Returns have always been a headache for e-commerce. Online shopping returns involve consumers returning products purchased through e-commerce platforms. In 2023, the global reverse logistics market amounted to about 700 billion U.S. dollars, and projections suggest it will grow by 36 percent to 954.5 billion dollars by 2029.
The costs and the limited resources like space and staff to handle returns made retailers reconsider their policy of offering free returns. Now, about 80% of ecommerce stores charge for at least one way of returning items. Although this has lowered the number of returns, it also means retailers might lose some business. What can be done to cut down on returns without making customers unhappy?
Here are some ways to change how, why, when, and where customers return things.
1. Provide more detailed information
Consumers want a smooth, seamless, and informed buying process — which means the more information a brand can provide, the more informed the consumer can be. Design the customer experience to include as much information as possible, including user generated content (UGC), such as:
This way consumers can gather the data they need to make more confident and accurate buying decisions. When consumers can order accurately (for example, use a sizing chart to compare measurements to ensure they order the right size, and then having customer reviews that indicate sizing accuracy), it reduces the likelihood of returns.
2. Craft a return policy to encourage desired customer behavior
Consumers want options. Ecommerce retailers can craft their return policy so that it motivates consumers to choose the return method that is most preferred by the brand. Want to drive returns to in-store? Make in-store returns your only free option. By charging for the least-desirable (most costly) return method and providing cheaper or free returns for the desired process (least costly) for the brand, retailers can shape consumer behavior.
3. Offer free returns as an exclusive member benefit
Loyalty or reward membership programs are ideal places to offer free returns, especially for ecommerce brands that do not have physical stores. Consumers that value free returns will be incentivized to sign up or pay an annual membership fee, which can help offset the costs of returns. Some retailers are also placing free shipping within the perks of their membership programs.
4. Choose: clear return timeframes or no limits
Some e-commerce retailers are shortening the return timeframe, which encourages buyers to make return decisions within that timeframe and takes advantage of people’s tendency to procrastinate and miss the deadline. Different studies show, however, that “no deadline” return policies actually reduce returns — likely because people are not pressed to make a decision and don’t get around to doing so.
5. Limit what can be returned
Electronics, beauty products, and some furniture cannot be returned unless unopened and within very limited timeframes at most retailers. Limiting items that are costlier to process in returns or more difficult to resell can help reduce reverse logistics cost and deter returns.
6. Donate returned products to charity
Donating returned items to charity, rather than processing them, might be a wiser use of money. Ecommerce retailers can inspire consumers to donate rather than return, and encourage recycling unwanted items within the economy.
7. Collect data on returns
The more you can understand the reasons customers return products, the more you can adjust your processes to address those causes. Routinely ask customers for the reason for return and then pay attention to trends to identify areas to improve. This can also highlight potential fraud. While consumers prefer a “no ask” policy, requiring them to provide a reason can be highly beneficial to the retailer. Equally important is to regularly seek feedback from employees processing returns to help identify areas to automate, streamline, or improve.
Creating a return policy that organically minimizes returns, even when they’re free, can cut costs without compromising the customer experience.