5 Ways Retailers Can Reduce Return Rates


Heather Hudson

May 04, 2021

What’s the return rate in your store? If you’re like many retailers around the world, it’s too high for comfort.

In 2020, $428 billion in merchandise was returned in the U.S. alone. For our neighbours to the south, that’s more than 10% of total retail sales.

The pandemic had a little something to do with the higher rate of returns last year. With more consumers stuck at home, there was surely a spike in impulse purchases. But it’s not like the retail return rate was ever super low.

“Shoppers are known for returning 5-10% of what they purchase in store but 15-40% of what they buy online,” David Sobie, co-founder and CEO of Happy Returns, told CNBC in 2019.

Average return rates vary by category, but clothing and shoes bought online are usually the highest.

From “wardrobing” (buying an item of clothing, wearing it once, then returning it) to “bracketing” (buying multiple colours, sizes, or styles with an intention to return the least favourite) to accidently purchasing the wrong shape or size, to receiving genuinely defective or damaged products, there are myriad reasons customers initiate a return.

But no matter what the backstory is, the problem lands squarely in the lap of the retailer. How can you reduce your return rate? We’re sharing a few strategies that could make a difference.

Make your e-commerce site as clear as possible.

The same strategy you use to boost sales on your site also works wonders when it comes to reducing returns. A high-performing website with plenty of detail goes a long way to helping shoppers make informed – and lasting – purchasing decisions.

  • Do a quick audit to be sure you have:
  • High-quality images that show the product at multiple angles, including zoomed in
  • Video to show how the product moves and is used
  • Detailed product descriptions, including measurements and size charts for apparel
  • Product reviews from customers who have bought the item – people increasingly appreciate social proof

If you really want to get next-level, try virtual fitting room technology that allows customers to upload a photo of themselves and overlay an image on top of the photo. Wayfair and Amazon use similar technology to allow customers to see what products would like in their homes. When a consumer can visualize exactly what their purchase will look like, they are more likely to be satisfied with it.

Review your returns data.

According to Shopify, the main reasons for returns include damaged products, products not matching the description, products not fitting correctly, customers changing their minds, accidental purchases, ‘product is no longer needed’, or customer ‘wardrobing’.

If you have a high returns rate, it’s worthwhile to take a deep dive into the reasons why. Are products arriving damaged or defective? Check in with your delivery company. If products aren’t matching the description or aren’t fitting correctly, you’ll want to revisit your website copywriting and size charts. You can find solutions to most of the returns issues plaguing your store – but only if you know what they are.

Have a clear and fair returns policy …

Post a simple and clear returns policy on your website and in-store (if applicable) that will help manage customer expectations. Here’s a good start:

We want you to love your purchase as much as we love serving you! We offer full refunds for unopened items in the original packaging within 30 days of your purchase with a receipt or proof of purchase. If 30 days or more have passed since the purchase date, we will offer an exchange or store credit.

If you offer returns by mail, provide step-by-step instructions, including how to submit a return request online, what to include in the package, and where to mail it. Don’t forget to provide all the details your customer needs to complete the transaction. Clothing retailers Aritzia and Franc do a good job of being clear and thorough.

… but don’t bend over backwards.

According to recent Canada Post research, more than 8 in 10 shoppers say they want free returns. But fewer than 1 in 4 of the top 200 e-commerce merchants in Canada provide it.

Although a hassle-free return process has been shown to build customer loyalty, you’re not obliged to take a loss to accommodate fickle consumers. Many consumers are willing to take into consideration the cost of returns to the retailer, particularly for smaller businesses. That same Canada Post survey found that 30% of online shoppers are willing to pay reasonable shipping costs to return items.

Some retailers meet their customers in the middle by charging a small handling or restocking fee as the cost for every return. This builds in a layer of responsibility for consumers, making them think twice before ‘wardrobing’ or purchasing a product thoughtlessly because the stakes are low to return it.

The factors that play a role in what is considered reasonable include:

  • If a product is defective or arrives damaged, consumers will expect a free return
  • If a customer buys a number of the same product in different sizes or colours to compare, they will be more willing to share the cost of returns
  • If the retailer offers a flat or discounted rate to ship returns, consumers are more likely to consider it reasonable

Look into tools to help manage returns.

Making it easy for a customer to return products is not just great customer service, it’s also good retail management. Many retailers are turning to sophisticated order management systems that enable them to efficiently manage people, processes, reporting, and returns.

If you have an ecommerce website, you may want to consider an app that powers your returns function. Some popular tools include:

Tip: When shopping for the right solution, look for a company’s current customers to see if they are in the same category as your store or have a business model that aligns with yours.

Retailers will always have to contend with a certain percentage of returns – it’s part of doing business, especially as more consumers buy sight unseen online. If you take steps to avoid consumer confusion and make the process more streamlined for all, it will be less of a drain on your business.

This article is provided for informational purposes only. It is not an exhaustive review of this topic. The content is not financial or investment advice. No professional relationship of any kind is formed between you and PayBright. While we have obtained or compiled this information from sources we believe to be reliable, we cannot and do not guarantee its accuracy. We recommend that you consult your personal finance professional before taking any action related to this information. PayBright is a provider of Buy Now, Pay Later (BNPL) solutions. BNPL providers offer plans with a variety of terms and conditions, including interest rates, fees, and penalties, and have different standards for qualifying for loans. Laws and regulations governing BNPL providers vary by jurisdiction. We recommend that you compare and contrast plans, read the fine print, and conduct detailed research into any BNPL provider before using their services.

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Heather Hudson

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