Returns policies and the handling of returns are critical considerations for online retailers. Returns can pose significant challenges, involving substantial processing costs, staff, and resources. Additionally, returned items may not always be resellable, further complicating the issue.
These factors directly affect profit margins, with some sectors feeling the impact more acutely than others. According to Paazl, online retailers, in particular, face a higher burden, as return rates for in-store purchases average around 8%, while online purchases see a return rate of approximately 25%.
The Issue of Serial Returners
Barclaycard research highlights the growing problem of "serial returners" – shoppers who intentionally over-order to keep only desired items and return the rest. Key findings include:
30% of shoppers admit to deliberately over-purchasing and returning unwanted items.
19% acknowledge ordering multiple versions of the same product to decide later which to keep.
The Impact of Returns on Retailers
The same Barclaycard study examined how returns affect retailers:
57% of retailers report that handling returns negatively impacts their daily operations.
33% of online retailers offer free returns but offset the cost by charging for delivery.
20% of retailers have raised product prices to cover the costs associated with returns.
Returns remain a challenging aspect of e-commerce, requiring retailers to balance customer satisfaction with the financial and operational strain of managing returns efficiently.
Most Returned Product Categories
The fashion industry faces the highest return rates in online retail, followed closely by health and beauty products. Key data on frequently returned categories include:
Clothing/shoes: 56%
Electronics: 42%
Accessories/Jewelry: 30%
Health and beauty: 22%
Entertainment: 21%
Reasons for Returning Online Purchases
Several factors drive online returns, with delivery issues and mismatched expectations leading the list. Major reasons include:
Items damaged or broken (often during transit): 80.2%
Do not match descriptions or expectations: 64.2%
Customer dissatisfaction with the item: 37.2%
Delayed delivery: 7%
Perceived poor value: 7.5%
These insights highlight the importance of accurate product descriptions, high-quality images, and reliable delivery processes to minimize returns.
Poor Returns Experiences and Customer Loyalty
Some retailers attempt to deter returns by introducing barriers, such as charging for return postage or complicating the returns process. However, this approach risks alienating customers. Research by Rebound indicates that negative returns experiences can significantly impact customer loyalty:
Straightforward and user-friendly return policies can serve as a conversion rate optimization strategy and enhance sales.
Impact of Negative Return Experiences on Customer Retention
A survey titled "Has a Negative Returns Experience Ever Resulted in Not Shopping With the Retailer Again?" reveals the influence of negative returns experiences on customer loyalty:
18-25 years: 60% stopped shopping with the retailer.
26-35 years: 57% stopped shopping.
36-45 years: 50% stopped shopping.
46-55 years: 45% stopped shopping.
56-65 years: 36% stopped shopping.
65+ years: 30% stopped shopping.
The data underscores that younger customers (18-25) are likelier to cease shopping with a retailer after a negative return experience, whereas older customers (65+) are more forgiving. Retailers should focus on creating seamless and positive returns experiences to retain younger, more brand-sensitive customers.
Returns Policies: A Key Factor in Purchase Decisions
Returns policies are a critical consideration for customers when deciding on a purchase. Alongside price, product quality, delivery costs, and timing, the ease and clarity of returns policies heavily influence buying behavior.
Key insights from recent surveys:
68% of shoppers review returns policies before purchasing (2017 UPS Pulse of the Online Shopper).
50% of shoppers abandoned a purchase due to insufficient returns channel options (Metapack’s Guide to Returns).
56% of consumers were deterred from shopping by restrictive or unclear returns policies (Metapack survey).
Customer Preferences for Returning Online Purchases
Providing customers with convenient and flexible return options is essential. Statistics from Rebound highlight the preferred methods for returning online purchases:
Post Office: 73% of shoppers prefer this option.
Courier Collection: 62% find this method convenient.
Retail Store: 61% prefer returning items directly to a store.
Collection Point: 47% favor this method.
Lockers: Only 28% of shoppers prefer using lockers for returns.
The Importance of Convenience
The data underscores that convenience is paramount in shaping customer satisfaction with returns. Offering a range of return methods, such as post office drop-offs, in-store returns, and home collections, can enhance the customer experience and improve retention rates. Retailers should simplify the returns process to meet these expectations, which can boost conversions and loyalty.
Reasons for Returning Online Purchases to a Store
In-store returns are popular for customers due to convenience, speed, and cost savings. For retailers, offering in-store returns improves customer satisfaction and presents opportunities for upselling, exchanges, or additional purchases during the visit.
Avoiding return costs: 58% of customers choose in-store returns to save on return shipping fees.
Convenient store location: 41% prefer returning to stores nearby.
Immediate refund: 38% value the faster refund process at stores.
Exchanging items: 34% of the items are returned to stores to exchange for different products.
Regular store visits: 30% return items during routine visits to stores they frequent.
Choice of refund or credit: 25% appreciate having options between cash refunds and store credits.
Benefits for Retailers
By enabling in-store returns, retailers can capitalize on several opportunities:
Customer engagement: In-store interactions may encourage additional purchases.
Retention: Offering flexible return options builds trust and loyalty.
Operational efficiency: Handling returns in-store may reduce logistical costs compared to mail returns.
Providing in-store return options addresses customer preferences and enhances the overall shopping experience, creating a win-win situation for customers and retailers.
Turning Returns Challenges into Opportunities
Returns policies are critical to online retail, significantly impacting profit margins and customer satisfaction. High return rates, especially in sectors like fashion, and the issue of serial returners add to retailers' challenges. While managing returns involves substantial costs and operational strain, offering transparent, flexible, and convenient return options can boost customer loyalty and drive additional sales. Customers value convenience, preferring post office drop-offs, courier collections, and in-store returns. By addressing these needs, retailers can turn returns from a financial burden into an opportunity to enhance the shopping experience and foster long-term customer trust.
