Optimizing Reverse Logistics: How Easy Returns Can Mean More Sales

E-commerce has been booming, posting record year-over-year numbers. Experts are predicting that over the course of the next few years this industry may be bringing in over $2 trillion in sales annually.

Newer virtual stores that give consumers an exceptional shopping experience have contributed a lot to this boom, with successful retailers quickly adopting new technology and methods to attract more customers to their website.

The shopping experience and customer journey have become synonymous with sales: the easier it is to shop, the more sales e-tailers generate; as has been seen with Amazon’s one-click buy experiment.

Traditionally online retailers have associated sales with profit and returns with loss. But new studies find that a streamlined e-commerce returns process actually boosts profits.

What’s more, hassle-free returns are an opportunity to give better customer service, improve product descriptions, and to increase loyalty and sales in the long-term—not to mention giving retailers a 40 percent possibility of gaining second-chance sales from customers making a return.

How do easy returns increase sales and boost retention?

Here’s what you need to know:

They’re Inseparable

Returns and sales go hand-in-hand. Customers want to be assured that they can easily return something if their purchase isn’t what they expected.

E-commerce offers a more flexible and convenient shopping method for the modern consumer, but it isn’t without risk. Products can be damaged, be different than thought or described, the wrong product may have been sent out, or the item may not fit correctly.

In fact, the Wall Street Journal reported that approximately one in three products bought online is returned for these very reasons.

If you sell online, there’s a 40 percent chance that a customer may return the product. To provide an excellent experience for customers, the return process needs to be hassle-free.

Reducing Returns

E-tailers who are serious about returns have come up with methods to reduce them.

Those that offer apparel and clothing items have incorporated sizing apps and charts on their store’s pages to help buyers determine that they are purchasing the correct size before they hit that checkout button.

Taking it a step further, informative and detailed product descriptions are indispensable.

High-quality images with zoom buttons, 3D or video views, as well as multiple images all help customers decide if that product is really something they want.

Even with all of these elements in place, though, returns still top 30 percent for most retailers.

Consumers Read Your Return Policy

Most consumers want to know what your return policy says before they make a buying decision. UPS noted that about66 percent of customers are reading the policy before checking out. If returns are a hassle, the chance that they still go through with the purchase is a meager 20 percent.

On the flip side, when hassle-free returns are offered, the same study finds that a consumer is 80 percent likelier to close the sale.

Simply put: consumers want a seamless buying and after-buying experience, much like they can get at any local brick and mortar store.

If returns are hard, they’re unlikely to buy from you in the first place; and if they have already made a purchase that they need to return and it’s hard, don’t expect future purchases from that customer.

The Appeal of Online Shopping

The real draw of e-commerce is that the consumer doesn’t have to leave their house. Obviously, if they were to go to a brick and mortar store, they could try everything on, purchase it and take it home, and all within the same hour.

But they are willing to risk not trying it on and are willing to wait the time it takes for shipping. Why?

Because they love your prices and your unique selection. Plus, it’s more convenient and it takes less time.

But e-commerce is losing the battle with the returns process. When customers buy from a physical store, they can take it in any time with the receipt and will most likely get their money or a replacement item in return. It’s quick and easy.

When making a return policy for an online store, be sure to ask yourself: is your policy similar to local stores? Would it deter anyone from making a purchase? How does it compare to Amazon’s return policy?

E-commerce Returns Fast Facts

If the importance of an easy and convenient return policy isn’t sinking in, here are a few e-commerce return statistics from 2018 that can help:

Still Not Convinced?

As if that weren’t enough evidence already, a Science Daily studied 26,000 consumers over the course of six months. They concluded that easier return policies can increase profits by 25 percent or more in the long-term.

So, it’s not just about making customers happy now; it’s about boosting your sales and retention, too.

In the study, a model group along with five additional groups was offered different return policies and marketing strategies. The model group had easy, free returns. The other groups had a different (but not so convenient) return policy. After every period of three months, the marketing strategy changed, but the model group stuck with its super-easy return policy.

What they found was that when returns were free, convenient and easy, profits went up. The model group grossed almost $2 million in that six-month period. By comparison to the other five groups, who mustered up just around $1 million, there was a profit difference of 25 percent!

So, what does all of this mean for e-commerce stores?

Hassle-free returns do wonders for your bottom line. They’re no longer the pain point of yesteryear.

The jury is out: make returns easy and customers come back to buy again. Don’t, and you lose them for good. The choice is simple.