As an e-commerce business, you’re no stranger to returns. E-commerce returns have become as inevitable as finding an odd sock in your laundry. This is further confirmed by the fact that 39% of online shoppers admit to returning at least one purchase per month, contributing to the nearly $744 billion worth of merchandise returned in the U.S. last year—a figure that could fund a small country’s GDP.
Interestingly, online purchases are returned at a rate of 30%, compared to just 8.89% for physical stores. The top culprits? Receiving the wrong item (23%), products looking different than expected (22%), and damaged goods (20%).
Knowing what your customers’ top return reasons are is the first step to mitigating the impact of growing returns. And that’s what we’ll discuss here. As we delve into the top reasons behind these returns, we’ll uncover insights to help you transform potential pitfalls into opportunities for customer satisfaction and loyalty.
Impact of Returns on Businesses
Returns can do a real number on e-commerce businesses. From squeezing profit margins with added shipping costs to complicating logistics and tarnishing customer loyalty, the ripple effects of returns are far-reaching.
Beyond the financial strain, returns can impact future revenue, with dissatisfied customers less likely to return and more likely to leave negative feedback. Here’s a look at how returns influence businesses.
Financially Draining Due to the Cost of Shipping
The NRF reports that returns cost retailers approximately $400 billion annually in the US alone. Returns can be financially draining for businesses due to the cost of shipping. Not only do you lose the revenue from the returned product, but you also incur operational expenses—handling return shipments, processing refunds, and restocking items.
This adds up quickly and affects your profit margins. In many cases, the shipping cost alone
Hampers Future Revenue
Returns have a long-term impact on future revenue by damaging customer satisfaction. When customers return items, they’re often dissatisfied, which can lead to fewer repeat orders. Negative feedback or reviews can also deter other potential customers, dissuading them from purchasing from your store.
Word-of-mouth, both positive and negative, can significantly influence purchasing decisions, meaning returns can cause a ripple effect, ultimately hurting your business’s reputation and bottom line. While you cannot wholly weed out returns, you can streamline the process by onboarding a returns experience management solution to ensure your customers have a smooth returns process and preserve revenue.
Poses Logistical Challenges
Returns create logistical headaches for businesses. First, you must verify each return request, ensuring it’s legitimate. Then, you need to arrange the return of the product, inspect it for damage, and decide whether to restock it, send an exchange, or issue a refund.
Managing all these steps takes time, resources, and careful coordination. When returns pile up, it can strain your operations, disrupt inventory flow, and increase costs, making the process more cumbersome than it initially appears.
