E-commerce: How to manage product return issues
Handling the return of purchases - particularly after a busy Christmas or seasonal peak - is part of doing business via any sales channel.
Handling the return of purchases - particularly after a busy Christmas or seasonal peak - is part of doing business via any sales channel.
Managing product return issues
In the e-commerce world, where roughly one in four online orders are returned by consumers, handling returns well is crucial to preserving profit margins.
In 2020, $102 billion of $565 billion in total U.S. online retail sales was returned by purchasers, according to the National Retail Federation. E-commerce businesses and consultants like software firm Paazl believe that the overall return rate of online orders is closer to 25% or roughly three times higher than the returns of in-store purchases. The costs of return shipping, storage and the processing of returned goods can take a huge bite out of e-commerce profits.
Reducing the product returns and keeping
customers satisfied
Manufacturers and retailers, however, can take steps to both reduce the number of product returns and, using smart packaging solutions, reduce their costs.
Just as consumers now expect free delivery of online orders, they also expect free returns if they’re unhappy with their purchases. A UPS survey (2020) found that 73% of customers said their experience with a product return would affect the likelihood of them buying from that online retailer again. The good news is that product returns give businesses a second chance to satisfy customers and generate loyalty that can result in repeat business.
There are two ways to cut the cost of e-commerce product returns:
- Reduce the number of returns
- Reduce the cost of the returns
On the first front, a solution begins with understanding the reasons for customer returns. Only 20% of online purchases returned are due to damaged products, according to a study by digital consultant Invesp (2020). The top two reasons for returns were that the incorrect item was ordered, (23%), and the item did not meet the customer’s expectations (22%).
The solution, say tech consultants, is to improve your website and your online marketing and communications with customers. Here are three key actions to improve transparency, engage customers and reduce the number of returns:
- Provide useful and accurate descriptions of products.
- Encourage and use customer reviews to inform your online content and your product design.
- Include lots of high-quality photos of your product from different angles with image zoom functionality if possible. Also consider a video of your product in use.
A more engaging and informative website will help reduce product return rates in the long run, but it won’t eliminate them.
The second strategy is to minimise the cost of product returns and smart packaging solutions are the best way to achieve that.
Securing return packaging and customer experience
To generate customer satisfaction and loyalty, a product returns policy must be clearly stated, as most consumers search for it before ordering, and the process must be easy and quick for the customer.
Loom, a maker of eco-responsible clothing spells out its return policy simply and provides return packaging to speed up the process for customers. All exchanges and returns (excluding underwear) are free for orders of more than 50 euros, as long as they are returned in the original plastic envelope provided. Customers with orders of less than 50 euros must pay their own return shipping. The company coordinates the policy through its website, sending a return shipping label when customers book their return.
Packaging producers have developed innovative solutions that facilitate an easy return process and reduce the environmental impacts of increased online order returns. Hipli, a French packaging producer, has designed a plastic package that can be reused up to 100 times. It is flexible, durable, tamper-proof and protects against moisture, punctures and tears. The package includes pre-paid postage as well as clear instructions on how to send it back either with returned goods or on its own.
Envisaging the future of retail
The packaging needs of businesses are as diverse as their product offerings. Some have lower than average return rates and others may have in-store returns policies that reduce the volume of return shipping they need to handle. But virtually all businesses can benefit from packaging that facilitates product returns. Tear strips that limit damage when opening a package, and second seal strips to close return packages with simple printed instructions on how to use them, make returns far easier for businesses and their customers.
Even for large breakable items like electronics, smart packaging can protect valuable goods on their return trips to store/warehouse locations or back through shipping networks. Bespoke packaging solutions, customised to meet the needs of a business, will cost more than simple primary packaging, but can more than pay for themselves in reduced shipping costs, minimised damage to goods and improved customer relations in the event of a return.
E-commerce is the future of retail sales. Unfortunately, so are higher volumes of product returns that can eat into profit margins. But with a combination of creative customer engagement and well-thought-out packaging solutions, your product returns needn't hamper your online growth.
