3 Ways You Can Make Online Product Returns Profitable

 In Ecommerce, Spotlight

Today’s consumer wants things to be fast, easy and convenient. This mantra helps explain why more than 50% of purchases are made from mobile devices. Retailers strive to meet this consumer demand by streamlining the checkout process. The problem is that checking and out purchasing is easy, but quite often returning is hard.

I’ve already covered how tedious a return can be from a respected online retailer in a recent blog (Dr. Martens Needs to Give Their Clumsy Return Policy the Boot). They serve as a great case study: Ordering new boots from Dr. Martens took 5 minutes. Returning them and filling out online forms took more than 20 minutes, followed by a trip to the UPS store and then waiting for weeks to get a refund, less the restocking fee.

When you make returns difficult, studies have proven that consumers will just take their business somewhere else in the future. While retailers have frowned on easy returns because they presume they lose money on them, the reality is that easy returns help you make more money in the long run. What follows are three ways you can make returns work for your bottom line.

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Easy Returns = More Sales

Want more sales? I’ve got the simple solution for you: Make returns easy! But don’t just take my word it.

Let’s look at two of the easiest places to make a return online (with exception to Amazon): Zalando and Zappos. Each place lets you try footwear on and just drop it in the box and send it back if you don’t like the fit and look. And each place is killing it on sales, even though their return rates are large.

“A world without returns would be nice, but it’s unrealistic. For us, the question is: can the business be profitable with returns? And we are certain that we can. And to end the discussion, I will tell you: the overall return rate for Zalando is 50%,” commented Ruben Ritter, managing director of Zalando, in a recent interview.

According to Craig Adkins, Vice President of operations at Zappos, they experience a return rate of at least 35%, but it’s not hurting sales. The reason, he explains, is that their most valuable customers make the most returns. But even though they have a high return rate, they are still profiting more than other online shoe stores because returns are easy.

“Our best customers have the highest return rates, but they are also the ones that spend the most money with us and are our most profitable customers,” Adkins says.

The lesson: If you sell online, returns are going to happen. Retailers who make it just as easy for a customer to return something as it was to buy it will generate more sales and earn more profits than retailers who don’t.

The “After Buying” Experience

After buying, what is it? It’s the experience that your customers have after they have completed the purchase and have received their product. Retailers strive to make purchasing as easy as possible. But after you make the purchase, it’s often quite difficult to send a product back that you didn’t like.

Here are some fast facts about what customers want from a return experience.

  • 65% of returns are your fault, not the customers.
  • 82% of your customers are likelier to complete a purchase if you let them know returns are easy.
  • A hassle-free returns policy that’s streamlined increase sales by as much as 25%.
  • 68% of shoppers want free return shipping and no restocking fees.
  • No matter what you do, about 30% of products are returned.

With this in mind, you can tailor your after buying experience to be as friendly as your buying experience. The choice, of course, is yours. But knowing these facts, it’s easy to understand how making after buying easy is going to encourage customers to buy again in the future.

Reconversions

Another way that easy returns help you earn more sales is by the method of reconversion. The numbers speak for themselves. UPS recently published a report called “Pulse of the Online Shopper.” They contracted think tank ComScore to gather the metrics. The findings are encouraging.

When a shopper returns to your site to process an online return, there’s a 64% chance that they may make another purchase. But you can’t blindly count of this repurchase happening if your return policy sucks.

The simple math here is as follows: Easy returns mean that you can earn repeat business from customers when they are placing that return. Bad returns simply mean that the customer is unlikely to make a future purchase from your online store.

Can Product Returns Make You Money?

The big question here is: Can you make online product returns profitable? The short answer: Yes. But how you approach your return policy is crucial to success. If you need some help, I invite you to visit our short, related guide on this: Can Product Returns Make You Money.

In the meanwhile, here’s a nifty infographic that can help you better understand why hassle-free returns equate to happier, more loyal shoppers and more money in your pocket at the end of the day.