A common challenge of the retail industry are returns. Both in-store and e-commerce transactions will sometimes result in returns. Most times, the customer will have made the error. In rare instances, the merchant or shipping company are responsible for the error. One thing is for sure: too many returns result in increased operational costs in addition to less customer approval. These two things coupled together often lead to loss of revenue. How can these vendors reduce their losses as a result of returns? This post will provide a breakdown of the typical reasons behind returns and a few ways to address them.
One of the most common reasons for returns are disconnects between customer and retailer. This often starts with the description or image of a product that customers see. When they order this product, they often receive an item that does not live up to what was described or pictured. Retailers must mitigate these discrepancies through honest descriptions and revealing pictures on the product page. None of these photos should be enhanced in a way that provides misleading visuals. These product pages also benefit from the inclusion of accurate sizing information. With recent research indicating that 52% of returns were due to issues with sizing, this issue is more prevalent than ever.
On the contrary, offering free returns is one of the ways retailers are benefiting in the industry today. While free shipping is more influential, with recent research indicating 96% of shoppers consider it a must, free returns come close (79%) to the top value proposition for customers. While some customers may take advantage of these return policies, others may order with intent to return but end up loving the product so they keep it, which in turn boosts sales.
With the popularity of online retail skyrocketing, it’s not surprising to discover that the rate of returns has risen drastically. According to reports, returns have seen a 70% year-over-year increase in 2020. This is exacerbated by online shopping scams such as wardrobing and bracketing. These schemes include ordering every variation of a product just to later return it and ordering a product, using it, then returning it as new. Many retail organizations have put policies in place to avoid these schemes as they’re necessary to remain successful.
Another issue that retailers are left to deal with as a result of their online web stores are fraudulent purchases. Unlike the scams mentioned previously, sometimes these purchases can be done to launder money from stolen credit cards or otherwise harm businesses. This is why anti-fraud tools are so important for businesses. With these tools, businesses are able to block transactions from stolen cards and offer refunds only to the original card or through store credit. There are even unique payment solutions offered by professional services that can help reduce the cost of returns for your business.
Retail organizations are always working towards developing the newest ways to improve sales and their customers’ experiences. For more information on how your business can get ahead of the curve in this regard, be sure to check out the infographic paired alongside this post for additional strategies. Infographic courtesy of Signature Payments.
