Why Online Retailers Should Embrace Ecommerce Returns

As ecommerce returns volumes climb, online retailers should really embrace the returns process. Here is why.

The online world of retail is growing faster than almost any other industry in the history of mankind. In fact, just this past year, an eMarketer report found that ecommerce was generating over $1 trillion per year in revenue worldwide. Many experts are predicting that by the year 2018, just a few years from now, the ecommerce industry will breach $2 trillion in annual revenue.

As ecommerce makes these strides forwards, cementing its position as a 10% part of all retail worldwide, consumers are also making their voices heard. At the top of the list is the returns policy that's offered by most online stores, something that can be a hassle to deal with if you buy something online and then find out that you need to make a return later. Since most stores still do not offer free return shipping, nor do they have automated systems in place - like Amazon's convenient Prime returns - consumers are starting to show that their loyalty and business goes to the retailers that make sure returns are hassle-free.

On the flipside are the smart retailers, who have molded their returns policies to cater to consumers. Places like Zappos, for example, realize a 50% rate of returns, but say that it helps them attract their most loyal shoppers. This is because the company realizes that the apparel industry has the highest rate of returns overall, but that shoppers also want to enjoy the convenience of online shopping. Some shoppers will order several pairs of shoes at the same time, of the same style, but in different sizes from this retailer, and then simply send back the ones that do not fit. It's this convenience that has customers raving about the company and coming back time and time again for an easy shopping experience.

Easy Returns Improve Profits

As the Zappos model above demonstrates, easy returns can help make you more money. Now most retailers would gawk at the notion of offering free return shipping. But in the end, it can help you earn more cash from improved loyalty, better retention and higher spend per customer - all which amount to an improved sales lift.

A recent study that was covered in Science Daily found that such is indeed the case. Over the period of 48 months, control groups at several retailers were followed. One group offered hassle free returns while the other kept business as usual. At the end of the study, which involved over 26,000 transactions, it was found that the group offering free returns generated $1.8 million versus the other group, which had standard returns, which generated just $1.22 million. This makes a clear case for the profitability factor in hassle-free ecommerce returns with complimentary shipping.

Consumers Buy More When Easy Returns Are offered

In the annual UPS report, Pulse of the Online Shopper - a good portion is dedicated to covering the topic of ecommerce returns. The report finds, as of 2015, that a majority of customers want an easy way to return a product they bought online via an automated system that's simple to use. What's more, these same shoppers are 42% likelier to make a future purchase, or a new purchase during the time of the return, if an automated system like Zappos' is offered.

Moreover, 80% of consumers view a store more favorably when ecommerce returns are simple, and over 92% of them will recommend the store to a friend or family member. Think about it. You wouldn't send someone you cared about to a store where you had a hard time returning something. But you will be thrilled to tell them about a positive return experience that you had. That's because we all crave convenience when shopping online.

Retailers Cause of Most Returns

So what's causing all of these ecommerce returns anyways? The retailer is. Here's how the numbers break down, according to UPS.

  • 65% of returns are due to retailer error, not consumer fault.
  • 23% of online returns are because the consumer received the wrong product.
  • 22% of online returns are due to the product being substantially different in appearance than was advertised online.
  • 20% of online returns are due to the consumer receiving a damaged or a defective item.

Amazon Has Set The Standard with Automated Returns

With giants like Amazon Prime making returns as simple as pressing a button, retailers do not have many other choices but to embrace an automated ecommerce returns system. Consumers by and far have made it apparent: make returns easy or they will simply shop elsewhere. With millions of stores now popping online, that choice requires just a few mouse clicks.

Bear these facts in mind when approaching your return policy, and you can win over more customers and enjoy a windfall of future profits as a result of your forward-thinking.

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