Best practices for managing and reducing ecommerce returns

Andy Tweddle, Payments writer
24 Mar 2022
Money moving sideways with a circular arrow

Convincing online shoppers to buy with your ecommerce brand is strongly linked to the quality of your returns policy.

Studies have found that there is a strong correlation between an increase in sales proportional to the generosity of return policies, and 92% of customers are likely to return to a site that has a convenient return policy.

In short, a customer-friendly approach to returns and refunds is an essential component in your ecommerce strategy. In this post, we’ll explore best practices for offering a positive returns experience, and ways you can reduce the likelihood of returns happening in the first place.

What is the average return rate in ecommerce?

The return rate for ecommerce is dependent on your industry. For instance, a 2021 study on consumer behaviours in the UK found that online women’s clothing stores saw nearly a quarter of orders being returned, while beauty products saw only 4%. However, returns are a cross-industry phenomenon, with the same study finding that a quarter of consumers return between 5-15% of items they buy online.

What are the main reasons for returns?

Interestingly, studies suggest that brick-and-mortar sales result in less than half as many returns as online sales. Primarily, this is because when customers buy online, they’re unable to physically see or try on the product they’re buying, meaning they’re more likely to change their mind about the order once they see it in the flesh. The same study shows that within the clothing industry, for example, returns are driven mainly by incorrect sizes — a direct result of customers being unable to try products on before buying.

How do returns affect customer loyalty?

Customers have come to expect a convenient and generous return policy from online retailers, with 2 in 3 shoppers saying that the time it takes to receive a refund affects their decision to shop with a brand again.

Similarly, an efficient and timely returns experience results in 92% of customers making repeat purchases with a brand. Customer retention is therefore strongly linked to a company’s return policy: the more timely and convenient for the customer, the more likely they are to stay loyal to a business.

Strategies for handling ecommerce returns

Since a good return experience is so crucial to customer loyalty, it’s important that businesses develop good strategies for handling ecommerce returns. With that in mind, here are some tactics on how to best approach returns:

Clearly display your returns policy

With how closely linked convenient return policies are to successful purchases, it’s important that your policy can be easily found by consumers during the buying process. Provide a clear link to your returns policy, including at checkout. Make sure your returns policy includes:

  • How long the customer has to return a product

  • What ‘return’ means (ie, does return mean when the item is posted or received by your business?)

  • Any costs associated with returns

  • The condition items must be returned in

  • Any limitations to your returns policy (eg if certain items can’t be returned)

  • What will happen if a return is rejected

Let customers return items to the store if possible

Studies show that 62% of shoppers feel more inclined to shop online if they know that they can return items in-store. If your business has brick-and-mortar stores as well as online ones, this can be a convenient way to accept returns from customers. An added advantage of this method is that customers are more likely to make an additional purchase. If they’re returning items that are the wrong size, for example, they can easily find the right size in store.

Offer instant refunds

As we’ve already mentioned, a customer’s decision to buy again with a retailer or brand can be affected by the time it takes to receive a refund once the return process is complete. So, offering instant refunds — meaning refunds that settle in the customer’s bank account straight away — should be a priority for your business. Payouts from TrueLayer are instant bank payments, which allow you to refund money to customers instantly. Instant refunds build brand loyalty and help reduce the anxiety customers feel when waiting for the money to arrive in their account.

How can ecommerce returns be reduced?

While a clear returns policy is important for increasing purchases, minimising returns is equally important for reducing the cost of your returns strategy. Here are five ways to reduce the likelihood of customer requesting a return, while still providing a positive shopping experience:

1. Ensure products are listed with high-quality images and thorough descriptions

For customers to know clearly what they’re buying, they need to see clear, high-quality images showcasing the product. It also helps to provide a thorough description, including size, materials and relevant craftsmanship information.

2. Include size guides

With many returns being due to wrong sizing — particularly in fashion — a key way to reduce returns is through providing detailed sizing information, along with size guides. This will help ensure people order items that fit, making them far less likely to need to return them.

3. Use quality packaging to reduce items arriving damaged

20% of customers cite broken or faulty items as their motive for seeking a refund. A big cause of this is packaging that isn’t equipped to protect the item. Combat this by using suitably sturdy packaging that won’t be torn or damaged during transit.

4. Analyse your return statistics

It’s important to keep a detailed record of what items are returned, by which customer segment, and any reasons given for the return. You can then analyse your own data to work out which items are prone to being returned, and what the weak points in your returns process are.

5. Lengthen your returns policy

The average return policy is 30 days. While it may seem counterintuitive, research from the University of Texas-Dallas found that lengthening policies to 60 or even 90 days can lead to fewer returns as it removes the element of urgency. When customers are given a more limited time frame to decide whether or not they want to return an item, they tend to opt to return it hastily. However, if they have more time to examine the product and test out whether they like it, they’re ultimately less likely to decide to return it.

Find out more about offering instant refunds as part of your returns experience with Payouts from TrueLayer. Boost customer loyalty, remove time-intensive manual processes, and be confident of paying the right account at the right time.

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