If it’s one thing that can spoil your holiday cheer, it’s product returns. You worked too hard for those Q4 profits just to see them eroded away by disappointed gift recipients… and it doesn’t help that Amazon FBA’s new returns policies aren’t sitting well with sellers.
The trouble with product returns goes beyond just the loss of a sale. eCommerce stores are usually the ones who pay for return shipping, not to mention the cost of packaging or the labor involved moving the inventory to and fro — and that’s assuming the product’s resalable, which sometimes it’s not. And don’t forget to handle these setbacks with a smile on your face, because if you don’t, you lose a customer on top of everything else.
What’s best for everyone, buyers and sellers, is to address product returns before they happen, especially during the holidays when they’re most prevalent. In this article, I’ll explain 5 ways to prevent product returns and mitigate their losses, to help your holiday profits last all year long!
1. Segment Risky Customers
Sometimes the products are to blame for returns, but sometimes it’s the shopper. Certain customers are just more likely to make returns than others, and if you can identify those customers, you can tailor your marketing efforts to avoid them.
The first place to start is your analytics. Are there any trends in where your returns are coming from? Certain referrals or ad campaigns? Certain geographic locations? Look for patterns and trace them to the source — your returns could be coming from a specific type of customer, or from a badly worded ad or misleading influencer post.
For those with enough time, you can even mark specific customers and put them into separate emailing groups. If you can segment customers by what they’re likely to return, you can fine-tune your marketing campaigns to make sure these customers see only ads for products they’ll probably keep.
2. Extend Your Time Frame for Returns
Reading the heading might leave some of you scratching your heads, but it’s true. Having a longer time period allowance for returns actually decreases them.
The most reasonable explanation for this phenomenon is what’s called the “Endowment Effect.” Essentially, the likelihood of a customer returning an item goes down the longer they own it, presumably because they develop an attachment to it and get used to its flaws.
Lenient return policies in general take a lot of the pressure out of a customer’s choice to return a product. Policies limited to 30 days rush customers into making premature decisions, whereas something like a 90-day period gives them enough breathing room to experiment with the product and ultimately come around to liking it.
3. Improve Product Page Accuracy
In general, descriptive product pages — including pictures, videos, and written descriptions — are an eCommerce best practice. If your customers expect one thing but receive another, can you really blame them for returning it?
Give shoppers the most accurate product description possible to avoid any surprises upon receipt. That means adding all relevant details and specifications into the product page descriptions, as well as high-definition images to show off aspects like appearance and texture.
Product videos are an enormous help in this department as well. Videos more than static images show off a product in three dimensions, giving viewers a better sense of what it’s like to own it. Moreover, videos can also demonstrate how to use more complicated products, circumventing returns because users couldn’t figure out how to use it correctly.
4. Improve Your Reverse Logistics
Naturally, eCommerce companies take plenty of care organizing their outgoing shipping logistics, but what about products coming back? These issues fall under reverse logistics, and the more returns you receive, you more you have to worry about it.
According to Reverse Logistics Magazine, the “return and repair” process accounts for 10% of all supply chain costs, but improper reverse logistics compounds that figure to approximately 30%. A UPS report puts that loss even steeper for high-tech manufacturers, losing over 50% of inventory value for return products from mishandled reverse logistics.
Optimizing your reverse logistics could be as simple as going over the numbers and rethinking your policies. However, many eCommerce brands are outsourcing their returns to 3P logistics providers for extra efficiency. Either way, investments in improving your reverse logistics usually pay off: one account from the Penske blog saw a 4x decrease in cost per return, not to mention a 12% increase in customer satisfaction.
5. Collect Data on Reasons for Returns
Similar to our first tip, the more data you collect on returns, the better. In addition to pouring through analytics, you can also just ask the customers themselves. Implement an extra step in the returns process for eliciting customer feedback on why they initiated a return in the first place.
The results may surprise you. Of course you’ll get answers like “I just didn’t like it,” but you’ll also receive helpful feedback that reveals problematic areas. Maybe the product didn’t deliver what what promised, in which case you should change what you’re promising. Maybe the sizing was off from expectations, in which case you should devise a new sizing chart.
In eCommerce, there are plenty of opportunities for your shoppers to misinterpret what you’re selling — after all, online stores lack the advantage of brick-and-mortar stores where customers can touch and examine products before purchase. If you can isolate the worst areas through empirical data, you can fix them ASAP to stem the problem.
Conclusion: Retaining Reputation
A final note on one of the worst consequences of product returns: bad customer reviews. If one customer misreads a product description and unwittingly buys a product they don’t want, they still have the power to hurt your business, even if you accommodate them at every turn during the returns process.
That’s why eComEngine built a feature in FeedbackFive that automatically excludes refunded orders from email requests for reviews. FeedbackFive is a tool that helps you improve all aspects of getting online reviews, optimizing email deliveries at the perfect time and helping you stay ahead of negative reviews. It also lets you choose conditions for whom you request reviews from, with an option to exclude people who returned your product. Customize your parameters once, and you never have to worry about it again.
With the free 14-day trial, you can try Feedback Five without risk. Sign up for your free trial now.
This post is accurate as of the date of publication. Some features and information may have changed due to product updates or Amazon policy changes.