Reduce Your Return Rate This Holiday Season
The holiday season: a time of twinkling lights, festive cheer, and… soaring retail returns. The holidays are a crucial time for retailers, filled with opportunities and challenges. While sales rise, so do return rates, impacting the bottom line and customer relationships. Let’s dive into why returns happen, their impact, and how to minimize them.
The True Cost of Returns
Returns have become an increasingly costly affair. Statistics show that for every $1 billion in sales, retailers face $165 million in returns.
Last year, the collective cost of retail returns in the U.S. reached $817 billion, with online returns contributing a substantial portion. This figure represents a hefty dent in brands’ revenues—and even more so when you account for the additional costs incurred.
Every return signifies a number of costs for retailers:
- Lost Revenue: Returns are not just reversed sales; they often translate into lost revenue, especially if the product cannot be resold at the original price.
- Shipping Costs: Each return incurs additional shipping costs. While you can pass these costs onto the customer, 79% of customers expect free return shipping.
- Cost of Product Dispositions: Dealing with returned merchandise often involves additional costs in processing, fixing, or even disposing of products.
- Wasted Time and Resources: More returns mean more work for logistics and customer service, affecting overall business efficiency.
- Brand Loyalty: Frequent returns can negatively impact a brand’s image and customer trust.
Every return is a triple threat to retailers, impacting revenue, resource allocation, and customer loyalty.
Why Do People Return Their Orders?
Understanding the ‘why’ behind returns can help you understand how to resolve the issue. According to research, there are a few key reasons that lead consumers to return their items:
- 81% of shoppers returned items because they were damaged or defective
- 75% of returns happened because the item didn’t fit
- 56% of returns were due to the product not matching its description
- 33% of customers returned items simply because they changed their minds
- 11% of returns were due to late deliveries
Best Practices to Reduce Returns
As you can see, returns are a real problem for retailers. The good news is there are steps you can take to reduce the number of returns and their impact. Here are some strategies that can help.
Ramp Up Quality Control and Packaging
Take a closer look at how sturdy your products are and how they’re packaged. If you make sure they’re tough enough to withstand a bit of rough handling and wrap them up securely, you’ll see fewer returns from damage or defects.
Enhance Your Product Descriptions
Are your product descriptions and photos detailed and accurate? Does each product listing contain high-resolution photos from various angles?
The more honest and informative your product pages are, the better your customers understand what they’re buying. This means fewer surprises and disappointments, and in turn, fewer returns.
Get the Perfect Fit
The apparel industry is the industry most affected by returns, with 25% of customers saying they are most likely to return clothing. That’s probably because getting the right fit can be tricky—so be sure to do all you can to help customers find their size.
One way to help your customers find the perfect fit is by offering detailed sizing guides. These days, there are also technical solutions out there, like VR fitting rooms. This enables customers to see what the items look like before they purchase them, so they pick the right size the first time around.
Encourage Reviews and Feedback
Set up a space on your website for customer reviews and a Q&A section. When shoppers can read about others’ experiences and get their questions answered, they are more empowered to select products that fit their needs. Plus, you get useful feedback to see what’s resonating and what’s not.
Ensure On-Time Delivery
Nobody likes waiting too long for their orders, and delays (especially if they’re unexpected) can lead to returns.
Make sure your shipping game is on point. Reliable and prompt delivery can save you from the hassle of returns caused by those frustrating “too late to need it now” moments.
If a delay is unavoidable, be sure to communicate it upfront and keep the customer updated so they know what to expect.
Nail Your Post-Purchase Emails
After your customer clicks “buy,” keep the conversation going to help them get the most out of their purchase.
Let them know about special features, offer tips and tricks, and suggest complementary products. Proactive communication can drastically reduce confusion or misuse, leading to fewer returns.
Plus, they’ll appreciate the extra effort and care, fostering a deeper connection with your brand.
Offer Flexibility and Transparency
When customers know they can easily return something, they are more likely to make a purchase. Research shows that 92% of consumers say that they will buy again if the product return process is easy.
Sure, customers might return items sometimes, but making the returns process as streamlined as possible is key to getting their business in the first place.
Leverage Customer Segmentation
Just like you can segment customers to promote specific offers they are likely to be interested in, you can also use segmentation to reduce returns.
By analyzing historical data in your customer data platform, you can identify trends and behaviors that indicate a customer’s likelihood to return certain types of items. You’ll want to consider the number and causes of previous returns.
For instance, if you’re running an email campaign promoting red dresses, you might want to exclude shoppers who have returned similar items because they didn’t like the color.
How to Reduce Returns
Each of these strategies is about putting yourself in your customer’s shoes and making their shopping experience as smooth and worry-free as possible. Remember, a happy customer is one who keeps their purchase and comes back for more.
Want to learn more about customer segmentation? Check out our step-by-step guide.
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