April 21, 2021
2021: More sales, more returns, more opportunities
Offline shopping has been hammered by restrictions and shoppers’ reduced appetite for crowded malls and in-store retail. On the other hand, ecommerce has skyrocketed, bringing with it a tidal wave of returns and logistical challenges for retailers. The question for many is: what’s next?
Analysts have been assiduously making their predictions for post-pandemic retail, but it doesn’t take a professional number cruncher to work out that ecommerce sales won’t be falling back to pre-Covid volumes any time soon. US retail ecommerce leapt 31.8% to $211.5 billion in Q2 of 2020, according to the U.S. Census Bureau. That’s an astronomic increase which, while not expected to continue indefinitely, certainly gives us a glimpse into what’s possible.
With this amazing growth comes another key stat that retailers need to give some serious consideration: around 20% of ecommerce sales are returned. So naturally, all that additional ecommerce activity generates more returns. That $211.5bn we mentioned above? Eyeballing the percentages, you can reckon that around $42bn worth of those ecommerce sales were returned.
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Why so high?
In-store returns are only around 5-10%, so why are ecommerce return rates so high, even when the products themselves can often be found in a retailer’s stores? The simple answer is ‘clarity and convenience’. If a customer doesn’t know for sure what they’re getting, they’re more likely to end up sending it back. They might also be tempted to get multiple variants of the same SKU, just to be safe. The prevalence of ‘wardrobing’, while not unheard of in stores, is also more of an issue online, as unscrupulous shoppers can hide behind the comparative anonymity of the internet.
Returns begin with the retailer
Stores are built around the idea of maximising sales, consumer confidence and comfort. The same has to be true online, where shoppers who are confident in the information they have about a product are able to select the right product in the right size/fit/color/other variation. It boosts sales, and it helps reduce returns. Giving customers access to the same level information online as offline really counts. A few key examples:
- Representative photography
- Accurate sizing
- Plenty of understandable product data
Just as importantly, retailers can provide information online that they might not be able to offer in-store, such as user reviews and Artificial Intelligence or Augmented Reality tools to help create looks or see what products will look like in your home. A digital returns platform, of course, will help you to see clearly who is making excessive returns and an effective returns policy will give you the means to challenge them. Together, you’ll have the strength to wrestle your returns rate into something far less terrifying.
Returns are not just about their impact on sales numbers – they’re operationally costly too. However, bringing that cost down isn’t impossible. A digital returns platform is a must-have for any online retailer that wants greater cost control. For example, a customer who books a return via your digital returns platform is telling you a great deal about how you might process that incoming package:
- A damaged item can generate a QR code for slower, cheaper shipping. It can’t be resold, so there’s no hurry – it might even be directed straight to your waste processor.
- A desirable, seasonal item can be given expedited shipping, to get it back up for sale faster. After all, you shouldn’t be treating $300 sneakers and $3 socks the same in your returns process.
Additionally, digitising returns gives retailers the opportunity to implement their returns policy at the point of the return being booked – out of policy items simply aren’t available in the platform, whereas with paper returns labels, customers can send whatever they like, whenever they like.
Even better, a digital returns platform means retailers can do away with printed returns labels entirely. The cost of each label is very low, but for retailers shipping millions of orders annually, it quickly adds up.
…and raising standards
Thinking of customers on a ‘one-sale’ basis is the antithesis of good marketing. Approach each return as an opportunity:
- To learn more about the customer’s wants and needs
- To make frequent connections
- To demonstrate exceptional customer service.
Every time your customer needs to make a return – no matter how much you wish they weren’t – they’re offering you a chance to talk to them and improve their day. You can have your brand at their front of mind through reminders to post their return, updates on the process, even notifications to say that their refund is on its way. And now you know that little bit more about them, you can tailor future offers that they won’t be able to resist.
Nothing to fear, everything to gain
There’s no need for retailers to be panicking about the increased percentages of product returns they’re experiencing – in some ways quite the opposite. By adopting a digital returns platform, retailers can transform a painful and expensive process into a feedback loop that decreases return rates, reduces costs and improves customer loyalty and long-term value.