How to Reduce Ecommerce Return Rates: Statistics and Best Practices

Amit
  • May 24, 2022
  • 17 mins
eCommerce Return Rates: What are they, and how can you reduce them?

Executive summary:

  • The average ecommerce return rates hovers around 20-30%
  • There are predictable and common reasons for returns, such as: sizing issues, wrong gifts, purchase of multiple products with an intent to return some/all, or a failure to set correct customer expectations. 
  • To help reduce return rates look to strategies like creating sizing charts, offering exchanges and store credit, communicating clearly about your products, and tracking the reasons for returns.
  • Rather than look at products return rates as a problem, focus on turning returns into opportunities to build loyalty and drive future purchases
  • Using Richpanel, customers can start the returns process themselves and take it as far as you allow them to. You can ensure you provide a high-quality customer experience and provide a seamless returns experience.

54% of buyers say that free returns or exchanges are the second biggest influence on whether they buy from a brand or not. 

But, there’s a fine line. If you start getting too many product returns, it’ll eat into your margins and cost you a significant amount of your revenue.

You need a generous return policy if you expect people to have confidence buying from you. It’s a signal that you trust your customers and your product is high-quality. It’s also a signal that you value your customers time and effort.

It’s crucial that you understand why your customers return items, and implement steps to both reduce your return rate and ensure you can use your returns process to keep customers happy.

Ecommerce return rates can be 2x to 3x higher than brick and mortar stores

The average ecommerce return rate rests at around 20-30%.

Product Return Rate Analysis

Aggregated Return Rates
Source: HubSpot

Some industries and businesses are more susceptible to high return rates. 

For example, an apparel company may have to deal with higher return rates because customers cannot physically try on the clothes before buying than a garden tools company. 

Understanding your category product return rates will help you gauge how your business stacks up against competitors. 

Ecommerce Return Rates by Category

As a guide, here are the average rates of return for different product categories according to a study by Shippo

Category Return Rates
Apparel10.01%
Beauty4.99%
Electronics8.28%
Health and Wellness4.20%
Jewelry8.31%
Sports & Outdoors6.10%

Statistics on Ecommerce Return Rates by Category

While your business may fall above or below these averages, they represent a clear benchmark in understanding where your business stands.

Ecommerce Returns: Common Reasons for Product Returns

Every ecommerce store will encounter customers who want to return items. It’s part of doing business.

The first step to reducing your return rate is to understand the motivations for returning products. Here are some of the main reasons:

1. They purchased with the intent to return

Customers will often buy the product with the intent to return. They may purchase multiple products from your store, as well as your competitors to see the differences.  

This is called “bracketing” and it’s extremely common. You’ve probably noticed customers at your store make purchases with high order value, only for half of the items to come back in the mail a week or two later. You’re not alone:  41% of consumers say they’ve purchased multiple items with the intent to return some of them. 

You can’t blame your customers. It’s the only way around the unknowns of online shopping. 

Consider the following example: a runner wants to buy a new pair of running shoes, but they can’t go to a store where they’d usually try on 3-4 pairs to find one that fits well. Instead, they shop online. Because they’re considering multiple pairs, the easiest way to decide is to order multiple options and try them on at home. Once they decide on the pair they’re keeping, the extras will get returned.

This can cause concern for merchants, but it’s not all bad news. 

Zappos sees high-return rates often, but doesn’t think it’s a problem. Their VP of services and operations, Craig Adkins, highlights that “our best customers have the highest return rates”.

Why is it a good thing? Those customers trust your service and customer experience enough to be confident in your returns system and choose you over visiting a brick and mortar store.

But, how do you manage bracketing to ensure it doesn’t destroy your profit margins and hurt your business?

If you notice that a high number of customers are returning multiple items from their orders, you need to create systems to help customers return their items promptly.

This could mean:

  • Pre-empting returns when a customer orders a high number of items and including return labels in the box
  • Sending an automated email to customers with instructions on how to return items after they receive their order
  • Having a clear returns FAQ section on your website, or accessible via a self-service system like Richpanel

This will help you receive the returned items as quickly as possible. When you receive items back quickly, you’re more likely to be able to resell them at full price, rather than having to sell them as pre-owned, out of box, or refurbished — all of which cut into your margins.

2. The product didn’t fit or work as they expected

Often, especially in apparel, customers purchase the wrong size and need to make a return. 

The likelihood of experiencing returns in apparel is higher than in other industries.

In other product categories, it’s still something worth thinking about.

We all think we know much more than we do. As a result, customers may make incorrect assumptions when they purchase your product. The more unfamiliar they are, the more likely they are to return it.

For example, an iOS user might consider switching to Android for their next phone. When it arrives, they decide they’d rather stick with their iPhone, and return it.

Unfortunately, there’s not much you or your team can do to solve this. In these situations, the best way forward is to help your customer return their item seamlessly, leaving a strong impression of your company on them.

If they have a friend in the market for a product, they’ll still be happy to recommend you if you exceed their expectations on customer service.

4. The product didn’t match your description

When purchasing a product online, customers have to rely exclusively on the description you provide and product photos provided by you and reviewers. 

Usually, they defer to you as the go-to source to understand the purpose of the product. If your descriptions are not thorough, it could cause customers to feel cheated enough to return your product entirely.

Make sure to include as many high-quality photos or videos as possible, with your product being showcased in a variety of scenarios.

As well as adding high-quality photos and videos, include:

  • A frequently asked questions section
  • Customer reviews under or next to your product
  • An embedded social feed where you share user-generated content

These will help align customer expectations with what they’ll receive.

Next, it’s on you to deliver on your promises with an amazing customer experience and product that meets every expectation your buyer has.

5. They’re returning a gift

During the holiday season, millions of shoppers buy products with the sole purpose of giving. 

Unfortunately, a high percentage of those gifts are returned. USPS even calls January 2nd “Peak Returns Day because they see a huge uptick in returns at that time of year, every year.

Given this trend, you should expect to receive some returns in January – and these are usually from customers outside your core audience anyway. Factor these returns into your holiday season forecasts, and it won’t be a surprise.

It’s usually not worth spending huge amounts of money or time fighting these holiday returns, but you can attempt to offer store credit or exchanges to customers who want it.

 The key is to make it seamless so that anyone who is discovering your brand for the first time doesn’t get a bad first impression.

6. They could be defrauding you

While we might associate returns with disgruntled customers or ill-fitting shirts, 9 in 10 ecommerce merchants have reported thieves returning items for stolen cash. 

Often, they will make purchases using counterfeit money or stolen credit cards and then take your money through returns.

Regardless of why customers may make returns, accept one fact before discussing how to reduce return rates and create a comprehensive return policy: they will happen, no matter what you do to prevent them. 

The key is to have a system to manage them and ensure return fraud doesn’t hurt your margins, or your customer experience.

How to Reduce Returns in Ecommerce – with Examples

There are several routes you can take to reduce return rates and increase customer satisfaction. To address every problem listed above, take a look at the following preventive measures:

1. Create helpful sizing charts and feature reviews to prevent returns

Sometimes customers may under or overestimate their size and purchase the wrong one.

To prevent this disappointment from happening, create helpful sizing guides and feature customers wearing your product.

Typically, you want to include the four following measurements in your chart:

  • Waist
  • Hip
  • Bust
  • Height

Break your products into different sections, with as much detail as possible.

For example, on Columbia’s sizing charts you can filter by product type (tops, fit type), and more.

Product Size Guides Example
Source: Columbia

They also offer tips on how to take your measurements so customers can make an accurate decision.

Measuring Guide for Cloth Size
Source: Columbia

Depending on what you sell, you will have to adjust what to include in your sizing chart. As a general rule, you should consist of any measurement that might be different for every person. 

Alongside a helpful sizing guide, feature customers’ reviews and feedback. 

Customers will often talk about the sizes they chose, and those comments could come in useful for prospective buyers. 

2. Offer an alternative product during the returns process

New objects activate the reward system part of our brains. What does this have to do with returns? If your customer finds a suitable substitute, offer to send them something novel and equivalent in value in exchange for the original product.

Using our previous running shoes example, if they find another pair of shoes and no longer need yours and begin the returns process, you can use the returns process to suggest exchanging the product with another color or style, or highlight related products that a runner would be interested in. 

They’ll be grateful for the alternative, and it might be enough to make them consider the exchange or cross-sell over simply returning the item and leaving.

You can also offer store credit directly if you’d prefer the customer to make their own choice.

By pursuing this route, the return becomes a transaction, and you mitigate losses.

You can quickly set that up inside Richpanel. For example, Jacob ordered a black wallet in his order, and changed his mind about it. During the returns process, he chose Store Credit as the preferred method of return.

The best part? 

Your customer support team didn’t even need to have a conversation for this to happen. He was able to start the returns process, receive store credit, and return his order.

If your team does have questions for your customer, you can easily reach out with all the right information. 

Another way to tackle this problem is to qualify your customers for the products they’re buying by showcasing more of your product range.

It may sound counterintuitive: why would you want to stop a customer as they’re about to convert? A few reasons: 

  • Maybe they selected their original order quickly, without considering better options
  • Perhaps they accidentally selected the wrong color and felt unsure about reaching out.

Regardless of the scenario, buyers will appreciate your proactive approach and feel more comfortable shopping with you in the future.

You can include a Related Products on your product pages, or include it in your checkout flow.

For example, luggage brand Away has a ‘You might also like’ section below the product you’re viewing.

Product Display on Ecommerce Store
Source: Away

If your customer sees a more suitable product for their needs, they’ll be able to quickly navigate to it. They’ll be less likely to make impulse purchases which will reduce your return rate.

It’s a customer-centric design choice that may slightly reduce initial conversion rates, but will improve CSAT and show them you care about helping them with their purchase decision.

3. Write detailed descriptions and highlight key features

If a customer fails to understand a product, your copy needs work.

Unsurprisingly, 9 in 10 online shoppers rate product content – like descriptions – as extremely or very important when deciding to make a purchase. If a customer chooses to make a purchase without fully understanding your product, you’ve set them up for potential disappointment.

Rather than going into detail as to every benefit of your product, try focusing on the three most important aspects. Studies have shown information overload can confuse prospective customers and turn them away from converting. 

Use your product description to highlight:

  • Key features and benefits
  • How the returns process works
  • Any other essential information

By giving a thorough explanation of your product’s most valuable parts, your customers will fully understand whether or not they should buy, thereby reducing return rates.

As well as that, your post-purchase experience needs to enable customers to find answers to their pressing questions. For example, how do they set up your product? How do they activate a specific feature?

Bumpboxx, a leading bluetooth speaker company, knew they were getting returns that were avoidable if they helped customers find answers to important product questions.

To solve this, they implemented Richpanel to offer a robust customer self-service portal where they could:

  • Add a self-service portal with frequently asked product questions
  • Enable agents to have all the customer data they needed at hand to start conversations faster
  • Reduce the total number of support messages

When customers receive their Bumpboxx they can have their most pressing questions answered in a self-service portal.

Richpanel Customer Self-Service Integration

If a customer can’t find the answers to their questions, they can still start a live chat.

Live Chat to assist Customer

With their new system to manage returns and support their customers, they were able to see a 42% reduction in tickets, drop their first response rate to under 10 minutes, and most importantly, reduce the number of avoidable returns.

4. Protecting your brand against fraud

While returns generally do increase during the holiday season, many returners are fraudulent.

To protect yourself from fraudulent returns, you can take the following steps:

  • Stop serial returners: If you notice a particular consumer consistently sending products back without good reason, you can block their email or payment cards from your systems. Be careful not to ban anyone that’s a loyal customer, though, as they’ll still have a high lifetime value.
  • Purchase fraud protection: Consider purchasing fraud protection to shield you from chargebacks, or use a built-in system on your ecommerce platform like Shopify Fraud Protect or WooCommerce’s Anti-Fraud plugin.
  • Utilize tracking numbers: Try attaching tracking numbers to every product you ship out, and consider having customers sign packages when they arrive. That way, they cannot claim they never received their order.
  • Ask for receipts: Whenever a customer requests a refund, require them to share their receipt with you. Then, you can cross-check to ensure they purchased it.

While these are only a few steps you can take to protect yourself from fraud, they will set you up for success so you can remain confident whenever you begin genuine returns processing.

6. Make your return policies obvious

Any good business already has a return policy as a web page. But, are you clearly communicating how a customer can process a return? 

Given that 8 in 10 consumers read your returns policy before purchasing, and 72% of consumers say a simple return experience makes them more likely to shop from a merchant again in the future, the importance of an effective return policy cannot be overstated.

First, you want to clearly and concisely highlight your returns policy. Make it clear in your footer, and linked from product pages. 

For example, Glossier highlights their “Free and Easy Returns” directly under their Add to Bag call-to-action.

Product Showcase with Free & Easy Returns Highlight
Source: Glossier

Second, build trust with buyers by permitting easy returns and offering a comfortable timeframe to process refunds. 

Tell customers exactly how long they have to return items, which items can be returned, and if there are any exceptions.

Allbirds’ return policy page is clear and simple.

Ecommerce Return Policy Example
Source: Allbirds

Allbirds’ customers can purchase in confidence, knowing their rights and where they stand with returns.

To put this to work for your brand, you can incorporate a self-service returns system so buyers can start the returns process easily, without needing to spend hours on the phone or have back-and-forth email exchanges with your team who need to search through your customer database or CRM for details to find out the right customer details.

This can be included in a chat-style widget that appears on every page on your site using Richpanel.

You can get this set up in 10-minutes on Shopify, WooCommerce, or Magento. Because Richpanel integrates directly with your cart software, the returns portal will be automatically personalized to every customer who uses it, with details on their past orders, products, contact details, and more.

With this platform installed, your customers will appreciate the simplicity of your platform – and 7 in 10 will “spend more and buy more often” with your business.

7. Find out why customers are returning your products

Although all of the previous tactics will help reduce your return rates, you should never rely on a one-size-fits-all method.

In fact, whenever a buyer does choose to return a product, try to engage them in a conversation. Ask them why they no longer need it, and offer any help you can provide.

Moreover, never make your return process exceedingly difficult to discourage buyers. Almost 60% of consumers note that “adding return friction” results in a “negative return experience.” Make it as painless as possible to avoid fostering a bad public image.

To make this simple, you can implement a self-service returns system using Richpanel. Customers will be able to use your system to quickly process their own returns.

Self-Service return system - Richpanel Customer Service Software Integration

Then, your team can review the return requests, confirm it, and you’ll leave the customer with positive sentiments about your brand.

Making this process simple for your customers is vital. According to Narvar, 96% of consumers would purchase from a retailer if they provided an “easy” or “very easy” return experience. 

Creating an effective, easy-to-use returns process can turn a typically negative situation into a driver of growth and loyalty.

Remember: Returns are an opportunity to create loyalty

Businesses have the ultimate goal of ensuring they make customers happy, while driving revenues.

Although return rates can hurt your profit margins, you should view them for what they are: an opportunity to create a seamless customer experience.

By providing a seamless returns processing experience through Richpanel, customers will still continue to shop with you. Leaving someone satisfied with their experience can be as simple as making their returns easy to process, or creating detailed size charts to avoid the need to return altogether. 

If you’re ready to start improving your online returns experience, Richpanel can help.

In minutes you can get set up and create self-service workflows that allow your customers to process their returns, and manage their orders. You’ll be able to analyze the reasons why your customers are returning their orders,  and ensure every customer leaves with a great impression of your brand.

Learn more about how Richpanel can help you scale your ecommerce store, and sign up for free today.

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