5 Steps to Tackle Your E-commerce Clothing Returns
E-commerce clothing returns are costly and irritating to merchants and customers alike. Online returns cost retailers an average of 21% of order value. The reverse logistics process costs, on average, ⅔ of the item’s price for retailers to process a return and a large portion of returns never gets resold due to the time discrepancy between recirculating returned packages and a garment’s shelf-life. This is additional complexity impacting and lowering margins for merchants, whilst customers struggle with the additional hassle of returning items.
In this article, we will discuss what steps you can take to reduce your returns effectively and boost your profitability. Using a grey-labelled 3D body measurement solution like Aistetic will definitely help you accelerate your returns reduction faster.
1. Measure your returns
Knowing the numbers behind your returns is important! Quantify the impact of returns to know what you are dealing with. Make sure you know who is returning what (customers and product’s IDs). Calculate all related costs like courier cost, remerchandising cost, the write-off cost of items not for resale etc. This will enable you to then establish a baseline period for comparison. Depending on your systems, you can keep track of your return management process manually using a Google Sheet or Excel or automate it with a provider such as Loop Returns, Return Logic or Return rabbit.
2. Segment your customers
This will help you to identify and distinguish occasional returns from serial ones. The first thing to do is to update and download your analytics pack and tag users that generate returns. Upload & run reports from analytics providers like Shopify or Google Analytics to then group your returners into segments. We’d suggest you start with 3 groups:
“Serial returners” (SR) – returning >50% of their purchases with you
“Occasional returners” (OR) – returning 25-50% of their purchases with you
“Keepers” (K)– returning <25%
From here you need an action plan for tiering your customers and then communicating to each group with a tailored offer. Let’s move on to your your returns policy.
3. Review your returns & exchanges policy to encourage exchanges
Typical searched questions include:
how long are the returns and refund windows?
if there are any fees for returning clothes?
While merchants & retailers might think tighter returns window reduce returns as shoppers are more likely to miss the deadline. In reality, a short returns policy could be harming your sales: ReBound’s consumer survey found that 63% of shoppers expect a returns policy to be at least 30 days. Check out Shopify's guide on how to write a return policy in 2023 with a free template.
Eliminate cash refunds and promote exchange practices: give your clients a chance to exchange an item immediately, instead of simply returning it. Offer incentives such as discounts or loyalty points to customers who choose to exchange an item instead of returning it. This approach can help build customer loyalty and encourage clients to choose the exchange option. Additionally, by providing unique benefits for exchanges you can create a positive shopping experience that motivates customers to continue doing business with your brand.
Whilst reviewing your returns policy, take the opportunity to crack down on fraud. According to Statista, E-commerce losses to online payment fraud are expected to grow from $41bn to $48 bn in 2023.
There are a couple of simple actions to take:
always require CVV with full billing address input for all online orders and client’s ID and receipt (email or physical) for in-store returns;
use virtual size and fit recommendation tools to prevent multiple size ordering and other AR software to improve products' visualization.
Installing fraud protection software like FraudLabs Pro, Signifyd and Kount is an additional step you can take.
4. Make returns easy
Regardless of all your efforts, you will still have a certain amount of returns. Not all returns happen as a result of fraud or customer mistakes. Whilst the returning process is annoying for retailers, imagine how frustrating it is for your clients to pay to return an item for a reason that isn’t their fault. Make sure to acknowledge this and provide your customers with the most convenient experience. You can do this using software that provides instant refunds like Reveni. Remember that even one bad return experience can cost you a potential loyal customer: a study by WBR Insights found 89% of consumers are less likely to buy from a retailer following a bad return experience. Accenture supports this notion with 82% of consumers considering a retailer’s return policy important before making an online purchase.
Provide an omnichannel experience, allowing your customers to return a product to your physical storefront for free. This will save you operational costs and eliminate the risk of alienating your clients with additional fees.
5. Display Customer Feedback
76% of consumers regularly read online reviews when browsing for local businesses. Showing positive testimonials on your website is social proof, and it improves your credibility . Encouraging your clients to share their real-life photographs with the product can help prospects visualize what that garment will look like in real life and make a more informed decision potentially reducing the return prior to purchase.
61% of consumers questioned in a poll by Nosto think fashion retailers can cut return rates by including more post-purchase photos and videos from other customers. The same poll showed that 59% of users think that virtual try-on tech will also help to rein back returns.
So what stops you from implementing these steps to reduce your returns?
Please share your experience and learnings, good and bad.
To step change your returns reduction with Aistetic’s plug-and-play returns solution, please book a 1-on-1 meeting with one of our product specialists today.