BFCM is a peak shopping season – an opportunity for online stores to sell more. But, this also means a high number of Return to Origin (RTO) cases, which results in a high RTO cost.
To understand how serious an issue RTO is, let’s look at some eye-opening stats:
- eCommerce return shipments can amount to 20% of total shipments (KPMG)
- For Cash on Delivery (COD) orders, RTO rate can go as high as 40%
- eCommerce companies can lose almost 20% of the revenue due to RTO
- 79% of customers buy if return shipping is free
And among the most common reasons for RTO are:
- Customer not available at delivery address to receive package
- Incorrect/incomplete address
- Impulse buying
- Orders placed by fraudsters
- Cash on Delivery (COD) order refused at customer doorstep
- Incorrect contact information
- Purchase anxiety when the delivery takes too long
This could result in a huge loss for your Shopify store. Think about it, you’re selling products at the best deals and discounts, and then you also have to bear the cost of reverse logistics. It’s a double hit on your resources.
And the more the number of RTO, the more your losses. 1 in 3 orders are RTO orders.
- Forward and return shipment costs
- Blocked inventory because of the products in transit
- Quality check of returned items costs resources
- Repacking of the returned items
- Operations and processing resources cost
And there’s no way you can charge for shipping or make it too expensive. The below illustration shows how much shipping and deliveries affect customer purchasing decisions.
So, what do you do to curb your losses during BFCM? You have to reduce the chances of RTO. Here’s how!
BFCM is a busy time for shoppers. Given the great deals and offers, they tend to shop a lot. It’s possible that they might forget what purchases they’ve made on your site. It’s also possible that they might end up buying the same item from two different sites. Or, buy items in a frenzy and realize they didn’t really need it.
All these instances can lead to RTO. They might return the products because they don’t need them.
Such cases can be avoided to a great extent if you allow your customers to view their order history in the customer account page.
The customer account page stores all the important information for your customers. This page also has an ‘order history’ section that shows details of all the purchases made by the customer.
Here’s what you must do:
- Enable quick sign up and login to the customer account page. You can do so by allowing customers to sign up via social login. It’ll be easy for first time shoppers during the BFCM sale to sign up
- Provide all essential features in the customer account page – order history, delivery address, returns & exchange, returns policy, reward points, etc.
The best part – you can easily set up all these features on your Shopify store with the help of the Flits app customer account page and add-on features.
Studies show that 8% of domestic first-time deliveries fail. On average, this costs retailers $17+. Now, imagine, if a retailer has 1000 return deliveries, it’ll cost them $17000. Woah!
That’s a huge unnecessary cost to your Shopify store. Isn’t it?
Now, among the most common reasons for RTO are: incorrect or incomplete address data, multiple addresses, and incorrect personal details. This is where verification can help you save your bucks.
- Once the order is placed, make sure you verify the contact details and address details shared by the customer
- You can do so through various channels such as SMS, email, WhatsApp, Messenger, phone call, etc.
- If you find discrepancies or your electronic system isn’t able to verify the address details, get more details from the customer
- If you cannot verify the address, ask the customer to share an alternate address
- Make sure you ask for the customers’ phone number so that the delivery executive can contact them in case they can’t find the location
- Confirm the delivery hours for both residential and commercial addresses. That way you can make sure the delivery executive does not reach the location at the wrong time
- You could use real-time automated field entry at the time customers enter their contact details. This will help reduce the chances of incorrect/incomplete information
88% of customers track their order status within a few hours or a day or two of placing the order. And it’s understandable, most customers are eager to receive the products that they purchased because it’s the holiday season.
Moreover, if it’s a first-time purchase from a store, they’re bound to feel some anxiety. If they’ve pre-paid for the product, they’d want some surety and confirmation.
This is why enabling order tracking helps. And there are many benefits of offering order tracking within the customer account page:
- Order tracking helps customers know where their purchases are, the shipping status, and on what date it might reach them
- It helps create positive emotions — when customers can see/track their orders, they feel happy and satisfied
- Customers can validate their purchases — enabling order tracking helps reduce customer anxiety and doubts
- When customers can track their orders, they are in a better position to coordinate with the delivery agent in case they want to give any last-minute instructions
For example, if the customer is not going to be at home and wants the parcel to be left with their neighbor
All the above factors help minimize the potential of RTO. Not just that, it can also help boost customer satisfaction.
Cash on Delivery (COD) sales have a higher RTO rate – 40%. It’s obvious — since the customer hasn’t paid for the product, they won’t lose anything if their order gets returned.
That’s why you should focus on converting COD to prepaid. It will help secure your sale as well as reduce RTO. And here are ways you can do it:
- Offer incentives to customers who pay online for their purchases
- Fix a minimum amount for the COD option
- Charge a little extra for COD
- Disable COD option during the BFCM period
- Offer store credits for the next purchase when customers choose online payment methods
- Confirm the order via different modes of communication soon after it is placed to detect any errors or lack of intent of buying
BFCM is a time when customers shop a lot. It’s possible that a lot of the purchases they make are rash decisions. At times, customers might change their mind about the product and might want to return it.
This can be avoided simply by sharing timely updates with customers. You can send updates through multiple communication channels such as SMS, email, Facebook Messenger, WhatsApp, etc.
From the time the customer makes the purchase to the delivery day, keep sending them updates. By doing so, you’re giving them opportunities to cancel their order earlier on, much before the time when the order gets delivered to them.
Here are some updates you must send:
- Immediately after the order is placed
- Order confirmation
- Order packed and ready to be shipped
- Order shipped out
- Package in transit and the day it will reach them
- Order out for delivery
Another way to reduce RTO is to optimize product descriptions. A detailed product description is essential so that shoppers are aware of all the details about the product.
For example, say you’re selling clothes. You simply write the sizes as S, M, L, etc. You don’t provide a proper size guide. When the product reaches the customer, they realize the size is wrong and initiate a return. This could have been avoided had there been a clear size guide within the product description.
Here are some must-include details:
- Size of the product
- Color variations
- Care and maintenance
One of the reasons for RTOs is that brands make it easy for customers to return products. By not defining your return policy clearly, you make the occurrence of RTO even higher. And that’s why it’s important to define your return policy clearly.
Don’t worry, 68% of customers read the returns and exchange policy before they make purchases. Besides reducing RTOs, it helps to instill confidence in the customers.
- Create a return policy page specifically for items on BFCM sale. Because your BFCM return policy might be different from your regular return policy, it’s important to communicate it clearly to customers
- Make your return policy as detailed as possible. For example, policy for items such as edibles and undergarments, etc.
- Include the return policy within the customer account page so that customers notice it and can easily find it when they want to refer to it
- Write a detailed return policy with extra tabs. For example, different sections on which items can be returned, in what condition, the initiation process, etc.
Amazon does this – collects details such as whether the delivery address is ‘home’ or ‘office’ or ‘other’, the time slot that the customer wants the delivery to be made and any other special instructions for the delivery.
By gathering these details, you can make sure the customer is available to accept the delivery, and that the delivery agent doesn’t reach at the wrong time.
Advanced delivery services may include interactive confirmation calls and SMSes with the delivery executive to ensure the item doesn’t have to return.
Customers expect their orders to be shipped and delivered to them as soon as possible. 75% of customers expect same-day deliveries. But only 50% of retailers are able to meet this demand. This means there’s a high chance that 25% of customers whose expectations aren’t met, might return the orders.
By ensuring faster deliveries, you can make sure that:
- Customers don’t change their minds about keeping the product
- Customers are satisfied with the delivery experience
- Customers might be willing to pay more for faster delivery
Studies show that fraudulent orders might cost merchants $40.62 billion by 2027. Fraudulent orders are one of the key reasons for RTOs. These are orders placed by fraudsters with no intent of actual purchases. They may have been placed with stolen credit card credentials. By identifying fraud orders, you can considerably reduce RTO.
Some ways to identify them:
- Look for information inconsistencies. For example, zip code and IP address mismatch
- A regular customer with an unusual location
- An unusually big order compared to customer’s order history
- Multiple purchases at the same time shipped to different locations
- A large number of purchases made in a short span
- Transaction decline due to incorrect card details
Do you agree RTO is a critical matter and can cost a lot to your Shopify store? It’s definitely not something you’d want to ignore, especially during the BFCM season.
Now, returns are bound to happen, but they don’t have to hurt your profits significantly. Right?
Implementing the above Shopify BFCM strategies can help you reduce RTO and increase your BFCM profits! With the right efforts in handling RTOs, you can easily turn the table.
Ready to tackle and reduce RTO head on?