Returns

Effective strategies to reduce returns – for better customer loyalty

The best thing is that there are no returns at all. Because not only the return shipment, but also the returns processing costs money.

That is why reducing returns is a key factor for the success of online retailers. Returns not only cause high costs, they can also affect customer satisfaction.

But how can returns be handled to reduce return costs and increase customer loyalty?

An important strategy is to make product descriptions as precise and detailed as possible. By providing clear information about size, color, material and other relevant features, you minimize misunderstandings and disappointed customers.

You should also implement a user-friendly returns policy that supports customers and makes the returns process easy for them. Enclosing a returns label or registering a return in the online store’s customer account can help with this. Clear and transparent communication regarding return conditions and deadlines creates trust and customer satisfaction.

Why are returns a problem for online retailers?

Returns pose a significant challenge for online retailers. They are not only associated with additional costs, but can also have a negative impact on the overall business strategy. When a customer returns a product, there are not only the transportation costs, but also the costs of reconditioning the product if it is to be sold again. These financial burdens can threaten the existence of small and medium-sized companies in particular if the return rates are too high.

Another aspect is the time spent processing returns. Each return requires administrative efforts ranging from checking the products to refunding payments. These additional processes can affect the company’s efficiency and tie up valuable resources that could be better invested in other areas.

A high returns rate also influences customer perception and the brand image. If customers make frequent returns, this may indicate that the products do not meet expectations or that the quality is inadequate. This not only leads to lower customer satisfaction, but can also deter potential new customers who rely on the experiences of other buyers.

The impact of returns on profits

The financial impact of returns is far-reaching and can significantly affect the overall business results of an online retailer. A high returns rate means that sales are not being used optimally. When customers return products, net sales decrease, leading to a direct decrease in profit. In many cases, the costs incurred by returns can impact profit margins to such an extent that they lead to the red.

In addition, online retailers must also consider the long-term impact on their pricing policy. They may be forced to raise prices to offset the costs of returns. Higher prices could in turn affect the company’s competitiveness in the market and deter customers who are looking for cheaper offers.

In addition, frequent returns can lead to an increase in stock levels if the returned products are not resold quickly enough. This can increase inventory costs and put the company in a difficult financial situation, as not only the products but also the associated storage costs put enormous pressure on liquidity. Sustainable returns management is therefore crucial for the long-term profitability of an online retailer.

Return rates in the e-commerce sector

Return rates vary greatly depending on the industry and product type. In the fashion and clothing sector, returns are particularly high, often between 30% and 50%. This is because customers do not have the opportunity to try on clothes before buying online. In the electronics sector, on the other hand, return rates are generally lower, but are still often in the region of 10% to 20%.

High return rates not only have a financial impact, but can also influence consumer behavior.

If the return prices are not included in the sales price, only the customers who actually make use of them pay the return costs and the other customers benefit from a lower purchase price. It can also lead to customers being more careful when returning goods.

However, it can also lead to customers not ordering the product in the first place if they know that they will have to pay the return costs in addition.

Many customers today expect a generous returns policy and are more willing to buy from retailers that offer an easy returns option. This has forced online retailers to rethink their returns policies in order to remain competitive.

The pressure to minimize returns is intensified by growing market transparency. Consumers have access to a variety of online platforms where they can compare prices and return conditions.

Retailers with high return rates risk not only losing customers, but also negative reviews that can undermine trust in their brand. It is therefore crucial for online retailers to understand the causes of high returns and actively manage returns to reduce the rate.

Reasons for returns: Reasons for high return rates

High return rates result from various factors that are anchored in both the product design and the purchasing process. One common problem is inaccurate or inadequate product descriptions. Customers often buy products based on images and descriptions that may not contain all the relevant information. If the actual products differ from expectations, customers are more likely to return them.

Another important factor is fit and sizing, especially in the apparel sector. Customers can be unsure of which size to choose and often order multiple sizes to ensure they get the right fit. This leads to a high number of returns as many of the products do not meet expectations or simply do not fit.

The quality of the products also plays a decisive role. Products that do not meet the advertised standards or have defects are more likely to be returned. If customers feel that they have not received the appropriate value for their purchases, they are less likely to make future purchases from the same retailer. Therefore, online retailers should ensure that their products are of high quality and meet the expectations of their customers.

On average, around 70% of returned items can be reused as A-goods. The proportion is particularly high in the Fashion & Accessories (82%) and Sport & Leisure (70%) sectors.

Only a few retailers are unable to resell any items at all or only a few. These include products from the food and luxury food sector in particular, where returns hardly ever occur. Find out more in the EHI study “Shipping and returns management in e-commerce 2019” ➚.

Strategies for reducing returns

Reducing returns requires a holistic strategy that takes various aspects of online retail into account. One of the most effective methods is to improve product descriptions and images. Detailed information about the product can help to avoid misunderstandings. High-quality images enable customers to make an informed purchase decision.

Another important aspect is the optimization of customer service. Efficient and helpful customer service can help customers resolve their issues quickly and reduce the need for returns. Through proactive communication and support during the purchasing process, many questions can be clarified in advance, leading to higher customer satisfaction.

The use of customer feedback and reviews is also crucial. By analyzing reasons for returns, retailers can identify patterns and take targeted action to address the causes. Customer reviews can provide valuable insights into the strengths and weaknesses of a product and help to identify potential returns at an early stage.

Improvement of product descriptions and images

One of the most effective ways to reduce returns is to improve product descriptions. Misunderstandings can be avoided by providing precise and comprehensive information. The product description should not only include basic information such as size and color, but also provide details on materials, care instructions and usage options. Customers should know exactly what they can expect before they make a purchase.

In addition to written descriptions, high-quality images are crucial. Images should be clear and appealing and show the products from different angles or in 3D. Detailed shots can help to illustrate the material and workmanship. If possible, images of the products in use should also be shown to give customers a better sense of size and style.

Another helpful approach is the use of size charts and comparison options. Especially in the clothing sector, it is important that customers can choose the right size. By providing size charts and tips on choosing the right size, the likelihood of returns due to fit issues can be significantly reduced.

Optimization of customer service

Excellent customer service plays a decisive role in reducing returns. Customers who receive fast and competent support with questions or problems are less inclined to return products. Online retailers should therefore invest in well-trained customer service that is available both by phone and online.

A proactive approach is also beneficial. Retailers can contact customers before and after purchase to ensure that they are satisfied with their products and to identify potential problems at an early stage. Through regular surveys or feedback forms, retailers can gather valuable information to continuously improve their products and services.

In addition, customer service should also be transparent and helpful when processing returns. A simple and straightforward returns process can increase customer satisfaction and strengthen trust in the brand. If customers know that they will receive straightforward help in the event of a problem, they are more likely to buy from the same retailer again.

Implementation of a clear return policy

A transparent and user-friendly returns policy is crucial for customer satisfaction and can help to reduce returns. Online retailers should provide clear information about the returns policy on their website. This includes details on return deadlines, the required condition of the products and the procedure for returns.

A simple returns process can increase the likelihood that customers will not forego a return if they have a problem with a product, but will instead exchange the product or opt for a credit note. By giving their customers a choice, retailers can increase customer satisfaction and better manage returns.

In addition, online retailers should also ensure that the return costs are transparent and fair. If customers have to pay for returns, this can lead to them deciding not to return the product and keeping it instead, even if they are dissatisfied. This can lead to a negative brand perception in the long term. Retailers should therefore consider whether they should cover return costs or design the return policy in such a way that customers have a positive shopping experience.

This chart shows the responses of the online retailers surveyed as part of the EHI study “Shipping and returns management in e-commerce 2024 ➚” to the question of whether they cover the shipping costs for returns. The proportion of respondents (in percent) is shown.

40% of the online retailers surveyed cover the shipping costs for returns themselves if a certain value of goods is reached. 30 percent even offer their customers free shipping in general, while 30 percent also pass on the shipping costs to the customer.

Conclusion: Effective strategies for reducing returns

Reducing returns is a complex challenge, but one that can be successfully overcome with the right strategies. Online retailers should focus on improving product descriptions and images to give customers a clear picture of the products. Excellent customer service that responds quickly and helpfully to queries can also have a significant impact on return rates.

In addition, the use of customer feedback and reviews is crucial. Retailers should actively respond to feedback and continuously work to improve their products and services. A clear and user-friendly returns policy completes the overall package and ensures that customers have a positive shopping experience despite any returns.

Overall, it is important that online retailers understand the causes of high returns and take proactive measures to minimize them. By implementing these strategies, they can not only reduce their return rates, but also increase customer satisfaction and long-term loyalty. If retailers are able to create a positive shopping experience, they will not only retain existing customers, but also attract new ones.