Learn how to optimize and enhance your returns process with store credits.
Keeping the customers happy is the secret spice for a successful eCommerce recipe. It’s a necessary evil. And if not handled with care, it can threaten the survival of your eCommerce business.
Did you know more than 30% of all online purchases are returned? The number is mammoth compared to the return rate of 8.89% in brick-and-mortar stores.
Receiving returns over and over again can offset your profit margins. It also negatively impacts customer loyalty and brings the conversion rate down. Moreover, returns cost eCommerce businesses in many other ways — shipping charges, restocking costs, product damage, replacement, etc. According to a report by Statista, the US eCommerce industry spent $550 billion in the year 2020.
Does this mean you should stop providing the return option? Not at all. If anything, eliminating the return option will hurt your sales because hassle-free returns are what make customers trust eCommerce businesses.
So, how can you provide hassle-free returns and avoid losses it causes at the same time? With the help of store credits. And in this post, that’s what we are going to talk about.
Store credit is a blessing for every eCommerce business. It comes with many advantages, like reduced credit card chargeback cost (a charge that retailers have to pay when banks reverse electronic payments) and lower financial burden.
It’s not just a substitute for cash refunds. If used strategically, store credits can help eCommerce businesses increase the customer retention rate and much more.
Here are some of the ways you can use store credits to reduce returns and tackle losses.
Striking the right balance in your return policies is extremely important for your eCommerce business to thrive. If you make it too easy, customers will bring down your profits. And if it’s too rigid, they will have a hard time trusting your business. Therefore, sticking to a flexible return policy is your best bet to not lose customers and revenue.
Let’s say you sell body wash online, and some customer buys a pack of three from you. However, when they use the product, they don’t like its fragrance. Now they want to return the product and get a refund. You have two options — you can straightaway say that it was their choice of fragrance, so you can’t take the product back, or you can take it back and face the losses because one of the body wash has been used.
Saying no right away will, in most cases, make the customers angry. And you’ll probably lose them forever. And taking everything back and giving a full refund will also drop your profit. But with store credits, you get a third option too — a partial refund.
You can allow the customer to return two unused body wash and offer the store credits equivalent to the price of those two only. Doing this will ensure that you don’t bear the loss of a used product. And because you’re offering store credits, the customer will have to come to you again to shop for something else, keeping your profits intact. This will also make customers feel that they have been treated fairly.
Customers find it difficult to trust banks and credit card companies to process refunds on time. It usually takes a week or sometimes even more to get the money back in hand.
But when it takes more than 3-4 days for the refund to reappear in their account, customers become anxious. And according to a report published by American Express, late refund is one of the biggest reasons why customers don’t trust an eCommerce business.
But unfortunately, there’s nothing you can do about it. Once you initiate the refund from your end, the process goes out of your hands. The speed of refunds depends on your bank and customers’ payment providers.
But when you have store credits, your customers get an alternative. On the return page, you can offer both options — refund to back or store wallet. You must also mention that banks will take around 7-10 working days, whereas the credits will be added instantly.
If the customers are interested in your store, more often than not, they’ll go for store credits to use in the future. In this case, you would not have to pay any chargeback cost, and even your customers will be pretty satisfied by receiving the refund instantly.
A lot of times, customers get gifts that don’t quite fascinate them. And then they come to you to return the product. In such cases, you can’t refund the amount to the source account because the gift belongs to someone else now. And if you refund it to the gift receiver’s account, there’s no guarantee they’ll shop from you.
This is also where the concept of store credits can help you. You can refund the amount in the form of store credits to ensure that it goes to the receiver’s store wallet, and they buy from you.
Moreover, for gift products, if the original customer is not the one returning them, you should not refund the entire payment. It’s mainly because there was no error from your end. And you should not face the losses of someone else’s product selection.
There are times when customers buy a product, and within a few days, its price drops. This is a highly unpleasant situation for the customers as they feel cheated. Many will even want to return the product if they are still in the return period.
And why wouldn’t they? After all, they don’t have to pay anything to return, and they’ll get the same product at a lower price from you or your competitors. There will also be some customers who’ll want a partial refund to their bank account, which isn’t always possible.
Here you can use store credits to turn this unpleasant situation to your advantage. If any of your products experience a price drop, you should transfer store credits equivalent to the drop price. While transferring, you must also ensure that the credits are transferred only to those who bought the product recently (10-15 days).
And here’s a thing about gift returns — when you add a certain amount of store credits to the customers’ account, their order value will probably be higher than what they got. It is because the store credits are not their own money, and they’ll want to add some more to get an even better product.
That said, even if the price drop is as low as a few dollars, issue a refund. This way, customers will know you care about them and their experience. And they would trust you with all their future purchases.
Suppose a customer comes to you to return a product with a legitimate reason, then there’s no stopping them. All you can do is convince them to opt for a refund via store credits so that you can avoid the chargeback costs.
One of the prevalent ways is offering a little more money when customers opt for store credits. Suppose a customer buys a product worth $100. On the return page, have both options ready with the proper CTAs. The “bank transfer” medium should give $100 (minus any shipping charges you want to deduct). And the store credits option should say, “Get $100 + $10 for the inconvenience.
Getting $10 just for returning a product, the customers will definitely go for it. And you’ll avoid the return losses and make higher revenue as customers are most likely to add more money when shopping with store credits.
When you keep receiving returns and refunding the entire amount for it, your revenue takes a lethal hit in the long term. Your chargeback and shipping cost keeps adding up and can reach a point where your business is no longer profitable. And that’s where store credit comes in.
With Flits store credits, you can ensure that there are no chargeback costs and the money returns to you. Moreover, it’s also helpful in running customer loyalty programs or giving referral bonuses.
Stop hurting your profits and reduce returns and optimize returns process with Flits store credits.