The rise of online shopping has brought with it a multitude of benefits, but also a significant increase in return rates. With purchase anxiety on the rise among consumers, it’s more important than ever to find ways to reduce return rates and protect your profits.

According to a 2022 Forbes article, online merchants typically face eCommerce return rates anywhere between 20% and 30%, which leads to a significant drag on profits due to the logistics and high cost of handling unpackaged, tampered merchandise. Returns are indeed an online retailer’s nightmare, quite literally!

In this blog, we’ll explore the various factors that have contributed to the increasing online return rates and the practical strategies businesses can work on to reduce them.

Whether you’re just starting out or looking to improve your existing processes, this guide will provide valuable insights and actionable steps to help you boost your profits and grow your business

What is eCommerce return rate?

The return rate is a metric used to measure the number of products that are returned by customers after purchase. It is a key indicator of customer satisfaction and can impact a business’s bottom line, especially in the world of eCommerce. The return rate is calculated as the ratio of the number of returned products to the number of total products purchased, expressed as a percentage.

What are the common causes of order returns?

According to industry statistics, the average return rate for brick-and-mortar retail stores is around 8.8%, while the average eCommerce return rate for Shopify businesses is estimated to be around 15.2%. While some returns are unavoidable, there are several common factors that can contribute to higher return rates:

1. Incorrect Product Information: Customers may return products if they receive a product that is different from what was described on the website, including the wrong size, color, or style.
2. Product Quality Issues: Poor product quality is a common reason for returns, and it can be especially challenging to assess product quality when shopping online.
3. Buyer’s Remorse: Some customers may change their minds about a purchase and choose to return the product, even if it is in good condition.
4. Shipping and Logistics: Delays, damages, and incorrect addresses can all contribute to product returns, and are often outside of the control of the seller.

By understanding these common causes of returns, businesses can work to address them and reduce their return rates, ultimately leading to increased profits and customer satisfaction.

The average eCommerce return rate for Shopify and its impact

The average eCommerce return rate can have a significant impact on a business’s bottom line.

According to a Forbes article, the average eCommerce return rate for Shopify businesses is estimated to be between 20% and 30%. This high return rate can be attributed to a variety of factors, including incorrect product information, product quality issues, buyer’s remorse, and shipping and logistics issues.

The consequences of a high return rate are multifold. Firstly, businesses lose out on revenue, as they must refund the customer for the returned product and absorb the cost of the item. Secondly, there are additional costs associated with reverse logistics, such as handling, shipping, and processing the returned product. Furthermore, returned items may be damaged, which can lead to additional costs for repair or disposal.

Additionally, a high return rate can also impact customer experience and satisfaction. Returning items can be a disappointment and an inconvenience for the customer, which can lead to negative reviews and a loss of customer loyalty. This is particularly concerning for eCommerce businesses, where the customer’s experience is critical to building brand reputation and driving repeat purchases.

How can you reduce eCommerce return rates?

Reducing eCommerce return rates requires a multi-faceted approach that addresses the various causes of product returns. Here are a few strategies that businesses can use to reduce their return rates:

1. Set up an ‘immersive’ order history page for your customers using Flits

Enhancing your Shopify customer account page can help reduce return rate on Shopify by increasing customer engagement and satisfaction. Using Flits, you can create a detailed yet easy-to-use customer account page that provides customers with all the information they need about their purchases, including product size, color, and more. This helps customers understand the product better and makes the shopping experience more personalized.

Additionally, Flits also provides customers with a convenient way to track their orders, contact customer service, and manage returns and exchanges. By providing customers with a seamless and hassle-free shopping experience, you can further reduce the return rate and increase customer satisfaction.

2. Improve product descriptions

Detailed and accurate product descriptions play a crucial role in reducing return rates. When customers are able to understand what they’re purchasing and make an informed decision, it significantly reduces the likelihood of them returning the product.

To make your product descriptions more effective, include relevant information such as measurements, materials, and other key details. High-quality product images are also essential as they help customers visualize the product and get a better understanding of its size, look, and other features.

Incorporating 360-degree product views, videos, and interactive images can also be beneficial in reducing returns. By providing a more immersive shopping experience, customers can feel more confident in their purchase, leading to a decrease in return rates.

Furthermore, make sure your product descriptions are easy to read and are free of any typos or grammatical errors. This will help build trust with your customers and further enhance their shopping experience.

3. Put out extremely clear return policies

Having a clear return policy is an important aspect of reducing return rates for eCommerce businesses. A well-defined return policy can make the process of returning products easier and less stressful for customers, increasing their likelihood of returning unsatisfactory items and reducing return rates.

In addition to making the return policy prominent on your website, consider including information on how the return process works, how long customers have to return items, and what criteria products must meet in order to be eligible for a return. Including this information upfront can help customers feel more confident in their purchases and reduce the likelihood of returns.

Offering flexible return options, such as in-store returns or exchanges, can also increase customer satisfaction and reduce return rates.

4. Encourage exchanges instead of returns

Encouraging product exchanges instead of just returns can benefit your eCommerce business in multiple ways. Not only does it help to reduce customer dissatisfaction, but it also cuts down on the costs associated with processing returns and managing inventory.

By offering an alternative product during the returns process, you provide customers with the opportunity to exchange their unwanted item for something that better fits their needs and preferences. This can be a different style, size, or color of the same item, or a completely different product.

Offering an exchange option shows your customers that you value their satisfaction and are willing to work with them to find a solution that works. This can improve customer experience and increase customer loyalty, as they will appreciate the extra effort you put into finding a resolution that works for both parties. Additionally, by reducing the number of returns and associated costs, you can help to improve your bottom line and overall profitability.

5. Get to the root cause of returns

If you are an eCommerce business, understanding why customers return products is essential for improving customer satisfaction and the success of your business. Customers may return products due to a variety of reasons, so here are some tips on how to figure out why customers are returning products:

• Track customer feedback: Monitor customer feedback both before and after they receive the product. Ask customers why they decided to return the product and keep track of their responses.
• Analyze return data: Analyze data on the types of returns you receive. What products are being returned, and why? Are there any specific patterns?
• Survey customers: Conduct surveys to gain insight into customer preferences and expectations. Ask questions about the product, delivery, and customer service.
• Follow up with customers: Reach out to customers after they return a product and ask for additional feedback. This could provide you with valuable insights into why customers return products.
• Analyze customer reviews: Read customer reviews to see if there are any common complaints or issues.
• Track competitor data: Keep an eye on your competitors and see if they’re having similar issues with returns.

6. Offer a virtual try-and-buy experience

One offbeat way of reducing the return rate for Shopify businesses is to offer a virtual “try before you buy” experience. This could be done by offering 3D product visuals and interactive demos so customers can experience a product before they buy it.

By allowing customers to experience a product before they buy it, they can make an informed decision and have a clearer understanding of what they’re purchasing.

To implement this strategy:

• Invest in technology that can create 3D product visuals and interactive demos: This will give customers an immersive experience and a better understanding of the product.
• Provide customers with product information such as size, color, etc. so they can make a more informed decision.
• Monitor customer feedback and adjust your product visuals and demos accordingly: This will help you improve the virtual try-and-buy experience and make it more effective in reducing returns.
• Offer incentives for customers who try the virtual try-and-buy experience: This will encourage them to engage with your products and make a purchase.

7. Segment your customers and use sharp targeting

You can reduce return rates by segmenting customers and using targeted marketing campaigns.

By understanding the unique needs and interests of each customer segment, you can tailor your marketing campaigns to their specific needs and preferences. This allows you to offer them the products and services they are most likely to want, which can minimize customer dissatisfaction and returns.

To make the most of this strategy, consider using data from previous purchases and marketing campaigns to identify the offers and promotions that each customer segment typically responds to. You can also use algorithms to predict customer behavior and determine which products and services each customer is most likely to buy.

This information can be used to create highly targeted campaigns that are more likely to result in customer satisfaction and fewer returns. Additionally, by making the customer feel understood and valued, you can also foster long-term loyalty and repeat purchases, further reducing the likelihood of returns.

Bonus Tip: Provide helpful styling guides and tips to reduce returns

One way to minimize returns is to provide helpful styling guides and tips for customers. By giving them clear measurements and guidance on how to choose the right size, customers can feel confident in their purchase.

You can also show off the product’s potential by including photos of how it can be worn and provide styling ideas. Giving customers information about the fabric, including its quality and care instructions, will help them understand what to expect and how to best care for the product. And don’t forget to offer customer support to answer any questions they may have.

Here are some specific tips to consider:

• Provide clear measurements and guidance on choosing the right size
• Show off the product’s potential with styling ideas and photos
• Describe the fabric and provide care instructions
• Offer customer support to answer any questions they may have

By taking these steps, you can help customers feel confident in their purchase and reduce the need for returns.

Returns management for Shopify Plus stores

It’s important for Shopify stores to allow customers to easily return products. But merchants might argue that they’d rather reduce returns rate. However, what they overlook is that allowing returns can help their brand build credibility, improve customer experience, and boost loyalty. And for small to mid-sized businesses, managing returns may not be too difficult as their sales are not high.

However, when it comes to returns for Shopify Plus or essentially large-sized businesses, things can get complicated. Many businesses tend to overlook reducing returns in eCommerce simply because it’s a complex task for them. But they shouldn’t. 

For instance, many large companies have set up excellent and customer-friendly returns and benefit manifold from it. Case in point, companies such as Borosil. However, due to the large scale of these businesses, managing reducing return rate could get more complex. But it’s critical for the benefit of their business. Let’s look at why Shopify Plus stores need to set up and manage returns.

1. Customer satisfaction

One of the biggest reasons for companies to reduce return rate is customer satisfaction. 76% of first-time shoppers say they would shop from the store again if it has a friendly return policy. The return policy of online stores is directly connected with customer satisfaction. Ensuring a positive experience is crucial to attract and retain new customers. Large businesses often deal with a large number of returns and hence, must be on top of their returns game.

2. Inventory management

For large-sized businesses, inventory management can be a complex task. This is one area where efficient returns management can play a crucial role. To manage returns efficiently, you have to inspect returned items, refurbish, restock or discard damaged pieces. Properly managing returns can help with inventory management. 

3. Competitive advantage

Many Shopify Plus stores avoid returns as it can get complicated. However, little do they realize that in the competitive world of eCommerce, providing efficient returns could help differentiate them from other brands, and as a result reduce return rates. 49% of customers are more likely to choose brands that enable easy returns.

4. Data and analytics

Well-managed returns can help you generate informative data. For example, you can identify patterns, trends, reasons for returns, etc. This data can then help you with product return rate analysis and optimize your store’s shopping experience to reduce return rates. Moreover, data can also help with demand forecasting. For example, products that were returned are readditions to your inventory.

5. Cost control

Managing returns can also help you with cost controlling. Returns can prove to be costly for your Shopify Plus store if not planned well. For example, return shipping, packaging, repackaging, damage to goods, processing fee, etc., are some factors to consider when you are laying out your return policy. Large-sized ecommerce businesses need to have a well-thought-out returns management system in place to minimize these costs. 

With all the above advantages, Shopify Plus stores that have not initiated returns are losing out on a lot of opportunities to turn returns into sales. How’s that? Read in the next section.

How to turn reduce return rates and turn returns into sales 

Think about returns as an opportunity. Now, many of you merchants would wonder if that sounds counterintuitive. But it’s not. You can turn returns into sales opportunities if you manage them strategically. Here are some tactics to do so:

1. Encourage customers to buy another item from wishlists

Wishlists are a common marketing tactic used by eCommerce stores. When combined with your returns strategy, you can increase opportunities to sell wishlist items and reduce returns in your eCommerce store. Here’s how – when customers return products, prompt them to buy an item from the wishlist instead. You could even give them an incentive. Since items in the wishlist are those that customers wanted to buy at some point, they could do so with the return amount.

2. Suggest items from recently viewed products

Customers tend to spend more time looking at products they like on your site. And you should capture this information via the recently viewed products feature. This would give you an opportunity to recommend a product recently viewed when customers return products. Customers like it when brands personalize their experience and help them make purchase decisions. This is one way you can improve customer experience on your Shopify store.

3. Offer store credits with a validity period

Another way to boost sales opportunities and reduce returns in eCommerce is to offer customers store credits instead of returning cash. When you offer store credits, customers are most likely to come back to spend their credit points because they would not want to waste them. Now here’s the trick, customers may take it easy and take their own time to use the store credits. You can avoid this situation by adding a validity period on the store credits. For example, use it within 2 months. 

4. Offer recommendations based on the returned product

Customers may return products for various reasons. For example, a product didn’t fit and you do not have their size available. In that case, they will have to pick an alternative product. This is your opportunity to recommend a product based on the one they returned. Consider the style, variety, category, color, etc. of the product, and recommend similar products. In fact, you could also upsell at this point by recommending a higher value product that is better than the one they returned.

5. Request feedback

One of the most efficient ways to reduce return rates is to ask customers for feedback at the time they initiate returns. How does this help increase sales, you may ask. Here’s how. When you ask for feedback you’re creating an opportunity to engage with customers. In addition, you are also making the customer feel important and special. They might share honest feedback and you could address it with a positive response. This sort of good customer experience can turn the returns customer into a loyal customer of your Shopify brand.

Ready to Reduce Your eCommerce Store’s Return Rate?

Having a high rate of returns can be a major challenge for any online business.

However, by taking a proactive approach to reducing returns, you can improve the customer experience, address customer concerns, and ultimately, lower your return rate. This can be done by providing customers with clear and comprehensive information about products before they make a purchase, being responsive to customer inquiries, and ensuring that customers are satisfied with their purchases.

An effective way to start reducing your return rate is by setting up a Shopify customer account page with Flits.

Also read: Why You Need A Flits Shopify Customer Account Page on Your Store

This allows you to display all of your customer’s orders in one place on the customer account page, making it easier for them to track their purchases and contact customer service if they have any questions.

With a Shopify customer account page, you can better anticipate customer needs, address customer concerns, and overall enhance the customer experience.

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