STUDY FINDS THAT CONVENIENT ONLINE PRODUCT RETURNS IMPROVE PROFITS EXPONENTIALLY
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Online product returns are not the nightmare that they’ve been painted out to be for e-retailers. No longer should they be viewed as a costly addition to the bottom line or a logistical maelstrom. In fact, they should be viewed as quite the opposite: A way to better connect with customers, remarket to them and improve loyalty, retention and long term sales.
As of early 2015, emarketer report had pegged e-commerce to be a $1.5 trillion dollar international business. Fast-forward to the present day, and experts are predicting that e-commerce will have grown into a much larger beast, accounting for nearly $2 trillion in annual revenue.
The truth is that online retail returns and e-commerce go hand-in-hand. Customers will return items that they buy from time to time, and the e-retailers that do not accommodate these consumers and simplify the process stand to lose out on future sales and growth opportunities.
Roughly One in Three Products Get Returned
But just how large a monster are online product returns as they factor against the aggregate annual revenue of e-commerce as a whole?
In a recent Wall Street Journal write-up, it was found that about 33% of all internet purchases result in online product returns. There are a number of reasons that were cited for the rate of returns hovering in this high of a demographic.
Key reasons included:
- Product arrived to customer damaged.
- Product was substantially different than was advertised online.
- Apparel product did not fit properly (the most common reason for online apparel returns).
- The wrong product was received by the consumer.
In reality, while there are some changes that can be made to reduce the rate of online product returns, the fact is that returns happen. Simple changes like integrating sizing apps for apparel retailers, adding more vivid imagery with zoom-in options for all retailers and providing more in-depth content can reduce the rate of returns. But they will still occur one way or another.
Who’s Reading the Online Product Returns Policy Anyway?
An important question is commonly asked by e-retailers that are trying to hone their online product returns policy to better mesh and flow with their customer demand, and that question is: Who is reading this return policy anyways?
One study found that over 60% of consumers take the time to review a return policy before making a buying decision. When you factor this into the equation, the power of the return policy to influence sales takes center stage.
Namely, surveys and related studies have found that a large majority of consumers view the return policy as an “important” part of the buying process. Simply put: most won’t deal with an e-retailer that makes it difficult to process returns.
Appealing to Customer Demand
Getting your online product returns policy in place is something that should be factored against what the consumer demands. It also should account for what other online stores are offering, places where the consumer could shop at instead of your store.
Things to consider include:
- What are your competitors offering?
- What do your customers want?
- What are you offering?
- Can you afford to offer convenient online product returns?
Keeping in Par with Brick and Mortar Retailers
When culling through the long list of variables that are involved in creating any effective online retail returns policy, one must also consider what the local retailers are offering. Now some might claim that this does not matter. But with a vast majority of shoppers comparing products both online and locally prior to making a buying decision, the influence of said return policy cannot be ignored.
For example, a consumer could buy electronics from your e-commerce store. But they may be dissuaded from doing so if a competitor like Best Buy makes it simple for them to return an item. If they buy from this online retailer and need to make a return, they can head into any local branch and have it immediately processed.
When creating your online product returns policy this is one incremental factor that should not be overlooked. After the consumer purchases the product, how difficult will it be for them to make a return? If your return policy is straightforward, and they can process a return shipping label from their home computer, it’s an easier process than the consumer having to make a trip into a local store, hence giving your online store the competitive advantage in the consumer’s eyes.
Study Finds Greater Than 25% Increase in Sales from Convenient Returns
Online product returns have indeed become such a large and important factor for e-retailers that now studies are emerging that are covered in respected scientific mediums that demonstrate the extent that some e-retailers are taking to make these returns convenient and hassle free for consumers.
In a Science Daily article, a study was followed that assessed data from 26,000 customers over a six month period. The customers were split into five different groups with the primary control group being stagnant and having no marketing efforts put forth. A few of the groups were offered standard approaches for online retail returns while the model group was focused on the positive approach to hassle-free returns.
Five different marketing strategies were integrated based upon each different group to derive a viable conclusion. Each marketing approach was catered to each group for three months and then observed following the approach for another three months.
The results from the study found a surefire increase in profits from the model group when convenient online product returns were being offered. When group managers integrated a cost effective returns policy that catered to the consumer mindset, it was found that this group generated $1.8 million in revenue while the control group only generated $1.22 million in revenue.
The conclusion is that e-retailers that are mindful of the online product returns process and policy stand to gain 25% or more in revenue over just six months as compared to those who are not.
Why Online Retail Returns Used to Be a Nightmare
The truth is that online retail returns used to be a nightmare. But emerging findings are purporting quite the opposite. No longer are online retail returns the setback e-retailers once thought, says new studies. Forward-thinking e-retailers are capitalizing on the competitive advantage that a simple, hassle-free returns policy gives them.
As the above report demonstrates, consumers are likelier to spend more over just six months if online retail returns are simple and cost effective or complimentary. Given the drastic proportion of revenue increase and consumer spend over this short period of time, as shown in the aforementioned study, it paints a clear-cut picture for e-retailers: Make online retail returns convenient, automated and hassle-free and earmark more profits each quarter.
What Can A Convenient Product Returns System Do For You?
A lot of retailers wonder what a convenient system for offering automated online product returns do for them. The first thing that you will want to consider is not so much what it will do for you, but what it will do for your customers. Take a look at these recent online product return statistics, as they demonstrate just how offering convenient, hassle-free returns affects your bottom line.
- Over 63% of consumers read the online product returns policy before making a purchase (comScore).
- 81% of consumers want a convenient returns policy that is hassle-free with no return shipping cost (UPS).
- About one-third of all products ordered online are returned by consumers (WSJ), so understanding that returns are part of the buying process is important.
- When free returns are offered, purchases can be increased by up to 357% (CNBC).
- When return shipping fees are charged, 81% of consumers are less likely to make a future purchase (Upstream Commerce).
- Zappos gets 75% improved customer loyalty, repeat buyers from free returns, even though they charge more for their products (eCommerce Digest).
The good news is that there is a way to automate your online product returns to offer the same proven system that stores like Amazon and Zappos do. It won’t cost you a fortune and you won’t need to worry about any code.
ReadyReturns drops into ANY website in just minutes with simple setup. There’s no coding and no worry about a costly interface. You can offer Zappos-like returns today, and be in full control of the rules of your returns. Don’t risk losing another sale! Start your 30-day free trial today!