How to Handle and Prevent eCommerce Returns for Maximum Profitability

1) Why is it Important to Handle eCommerce Returns?

Reverse logistics are expensive and can cost as high as 60% of your product's selling price. They can slowly and steadily munch away on your margins, much like Pacman strategizing and gulping pellets.

A potentially debilitating situation, product returns have the power to chomp away at your profits and lay waste to your conversion rates.

A whole new breed of informed and well-connected customers utilize the services of online retail businesses. The change in customer awareness drives the need for online stores to handle eCommerce returns in the right way. 

2) Challenges Faced When Handling eCommerce Returns

Customers who shop online expect eCommerce returns to be as easy as purchasing. More merchandise bought online is returned compared to their brick-and-mortar counterparts.

Operating with thinner margins, eCommerce businesses must manage customer expectations and maintain a well-constructed return policy to stave away financial loss.

When it's that time of the year when discounts run amok, enticing customers with promises and offers, sales skyrocket higher in the eCommerce stores than brick-and-mortars.

During the holiday season, online businesses experience a spike in last-minute purchases and post-holiday returns. Chalking it down to wrong gifting or overenthusiastic splurges; most shoppers set claim to refund options offered by the store.

In the apparel and accessories category, customers have begun to purchase multiple sizes in the same version or various options of the same product type. Accounting for delivery time and desiring options, shoppers pile products into the cart, intending to return most.

The escalating surge in return rates results in lengthier processing and inspection time, reduced workforce accuracy, and delayed restocking owing to aggregated shipping and quality checks. This in turn, leads to profit loss, inventory loss, and customer loyalty loss.

3) Best Practices for Handling eCommerce Returns

Best practices for handling product returns start with nipping the problem in the bud. By preventing errors at the front-end of your online store and improving the shopping experience, you can reduce the miscommunication customers may experience while shopping with you. 

And by keeping an eye on your logistics experience, you can bring your return rate numbers down.

3.1) Accurate Product information

When customers order a product and feel misled by the description, their immediate response to place a return request can also result in poor product reviews and low ratings, impacting any future sales.

Detailed product descriptions lower the rate of returns. Ensure accurate weight, dimensions, composition, and size guides are mentioned in the product info. 

3.2) 3D/AR

Compared to a physical store where customers can hold and inspect the product, shoppers rely on online stores to inform them about the goods they browse. AR shows customers how their product looks when worn or in the shopper's room.

This brings home a customer’s conviction about a product, and they are less likely to change their mind once they receive it and are therefore less likely to return it.

3.3) Safe Pack & Ship

A quarter of your outbound shipment can make its way back to you because they land damaged or faulty on the customer's doorstep. Even accounting for minimal manual processing errors, this percentage is too high to have been overlooked during fulfillment.

Protective packaging, thorough inspection, fragile stickers, and appropriate box size will reduce the risk of your shipment getting damaged in transit.

3.4) Offer Sustainable Returns

Shoppers are more willing to associate with stores that take sustainability seriously. While over 75% desire to shop with retailers who have sustainable returns, more than 70% of them are ready to shell out for a sustainable return.

However, returns shipping causes millions of tonnes in carbon emissions every year and the only way to cut down on that is by reducing your return rate.

3.5) Offer Real-Time Tracking Info

By optimizing the reverse logistics experience for yourself and your customer, partnering up with a shipping company that offers tracking information allows you to update your customers in real-time using automated notifications via OMS or other plugins.

By encouraging customers to offer their feedback on the returns process, you can use the data provided to improve your returns operations.

4) Return Strategies for Handling eCommerce Returns

4.1) Return policy - Easy to Read, Easy to Find

A well-crafted and easy-to-follow returns policy helps build trust and increase sales. It provides the customer visibility on what makes a product eligible for return before purchase.

A returns policy also ensures everyone in the organization is on the same level regarding rules and procedures. Return policies also lower your cost of customer acquisition while increasing customer lifetime value.

4.2) Append State and Federal Laws

Make sure you plug-in any related state or federal law associated with your product or returns in your return policy. You should be aware of and include rules such as compulsory acceptance of defective goods. 

Government imposed rules decide the duration for acceptability of returns and the percentage of refund a customer is legally owed. By taking control and staying on top of all legal requirement when it comes to eCommerce returns, you can handle your store’s returns better.

4.3) Setting Appropriate Deadlines

Although customers place emphasis on your return policy, they never really expect to return something. Several stores have done their own research on appropriate deadlines.

While some urge you to keep shorter deadlines in order to receive your returns faster and turn them around for restocking, others encourage longer durations which may result in a customer deciding to keep their purchase or finding other uses for it.

So while one method allows you to monetise on returns, the other reduces your return rate.

4.4) Accept via Shipment or Physical Location

A popular return logistics choice, customers can ship their purchase back to your fulfillment center, where the warehouse team can inspect the goods for eligibility for a refund.

Return apps help speed up the return process, update status in real-time and keep inventory updated.

Shoppers like to drop off their returns at physical stores. Returned merchandise can be inspected and immediately put on shelves. When customers walk into a physical store, they can view other products, which gives them more confidence to purchase in the future.

4.5) Make Returns Convenient

There are multiple ways to make returns more convenient for your customer. These can be tailored to suit the needs of your store. For one, offer various modes of returns - exchanges, refunds or store credit.

For another, make sure you provide pre-paid shipping labels in your forward logistics. Should a customer wish to return an item, all they have to do is log in their request, slap on the sticker and they are good to go.

4.6) Provide Prepaid Return Label

Prepaid return labels also keep customers, most of whom expect free returns, happy. While you could choose to make customers pay for returns, this decision will affect your customer loyalty. But, there is no need to struggle under the weight of costly returns.

You can choose to split the cost with customers, or offer free returns only within a limited period of time. No matter which way you choose, providing prepaid return shipping labels helps you and your customer handle eCommerce returns better.

4.7) Consider Margins

Your store’s returns could quickly obliterate any profit you make. Consider drawing up a returns policy that excludes products purchased at a discount, end-of-season sale or promotional activity.

And when pricing items, work in the cost of returns along with operating costs into your retail price to ensure you are covered.

4.8) Re-engage Shopper

A customer who was interested enough to purchase from you once, can be encouraged to do so again. Returns don’t mean end of the road. Customer re-engagement post a well-handled return could earn you a profitable and loyal customer.

5) Benefits of Using Automation For Handling eCommerce Returns

Automating the various legs of reverse logistics allows a customer to be in control of the information and processing power while giving your business the leeway to jump in when your presence is necessary. 

Automated returns also cut your processing time short and send notifications to your customer right from accepting their request to the status until the process is complete.

5.1) RMA

Return Merchandise authorization, RMAs automate the return requests of customers and decide if a product is eligible for a return based on input criteria.

5.2) Chatbots

Chatbots can help answer shoppers' inquiries on your store's website and lead them through any process they find challenging to follow.

5.3) Return Labels

Scannable return labels help you enter the returned merchandise into your inventory in a jiffy.

5.4) OMS/IMS

OMS ( Order-Management System) and IMS ( Inventory-Management System) help you manage order fulfillment and inventory levels and update stock across multiple channels.

5.5) NPR Management

The version for NDR for returns management, Non-Pickup Reports, automates the attempts post a failed pickup.

6) How can ClickPost Help You Handle eCommerce Returns

Integrating your returns portal with logistics management platform ClickPost’s eCommerce returns management software enables you to automate the processing of customer-initiated return requests based on your return policy.

It removes the need for manual intervention in your returns process. Its pre-configured rules allow for automated picking of shipping partners who suit the return parameters, create and print return labels and notify your shipping partners with requests for pick-up.

You can monitor and track your returns fulfilled by different logistics partners on your returns dashboard. ClickPost also offers an automated NPR management integration, which covers possible pickup exceptions and ensures successful pickup of the returns shipment.

7) Conclusion

If ignored or mismanaged, eCommerce returns will cause you to lose money and customers. On the other hand, well-strategized eCommerce returns can help a business grow its profits and customers.

Although the inevitable returns are almost indestructible, you can wield them as a weapon if you craft your store's pre and post-purchase processes smartly.

8) FAQ

8.1) What is a return in eCommerce?

eCommerce returns are the process that addresses a customer’s desire to return a product for cash, exchange, or store credit and the reverse logistics that goes with it.

8.2) How can I improve my eCommerce returns?

You can improve your business’s eCommerce returns process by including automation, software, strategies, and a well-planned returns policy.

8.3) How do you avoid returns in eCommerce?

You can limit the return rate faced by your eCommerce store by providing accurate product information, 3D/AR imagery, well-packaged shipments, fraud protection, and using customer feedback to guide you on future purchase orders.