E-commerce retailers love the Christmas season’s sales surge – less-loved is the inevitable wave of January returns. The “boomerang” month after the holidays sees more returns than any other time of the year. But prepared online retailers can leverage these returns to create satisfied, loyal customers – and even set up their online stores to reduce returns in the first place.
Just how good does my return policy need to be?
The short answer? Pretty darned good.
That’s because roughly 2 out of 3 Canadian online shoppers feel that easy returns1 are important. Nearly 20 per cent of them take the time to compare2 return policies across brands before making a purchase. If shoppers don’t like your return policy (or if they can’t find it), they’re less likely to give you their business – which can have a crucial impact on your holiday season success.
Free shipping on returns is a big deal for customers. In fact, 57 per cent of online shoppers3 say that the availability of free returns for purchases has a big impact on their decision of where to shop online. Another study found that regret (or the fear of regret) over paying for a return was the biggest factor in determining whether consumers would shop at a business again. People simply don’t like the idea of paying to try something out. Merchants like Clearly Contacts are taking notice of these market needs created by customer expectations – the online contact lens gives customers a 360 day return policy with free returns.
One way to win over customers is by speeding up how quickly you credit their accounts after a return. A Kurt Salmon special report found that the average consumer thinks that a refund should take about 7 days (the same study found that Millennials expect to get their money back in even less time). The average retailer takes nearly 17 days to credit a return during the post-holiday peak season – a lag that creates some unhappy customers.
Keep in mind that a return is often your customer’s last touch point with your business, so it creates a lasting impression.
Convenience keeps customers coming back – especially during the holiday season
Convenient returns create a positive experience for your customers, making loyalty and repeat business more likely. A hassle-free returns experience is even more important during the holiday season, when your customers are buying gifts for loved ones. They want to know that if a present doesn’t hit the mark, returning it will be easy for the recipient.
Merchants can streamline the customer experience with a pre-printed return label. It can be included directly in the parcel or made available as a printout on your website, on Canada Post’s website, or printable at any of our post offices. Plus, you can give your Canadian customers the convenience of sending it back via 26,000 street letter boxes and almost 6,300 postal outlets.
Another convenient return channel for online shoppers is your brick-and-mortar store. A December 2014 National Retail Foundation study found that nearly 9 out of 10 retailers now allow customers to return online purchases to a physical store. The immediacy of the return makes the customer happy and being in the store can kick-start a desire to shop, creating a replacement and even extra purchase. For retailers with an integrated inventory system, one where the forward and reverse logistic operations work hand-in-hand, it’s a less expensive way to get items back in stock – plus it saves on the cost of shipping for merchants who offer free shipping on returns.
An added benefit of providing convenient returns? Less impact on your customer service network. A customer-friendly, straightforward process means fewer calls to your network – and less grumbling on social networks.
Tip. An extended return timeline helps your customers’ peace of mind when they buy Christmas gifts in November and early December that recipients may wish to exchange or return. For the holidays, yoga-wear retailer Lululemon’s expands its return cut-off date until January 10 for online purchases between November 6 and Christmas Day. Merchants find that earlier orders make it easier to stay on top of inventory stock. Plus they benefit by reducing some of the fulfillment overload that happens in the last two weeks of the holiday season.
The best return experience? The one that never happens
The fewer returns a customer needs to make, the happier you both are. The Retail Council of Canada reports that Canadians returned over $27 billion worth of merchandise in 2013 – about 9 per cent of total sales. The figures are even higher for online retailers, as customers can’t see or try on the items they buy.
Reducing return rates is a quick way to increase net profits. David Pujades, the chief operating officer of online clothing seller Revolve states that “A 1 per cent reduction in returns can translate into a ½ per cent of additional profitability.”
There are 2 steps that every retailer can take during the purchase process to reduce customer return rates.
1. Size matters. When clothes and shoes don’t fit, they get sent back. An online retailer with a free shipping return policy may see customers ordering several sizes of the same item, trying to get the right fit – the customer will be happy, but the retailer now has extra shipping, logistics and restocking costs.
There are several online fitting tools designed to help shoppers get a better fit. U.K. online retailer ASOS reduced fit-related returns by almost half after adding a virtual fitting tool called Virtusize. U.S. retailer Running Warehouse reduced fit-related returns by 23 per cent after adding the Shoefitr app to its site. This doesn’t just apply to wearables – there are apps and online tools that show customers what a piece of furniture will look like in a given room.
2. Great product pictures and descriptions. Give your customers 360 degree views and the ability to zoom in on details when they’re looking at product images. This gives them a much better picture of what they’re ordering and helps to reduce return rates. A very short video showing it in use can also help.
Good pictures are enough for many shoppers, but make sure that it’s easy for them to find thorough descriptions that include the type of materials, size, technical details and product reviews. If your product requires some expertise to use, reduce returns by following up the sale with a link to a “how-to” video.
This holiday season, take a two-pronged approach. Create a transparent, seamless returns process for your customers, ideally with free shipping, and you’ll build long-term value and customer loyalty. At the same time, give customers the information they need to get more accurate sizes and a more accurate picture of your offering before they buy and you’ll reduce the percentage of returned items.
1 Omnibus Survey: CPC Marketing Research - Online Shopping Omnibus CPC#13-215, August 2013
2 E-commerce Channel Report 2014, NPD Group, September 2014
3 Building eShopper Loyalty, CPC 15-213, August 2015