11 Ways to Turn Online Product Returns into Profits
You’ve done everything you can to put out a great product or service. Your customers are happy, and you’re proud of that.
Every once in awhile, though, you get a refund request. While no merchant likes knowing that a customer wants to return something they just bought, it’s part of doing business. No matter how you cut it, refunds and returns are just part of the game.
As long as you’re putting out a product people are happy with, you don’t have to worry too much about the fact that a customer will occasionally want a refund. What you should focus on, instead, is how you handle those refund and return requests.
Approach them the wrong way, and returns could cost your company money. Handle them the right way and it’s possible to make a profit from your returns.
Here’s what you need to know.
Ecommerce Returns (By the Numbers)
According to Statista, ecommerce revenue will increase from $1.4 trillion in 2017 to $2.1 trillion by the end of 2018.
Here’s a chart detailing the increase.
With all that shopping, online product returns are certain to follow.
Today, an estimated 30% of all ecommerce products purchased are returned. Wondering why, how and when?
Here are some facts and figures to keep in mind:
- 65% of returns are the merchant’s fault. Most of these returns are because the customer received a wrong item, damaged items, or items that were “dead on arrival.”
- 80% of shoppers are deterred by an inconvenient returns process. The easier you make your returns process, the more sales you’ll draw. Today, the vast majority of shoppers don’t want to do business with companies that present a difficult return process. As such, making yours fast, easy, and streamlined is an excellent way to earn more business.
- 66% of customers read return policies. Don’t assume that all your clients are going to read your return policy! In reality, only 66% of shoppers read the entire thing before making a purchase.
- 79% of shoppers want free return shipping. Hand-in-hand with making returns easy and streamlined is free shipping. Today, 79% of shoppers want free return shipping on items they no longer want or need.
How to Turn Online Product Returns into Profits
Regardless of why a customer is making a return, here are a few smart tips you can use to take those returns and transform them into profits.
1. Create a Good Return Policy
Sure, not everyone will read it, but crafting a good return policy is one of the best ways to transform a potentially negative experience (a customer return) into a positive one.
For the best results, ensure your policy is clear, makes all the rules of your returns transparent, is written in plain English and is easy to read. Don’t forget to post it somewhere on your website where customers can find it!
2. Streamline the Process
Remember, eight out of 10 customers will shop elsewhere if they find out your store has an inconvenient or troublesome return policy.
To avoid this pitfall, be sure you’re doing what you can to make returns easy and fast for your consumers.
Here are a few tips:
- Include a return label in the box
- Offer free shipping
- Integrate automated returns
- Make it easy to return online
- Don’t charge return shipping fees
3. Fix Anything That Was Your Fault
Returns happen, but more than 50% of them are actually the merchant’s fault. When you receive a return, pay attention to the reason for the return.
If any part of it was your fault, fix it immediately. This boosts customer confidence and increases the likelihood that they’ll shop with you again.
4. Retarget to Customers Who Make Returns
If a customer makes a return, they’re a closed lead. Instead of letting these customers slip away forever, create a process to re-engage customers who make returns.
While you can do this by offering a simple and free return process, it’s also essential to provide retargeting ads, special deals, and follow-up emails to bring their business back.
5. Get Rid of Restocking Fees
While some merchants think that restocking fees help them make returns profitable (or at least allow them to break even on returns), the opposite is often true.
Because restocking fees and return shipping costs deter buyers, implementing them can do more harm than good. With this in mind, get rid of your restocking and return shipping fees.
Merchants like Zappos have done this and become famous for their customer-friendly returns process. This might be why some of Zappos’s best customers are also the ones who make the most returns.
6. Offer Online Returns
Automated, self-serve, and online product returns can all go a long way in making your returns process easier for consumers and more profitable for you.
Take things a step further by offering a web-based, self-serve return portal with clear instructions on your website. (Hint-hint: ReadyReturns does this for you!)
When customers realize they can make a simple, hassle-free return one a product that didn’t work out, they’ll be more likely to buy from your brand in the future.
7. Be Flexible
This goes hand-in-hand with offering a streamlined return policy. Flexibility is key when it comes to returns. Need an example? Consider brands like Costco, REI, and L.L. Bean, all which will accept no-questions-asked returns.
Consider offering 30-45 days for returns, expanding your reasons for returns, and allowing returns online or in-store, especially if you also run a brick-and-mortar location.
8. Communicate Throughout
Customers want to know what’s going on with their return. That said, offer close communication throughout the return process.
Customers should understand the state of their returns, the timeline for processing and when they can expect to see a refund for their products.
Amazon is one company that’s great at this.
9. Be Friendly
The worst thing you can do to a customer who is returning a product is to be rude. Remember, most returns are the merchant’s fault; and even those that aren’t don’t deserve to be punished.
With this in mind, be friendly, kind and accommodating to customers making returns. It will behoove you in the long run.
10. Take Steps to Reduce Returns
Yes, returns can be profitable, but the ideal return rate is still only about 13%. To achieve this, you’ll need to take proactive steps to reduce your return rates.
This may mean offering discounted items, writing better product descriptions, or offering a simple FAQ to educate customers before they make a purchase.
11. Sell More Big Ticket Items
The reason Zappos’ high-return clients are its favorite clients is because these customers are typically purchasing big-ticket items.
While you don’t need to start targeting an entirely different demographic all of a sudden, offering some big-ticket items can balance out your returns and help you maintain a profit, regardless who’s buying or returning.
Making Returns Profitable
Returns happen, but they don’t have to mean financial ruin for your company. By following these 11 tips, you can make returns profitable, easy and straightforward for everyone involved. Not only does this prevent you from losing money on individual returns, but it ensures those customers will keep coming back to do business with your brand.
Need even more tips? Check out this infographic below. It will give you the complete scoop on how you can start profiting from offering easy online product returns.
Ready to automate your returns process?
Get started with ReadyReturns today and #RethinkReturns.