
  • Shipping charges – who is responsible for the cost of return shipping?
  • Procedures for damaged or incorrect items – what should a customer do if they receive a damaged item or one that isn’t what they ordered?
  • Return instructions – provide clear instructions on the return process so online shoppers know exactly how to proceed. Does the customer need to present at a physical store or not?

A well-made returns policy can help reduce cost of returns

Final thoughts

What have we learned? Well, returns are bad; they eat into your profits, how they are handled affects customer satisfaction, and even in the best case, they cannot be entirely prevented. But you do have hope of materially reducing how often they occur and their negative effect.

You can provide good images and descriptions for products, offer customized products, ensure product availability is up to date, maintain high customer service standards, and design a tailored return policy.

One of these return complexities, managing the entire returns process, is a task you need to make software responsible for so that you can focus your human mind on more important things. Rich Commerce is one such tool – it’s a powerful, integrated Shopify returns management app that makes the process pleasant for your customers and hassle-free for you.

Businesses are really just large sets of problems that need to be solved, and many of those problems can be solved nowadays using purpose-built software. Don’t reinvent the wheel. Use something off the shelf like Rich Commerce, and make a concerted effort to improve customer satisfaction so that returns become the smallest problem possible for your business.