How To Reduce Your eCommerce Return Rate And Save Your Profits

For eCommerce, a customer's doorstep isn't always the finish line. 

Managing daily eCommerce returns, which involves the reverse logistics of sending a product back to the seller, is a constant struggle. This process significantly impacts profitability, especially if you are among the brands that offer free shipping and returns.

The cost to process $100 worth of product can be as high as $26.50, with return rates 14% higher in 2022 compared to 2019. 

To ensure eCommerce returns don’t impact your bottom line, let’s break down what you can do in two simple steps.

We’ll call them foundations to reduce your eCommerce return rate. These are:

• Understanding why customers are returning products
• Implementing solutions to address these reasons

Let’s dive into these two points and learn 12 ways to reduce your eCommerce return rate and protect your profits.

Before we begin, let’s quickly look at the current state of eCommerce returns and why you must also track your eCommerce return rate.

Rising Return Rates

In 2022, the eCommerce return rate hit an all-time high, with 16.5% of all purchased goods being returned globally.

The rates are even higher in the fashion industry, where 54% of the products were returned.

Major steps are being taken across sectors and regions to address this crisis and deliver the best experience without incurring losses.

Cost Implications 

According to a Wall Street Journal study, processing returns costs about 20% to 65% of the item's value.

With offers and free shipping, the chances of running slim on profits are very high.

Managing returns can also become costly for your business if you are not working with reliable shipping and inventory management partners.

Increase in Return Fraud

In the 2023 NRF report, fraudulent and abusive returns accounted for 16.5% of all returns. 

A section of online consumers engage in practices like buying multiple items, keeping one and returning the rest (bracketing), and buying, using, and returning those items (wardrobing). 

These are issues that cost eCommerce businesses without any fault of their own.

Managing Profit Margins

How much can managing return rates help you in eCommerce? According to the WSJ, reducing returns by half can boost eCommerce profits by 25%.

This is reason enough for businesses to work on reducing their return rate while balancing it with better customer experience over time.

To reduce the eCommerce return rate, we first need to understand the most common reasons people return products.

To summarize, you must work on two core areas: Product Information and Product Shipment to reduce your eCommerce return rate.

There are four main areas of business that will be positively affected if you successfully reduce your eCommerce return rate.

• Profits: Reducing returns saves on shipping, restocking, and processing expenses, which helps boost overall profitability.
• Brand Reputation: Handling returns well improves brand image and customer trust. Lower returns also build trust and increase repeat customers.
• Operational Efficiency: Fewer returns streamline logistics and inventory management, reducing strain on systems and improving operational flow.
• Environmental Impact: Minimizing returns reduces the carbon footprint associated with shipping and waste disposal, aligning with sustainable business practices.

1. Create an Informative Return Policy

Having an informative and thorough return policy will help you communicate your conditions more effectively.

Take Zara, for example. Their return policy mentions that products can be returned within one month of order confirmation, with a $4.95 deduction per return for shipping costs. This helps the company offset some of the expenses associated with returns while also promoting more thoughtful purchasing decisions.

Another benefit of having a clear return policy is that it makes customers more likely to trust you. 67% of the shoppers who visit your return page will know exactly who they are buying from and what they can expect if they encounter an issue.

Source: Zara

To create a valuable eCommerce return page, make sure you clearly share information on:

• Items eligible for returns or exchanges
• Time frame in which returns will be accepted

• The condition of the product to process a return
• How the return will be processed
• Refund options (full refund, store credit, etc.)

The more thorough you are, the better it is for customers to do business with you, so always make sure your return policy is easy for them to read.

2. Use High-Quality Product Images And Description

Customers rely on your product information when they are buying products online. They look at your product images, read descriptions, and explore reviews.

If you communicate correctly here, you can avoid a higher eCommerce return rate.

Ensure that the right information is shared with the customer, whether through product images or your product description.

Using professional photography and product photo editing services can significantly improve your product presentation and help reduce eCommerce return rates. In fact, 63% of online shoppers prioritize product images over descriptions, so make sure you have high-quality and accurate product representation.

As for eCommerce product descriptions, here are some quick tips that will help you present your product accurately and effectively: 

• Understand your customer's use case and address it
• Use bullets to share general information like size, type, color, and material
• Avoid jargon and speak to customers in their day-to-day vocabulary
• Highlight important features and provide usage and care instructions 

3. Educate Customers on Product Use Cases

When a customer knows how to use a product, the fear of the unknown goes away. 

For instance, if you sell a multi-functional kitchen appliance, having instructional videos, detailed guides, and infographics on your product page will help customers see the full range of benefits and applications.

Take IKEA as an example: They offer extensive product descriptions, usage guides, and even room design ideas to help customers visualize how furniture items might fit into their spaces and meet their needs. 

Source: IKEA

This also helps customers decide what the product is for and whether it will solve their problem. Having this clarity before they buy a product can significantly reduce the eCommerce return rate.

Another example is GoPro, which showcases various use cases of their cameras through customer videos and tutorials, illustrating how they perform in different environments from underwater to extreme sports.

Source: GoPro

4. Assist Customers in Choosing The Right Product

If you sell multiple product variants, you must help your customers choose the best option.

This can be in terms of size, color, product type, pattern, design, and more.

One of the common ways to do this is by creating a comparison section on your product page.

If we look at Amazon, we see that it showcases similar products side-by-side. Having all the information in one window can help customers find the best fit for them.

Source: Amazon

Consumers can quickly identify the right product for their needs, which smoothes the sales process as they know the product is the right fit for them. 

5. Motivate Product Exchange Over Return

When customers return a product, they aren’t always looking to hold their purchase. Offering them alternatives can be a great way to retain them.

Exchange is one of the most efficient alternatives, whether in the form of store credit or a different product.

When customers initiate an exchange instead of a refund, you don't lose out on a sale or the revenue gained from that sale.

This approach helps maintain positive cash flow and customer experience at once.

Suggest alternative options such as different styles, colors, or sizes. If they don’t find something right away, a store credit can ensure you retain them in the future.

The best offer for your store will depend on the test you run, but make sure to at least offer your customers an alternative to eCommerce returns. 

6. Invest in Inventory Management

Inventory mishandling is among the most common reasons why eCommerce products are returned.

About 20% of product returns are due to damaged goods, and 23% are due to incorrect shipping of items.

If a company can handle these inventory issues effectively, it can reduce its eCommerce return rate quite effectively. Inventory Management alone can be resolved with the help of reliable systems and partners.

Ensuring the correct product is picked and shipped in safe packaging will play a crucial role in increasing customer satisfaction and attracting returning customers.

7. Ensure Quick And Reliable Product Fulfillment

Even before the product is shipped, there are a lot of steps that must be checked off quickly.

This involves picking the right product, ensuring safe packaging, updating inventory information, entering tracking information, and much more.

To avoid any damage during transit, many steps have to be followed.

The first and most important step is to ensure you have reliable and experienced fulfillment partners for eCommerce.

You need an eCommerce fulfillment partner who understands the importance of this stage and delivers consistent results.

From safe packaging to order tracking and warehouse management, choose services that can help reduce your eCommerce return rate by preventing damage or wrong product delivery.

8. Choose Product-Sensitive Shipping Services

When an eCommerce company is selling products that require special care, such as a controlled temperature, it becomes vital to go ahead with temperature control shipping.

Such specialized delivery services are essential in the eCommerce supply chain. The end goal of eCommerce and fulfillment services is to optimize the customer experience and deliver the product in the best condition.

If you are receiving complaints from customers about getting damaged goods, trying alternative shipping and logistics partners that prioritize careful delivery and handling can be incredibly valuable and beneficial, especially if your goal is to reduce your eCommerce return rate.

9. Keep Customers Informed With Tracking Info

Just as you keep customers informed about their shipped items, it's equally important to maintain a transparent process for managing eCommerce returns.

Tell them everything from how long the return process will take to where they are in the journey.

It builds trust among the customers and helps them understand the process for your eCommerce product return.

It is advantageous to choose a shipping partner that offers tracking information.

Additionally, once the return is confirmed, send an updated email to the customer and provide an estimated timeline for their refund.

This proactive communication helps maintain customer satisfaction and keep them connected even if they must return an item.

10. Streamline Customer Support

Your customer support plays a crucial role in effectively reducing eCommerce returns. In times of crisis and urgency, customers can often make quick decisions.

This can happen when they receive the wrong product or don’t have enough information on their items.

At this time, providing support and assistance to your customer is crucial. The best way to handle this issue is to understand what caused the poor experience and then resolve it.

Does it relate to shipping, product, use-case, or misinformation?

Once your team has a clear idea, they can update the order placed, offer a product exchange, or communicate how to use your product more effectively to get the desired results. 

11. Identify Serial Returners

For starters, tracking customers who frequently return products with minimal description is vital.

These customers are increasing your eCommerce return rate for no particular reason and are negatively affecting your profits.

One simple and effective way to stop them is by banning them.

Retailers like Amazon, H&M, and ASOS are reportedly tracking return activity to blacklist habitual returners.

While it may seem drastic, such measures are essential for lowering your eCommerce return rate if you frequently encounter fraudsters.

12. Leverage User-Generated Content (UGC) & Reviews

According to Statista, 70% of customers read reviews before purchasing online. To enhance this, encourage customers to include photos or videos of their purchased products in their reviews. 

Take Etsy, for example. They successfully engage this strategy, providing shoppers with valuable firsthand experiences and visuals of the product in various settings.

Source: Etsy

Similarly, Zara uses UGC on its website to show people how real that outfit looks on their bodies, and so do many other brands. 

Source: Zara

This additional information helps customers make more informed decisions, thereby reducing return orders for eCommerce.

Getting Started With The Next Step

The goal is not to prevent customers from returning their products but to reduce the need for returns as much as possible.

eShipper offers several solutions to help your business achieve this, including providing accurate product descriptions and images, implementing advanced shipping and tracking solutions, leveraging 3PL (Third-Party Logistics) services, and offering easy returns management.

Identify the most common cause of your high eCommerce return rate and connect with Us partners who can help you resolve those issues effectively.

Author’s Bio: Druti Hiran is an SEO B2B Content writer with an honors degree in English Literature from MIT-WPU. She has written content about photography, fashion, lifestyle, art, pop culture, and the evolving trends of the industry. Connect with her on LinkedIn to discover more about her captivating work!