The pandemic drove a massive increase in online shopping. The threat of the virus was big enough to convince people who never shop online to resort to the activity. But while that helped many small online retailers build revenue, it also caused them to face another risk: an increase in returns.
One disadvantage of online shopping is potentially receiving a product that’s unlike the one pictured on the retailer’s website. We’ve heard of such complaints often, and in that scenario, we can’t help but take the customer’s side. Indeed, it’s pretty devious of online retailers to show inaccurate depictions of their products. But in some cases, the returns have nothing to do with the product’s actual appearance at all.
The Cost of Product Returns
Returns are a costly problem in many small businesses. Research firm Statistica found that in 2017, product returns all over the U.S. cost online and brick-and-mortar businesses a whopping $381 billion. It had been predicted that the cost would blow up to $550 billion in 2020.
Sure enough, the surge in online shopping in 2020 also skyrocketed product returns. But the reasons for the increase in the activity aren’t related to COVID-19 and anything else relevant to our current situation. Instead, the customers had pretty generic reasons for their unsatisfactory online shopping experiences.
Top Reasons for Product Returns
A survey reveals that fitting is the top reason customers return a product; about 65% of shoppers cite so. The second most common reason is a mismatching product description and item, as cited by 39% of shoppers. Products that looked different in real life places third, with 33% of shoppers citing so.
The issue of buying with the intent of returning is a growing problem, too. Across all shoppers, 35% are ordering more than what they need, causing them to make returns. But what’s more concerning is that among millennial shoppers, 43% buy with an intent to return, and among the Gen Z, it’s 46%.
Can You Ban Product Returns?
If you follow small online retailers on social media, you might’ve noticed that some of them have a “No Return/No Exchange” policy. They do this to save costs on reverse logistics since the customer can’t shoulder the shipping fees for a product they don’t want. But are businesses allowed to have this policy?
According to the law, retailers aren’t legally required to have a returns policy for customers who changed their minds about a recently-purchased product, or those who received unwanted items as a gift. Retailers are, however, required to accept returns for defective products, or if they themselves requested the return.
The law also provides a “Cooling Off Rule”, which allows buyers three days to cancel orders worth $25 or more. The rule expires at midnight on the third day.
Ways to Reduce Returns in Your Small Business
Though you can also implement a no return/no exchange policy for products that aren’t defective, don’t throw away the idea of allowing returns for any reason. You may lose customers if you place restrictions on returns. That because 70% of shoppers consider a return policy important in their purchase decisions. If that convinces you to implement a return policy, but charge a fee for it, rethink that catch, because 59% of shoppers said they wouldn’t order from a retailer that charges return fees.
Sadly, there doesn’t seem to be a way to make things even between you and your customers. Whether you like it or not, you have to face the risk of product returns.
But that’s not necessarily a bad thing. By welcoming returns, you may actually improve your reputation and eventually enjoy fewer returns. Still, you need to trim down return risks. To do that, ensure that your product descriptions are spot-on, read and note important points from customer reviews, and filter reviews by topic. Set filters on the common reasons for returns, such as fit, quality, and description.
Develop a reverse logistics strategy as well. Reverse logistics is basically the backward movement of your product, from the customer back to the business. However, you may need a third-party company to handle your reverse logistics. If your online retail store is powered by Shopify, a reputable returns management company specifically for Shopify can help you. They will deal with the process of physically managing your returned products, with a procedure assessing which ones they should accept or not. Their services can reduce your costs because if a defective item is rejected by the returns manager, you no longer have to use warehouse space for that useless item. As such, you won’t also spend money on transporting that item back to you.
No matter how accurate you show your products online, or how many great reviews they have, someone is still bound to be unimpressed by them. But a single return doesn’t define the fate of your business. Just keep improving your products and practicing transparency, until returns become a rare occurrence for you.
Meta title: Ways to Minimize Product Returns in Your Online Business
meta desc: One of the disadvantages of online shopping is not knowing how the product will exactly look like when you receive it. In many cases, the photo of the product isn’t even close to the real thing, leading to returns. How do you minimize such occurrences in your small business then?