The ease of the returns process could make or break a shopper’s experience.
Yet returns last year cost U.S. merchants $584 billion, which includes not only cost of goods sold but other ancillary costs like return shipping costs and labor costs to inspect the item to see if it can be restocked, according to San Jose, Calif.-based Signifyd, a commerce protection platform provider. That $584 billion also included about $43 billion in fraudulent returns.
While returns are a normal part of the retail environment, being able to curb them can improve small retailers’ bottom line this holiday season, particularly as more consumers shop online.
"We’ve definitely seen an increase in returns among online clients," says Nicole Penn, president of EGC Group, a Melville-based marketing and digital services firm.
With the pandemic, more people shopped online last holidays season and returns tend to grow with online shopping because shoppers are buying without being able to physically see or touch the product, she says.
This holiday season, online spending is still expected to be strong but grow at a slower rate than last year, given the return of now widely vaccinated shoppers to stores.
Online spending is predicted to grow five percent this year during the holidays compared with the 15% it grew last year during the 2020 holiday season, says Marshal Cohen, retail industry expert at the NPD Group, a Port Washington-based market research firm.
"The good news is I do not expect the flood of returns to be as prevalent," he says.
Smarter online buying
Among contributing factors for that this holiday season, besides more in-store shopping, is that consumers don’t have as much time to spend online since many returned to their workplaces. They've also grown savvier when online with more experience.
"During the pandemic, many people were discovering how to shop online and made lots of mistakes," Cohen says.
Still, returns will always be a cost-eater and retailers should take steps to contain them.
The top priority should be communication, says Cohen, noting retailers must engage in dialogue with customers in order to remedy the problems prompting returns. For example, maybe there’s a part missing that could be overnighted or an education process needed for using the product, he says.
Also having "clear" product descriptions helps, Cohen says. The more detail there is on what the product looks and feels like, the less likely they’ll be disappointed when it arrives, he says. "Romance the product in the sense that it’s more descriptive," he advises.
Perhaps even include an insert with a "thank you" and who they can contact with any problems, Cohen says.
Post-purchase emails can also be helpful to send to consumers, says Penn. These could ask if everything was OK with their purchase, provide instructions on the product or further educational information, she says.
Keeping communication open
Jon Klein, president of Smithtown-based Kantian Skincare LLC, which sells an anti-acne product Neutralyze on Amazon, does post-purchase emails and also includes an insert in its product packaging informing customers how to contact customer service if any questions or issues arise.
"You’re kind of proactively establishing that line of communication," he says, noting while Kantian has a no-questions-asked return policy, returns are less than 3% of their total orders.
Among tips he’d give online retailers is don’t overhype your product claims to give customers unreasonable expectations and include images of all sides of your product so people can make informed purchasing decisions, says Klein, also co-founder of Online Brand Growth, an e-commerce consulting firm helping brands grow on Amazon.
Now consider while there are ways to prevent returns from legitimate shoppers, there are always going to be a percentage of fraudulent returns.
These type of returns "has really been exacerbated by the pandemic," says Eleanor Ritchie, senior product manager at Signifyd, which has developed a return abuse prevention solution.
Contributing to this problem was the huge uptick in online orders due to the pandemic, a population homebound and many in financial distress.
Consumer abuse including false item-not-received claims were up more than 100% the first half of 2021, compared to 2020, according to Signifyd, whose back-end software system evaluates the return at the point the merchant gets the request and looks for suspicious behavior that matches the characteristics of a return fraud offender.
It alerts the retailer that the claim might be fraudulent and suggests the best way to respond to the request based on the risk involved, Ritchie says.
But consider many people are legitimate returners, and if that’s the case, you don’t want to turn them off by hindering the return process because that could impact future purchases, Cohen says.
"Ease of return" is top priority for shoppers, he says.
More tips for reducing returns
- Don’t delete negative reviews if you have a reviews section integrated into your site because you want accurate representation of what you’re selling.
- Have “dynamic” size charts on your site customized for individual items considering different items can be sized differently.
- Pay attention to packaging now more than ever as carriers are overloaded with shipments. Ensure enough cushioning to prevent product breakage.
Source: Nicole Penn EGC Group