The problem with product returns and how to avoid them
blogNovember 16, 2022
Building a digital shelf that reduces product returns starts with the confidence of knowing your products will be found at every touchpoint.
As online sales boom, there’s a lingering worrisome side effect – product returns. And they are as annoying for shoppers as they are for brands. According to a survey commissioned by Slickdeals, 66% of Americans feel the worst part of the shopping experience is the return process. That means a streamlined returns management process is critical to keep customers. In addition, examining shopper satisfaction and using product returns analysis to uncover potential challenges is key for brands to thrive in an increasingly competitive environment.
That’s why inriver recently hired OnePoll to conduct an independent study of 6,000 shoppers from the U.S., the U.K., and Germany to share their online buying experiences. One key takeaway from the results? Consumers demand accurate product information. When they don’t get it, they describe the buying experience using words like “annoyed,” “confused,” and even “distrustful”.
the growing product returns problem
Returns from online purchases skyrocketed as e-commerce boomed over the last several years. In fact, returns accounted for an average of 16.6% of U.S. retail sales, which soared to $4.6 trillion in 2021. At that rate, returns added to over $761 billion of merchandise back to the stores.
That’s 6% higher than it was in 2020 when the return rate was 10.6%, according to a survey by National Retail Federation. Online returns are also more expensive than in-person returns due to shipping, handling, and restocking costs. According to Pitney Bowes’ latest BOXpoll survey, online product returns cost retailers an average of 21% of order value, with several brands reporting even higher ratios.
why products get returned
Sometimes, products are returned simply because the merchant shipped the wrong item. Sometimes, there are accidents during shipment and the product is damaged or defective. In other cases, the item arrives too late, or the customer buys multiple items to compare them then return the product they don’t want. Most commonly, though, the buyer feels differently about an item once they see it or try it on in person. That’s where product information comes in.
According to our data, 34% of shoppers cited poor product descriptions as the main reason they sent something back, followed by 21% who blamed a poorly fitting item. Interestingly, 11% of global shoppers intentionally purchase several options so they can return the things they don’t want. At the same time, 10% say they never return online purchases.
why product returns are bad for business
Let’s take a closer look at why product returns can be problematic for your brand:
- Logistical costs. The cost of returns can cost brands and retailers more than shipping products to customers. In fact, the cost of returning a $50 product is roughly $33 and includes processing, transportation cost, liquidation losses, and discounting expenses.
- Loss of revenue. According to the Wall Street Journal, online returns can cost brands between $10 to $20 depending on the item resulting in a loss of revenue. It is often cheaper for brands to give customers a refund and allow them to keep the item.
- Loss of confidence. You can increase customer confidence by streamlining your returns management process. According to a product return rate analysis from Klarna, over eight in ten online shoppers would reject a retailer after a bad return experience. Unfortunately, returns can also negatively impact customer loyalty. In another report by Incisiv, 95% of shoppers say a poor returns experience will make them less likely to shop from a brand again.
- Sustainability issues. There is an environmental cost to returns. Aside from a loss of revenue, throwing out products can damage a brand’s sustainability reputation. Most returned items can’t be resold at full price, and some aren’t resold at all. That means, in many cases, they end up in a landfill.
- Likelihood of bad reviews. According to Reputation Builder, customers who have a bad experience are three times more likely to write an angry review versus happy customers posting a great review. With this is mind, there is a natural correlation between misleading or wrong product content and an unhappy customer, a bad return experience and ultimately, a bad public review. Reducing the return rate helps you win more with better reviews in the long run.
how brands can avoid returns
make sure product information is up to date
When shoppers are shopping online, they want robust product detail pages and expect accurate, consistent data. But according to our data, 40% of products have missing or inaccurate product information. Instead of leaving it to chance, analyze and compare existing product content across all your selling channels to make sure product information is clear and up to date.
leverage visuals and AR
In addition to text, photos, videos, and 360-degree rotating images are extremely effective. Augmented reality (AR) can also be a helpful tool for consumers to visualize what products look like with added context. Some examples of AR include virtual fitting rooms for apparel or the ability to imagine what a new console table will look like in your living room.
use digital shelf analytics
Seeing products the way your customers see them as they are exploring product categories is highly insightful – and helps you fine-tune your digital assets as needed. That’s why digital shelf analytics is a must-have technology. It helps you analyze return data to respond quickly and ensure revenue targets are on track.
how to build a digital shelf that reduces product returns
Building a digital shelf that reduces product returns starts with the confidence of knowing your products will be found at every touchpoint. With inriver PIM, you can see what competitors are doing and see what customers want. We help deliver accurate data with our syndication capabilities and create an immersive buying experience using image recognition to generate product attributes automatically.
It’s easy to transform product data into engaging stories by enriching your product information with meaningful images, videos, and other media. Our technology also allows you to extract real-time performance data and respond as needed. That way, you can uncover potential threats to your business and turn them into opportunities.
how to streamline your returns management process
collect and analyze returns data
By collecting and analyzing returns data, you can better understand which items are being returned and why. Knowing where returns originate is crucial to allocate enough resources across different channels. That way, you can identify underlying trends to address them and reduce return expenses.
develop simple return policies
Customers want a simple and streamlined returns process. Some suggestions include having a clear return policy on your website so customers understand what steps they need to take and by when. To minimize customer service questions, you can also offer an estimated timeframe for a refund, exchange, or credit.
automate the returns management process
Managing returns can be costly and cumbersome. Automating the process helps to reduce inaccuracies and costs. In addition, it enables you to turn a liability into a growth opportunity by giving customers control over the return experience, optimizing reverse logistics, and ultimately increasing customer satisfaction.
If your business doesn’t already have an effective strategy for dealing with online returns, it’s time to take action. With inriver PIM, you get real-time insight into product return data – empowering you to respond immediately and lessen the impact of returns on your bottom line. Contact us today to set up a personalized product demo and learn how.
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VP Customer Accounts and Digital Shelf Services
Joakim has over 25 years experience in people, sales and business management, helping brands and business increase their presence, sales and profit. With deep knowledge in retail sales and intelligence to consumer behavior to global sales, he is familiar with both B2C and B2B - no matter the size, industry or location of company.read more