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Why e-commerce businesses should invest in returns?

Anton Eder

Published on: June 18, 2022

Updated: September 8, 2023

Why e-commerce businesses should invest in returns?

How many of your e-commerce orders come back as returns? For some retailers, it’s as high as 30% – with all the costs of shipping, administration, refunds and exchanges attached. Returns are often seen as an expensive waste of time and resources, without any upside.

But it doesn’t have to be that way. In 2022, the smart investment for e-commerce retailers is a better returns experience. You can improve customer satisfaction, upsell purchases, build customer loyalty, and potentially even recoup some of the costs of returns management. Let’s get into the details.

Are returns worth the investment?

Consumers really care about return policies. You might think that your returns process is just a technical detail, but for many shoppers, it’s the deciding factor in whether they buy from you or not.

67% of consumers in the United States say that they check a retailer’s returns policy before they buy anything. And 68% say that they check the brand’s reputation, too. The similarity between those numbers is no coincidence: for most customers, your returns policy is your reputation.

If it’s difficult, confusing, or expensive to return products to your e-commerce store, then customers will go elsewhere.

People check returns policies because they want flexibility, speed, and choice. A return isn’t a failure of your product; it’s a request for further customer service. And customer service is an opportunity to build relationships and retain customers.

How e-commerce retailers are managing returns

It’s estimated that retailers in the UK alone lose about £60 billion to returns. Large e-commerce brands will handle over 10,000 returns each month – each one with its own costs of shipping, labor, and lost revenue. Those numbers add up fast.

So how are brands responding to the challenge?

There are a lot of different approaches out there. Some are designed for customers’ convenience, but at a price. For example, some larger retailers, like Amazon and Walmart, now offer a choice between shipping returns or paying for home pick-up. Others are simply focused on reducing the cost of returns, with some retailers telling their customers to just keep unwanted products.

But these approaches still don’t respond to what customers want. In fact, our research into the UK market shows that most brands stop thinking about customer experience as soon as the customer checks out. When it comes to returns, they’re focused purely on the operational process, without considering what the operations experience is like for customers.

Returns are a fact of life for e-commerce. Instead of trying to eliminate return costs, retailers should accept the reality that returns happen – and start seeing returns management as another marketing channel.

It’s time to invest in better returns

Based on our research, it’s clear what customers want from returns:

  • Clear explanation of return policies and requirements.
  • Fast turnaround times.
  • No need to print labels or fill out complicated forms.
  • Regular, personalized updates on the progress of returns.

The brands and retailers which score highly with customers offer simple, streamlined returns at a minimal cost. And instead of absorbing the financial pain of returns, they turn them into a new revenue stream. Sending personalized updates, offering alternative products, and providing a good customer experience means that you can “rescue” returns and turn them into profitable transactions.

We studied the delivery and returns experiences offered by the biggest apparel retailers in the U.S. and published the results in one handy tell-all guide.

Written by

Anton Eder