10 tips to reduce the rate of returns

prudsys, prudsys RDE, Omnichannel, Handel, E-Commerce, Echtzeit, Personalisierung, Retouren, Scoring

Online shops are particularly popular at Christmastime when everyone is looking for that perfect gift. Ordering a number of products and sending back the ones they don’t like is a matter of course for most customers. For retailers, however, the rate of returns represents a huge challenge with rates soaring up to 50 percent in the clothing industry. Despite the new Right of Revocation in effect since June 2014, in many cases making customers responsible for paying the return shipping, the flood of returns in Germany continues. As a retailer what can you do to reduce your rate of returns and how can you predict returns? Find out by reading our ten tips.

1. Ask for reasons and learn from the answers

Large online shops deal with several hundred thousand or more orders every month. Each return results in an average cost of 20 Euros for the retailer and has a negative impact on the environment. So it’s doubly worthwhile to understand the reasons behind the returns. Only then is it possible to pinpoint what factor needs to be adjusted to reduce the rate of returns. As a retailer it is in your best interest to ask the customer directly why they are sending your product back. You can do this by including a questionnaire in the package or by sending an email after the fact. Once you know the reasons for returns in your own online shop you should use this knowledge to optimize the ordering process. A study done by IBI Research entitled “Return Management” provides an overview of the most frequently cited reasons for return:

  • Article does not please
  • Article does not fit
  • Several alternatives ordered
  • Article does not function or is damaged
  • Wrong article ordered
  • No real purpose of purchasing
  • Article does not match the product description
  • Wrong article delivered
  • Duplex purchase
  • Delivery time to long
  • Delivery incomplete

2. Product descriptions

Customers usually come to your online shop without really having seen or tried your products. When they order they are always taking the risk that they will be disappointed in the actual item when it comes. The more accurate the product is described in the online shop the better able the customer is to judge whether the product will live up to his expectations and requirements. For this reason every bit of relevant information should be available on the product page. For example, you could mention that a piece of clothing usually fits small, true to size or big. A hint for your choice of words: Don’t use over-the-top marketing lingo, be clear and understandable.

3. Product pictures and videos

Detailed product descriptions should be supplemented with high-quality product pictures and videos. Provide the customer with large pictures from several angles to show them all of the details. Natural lighting and a truthful portrayal of the item are essential. A 360 degree panoramic view is also a nice feature. When it comes to fashion it can also be helpful to mention the size of the product pictured and the dimensions of the model. This gives the customer a point of reference for comparison and allows the customer to better decide if the product fits him and if he likes it. Many retailers now use short video clips in which the model takes a few steps so that customers can see how the clothing falls in motion, for example.

4. Offer advice

Even if you try to list every conceivable piece of information about the item, customers may still have questions. In the worst-case scenario the result is a cancelled order. That is why it is important to always have time for the customer and to let them know that. Your website should have an easy to locate option for contacting you quickly and easily by email, chat or telephone. For products that might require more in-depth consultation, a video chat is advisable. One more important thing: Customer support should not end when the order has been made. Offer customers your support even after they’ve made a purchase.

5. Customer reviews

Customer reviews are helpful when selecting the appropriate product. Many customers trust the opinion of other customers more than the information given by the manufacturer or retailer. Positive reviews strengthen the purchase decision. This information can answer questions that the retailer may not even have considered. Don’t worry about critical reviews. At best the review will prevent a return and the customer will look for a better alternative in your shop. Every review is valuable. The feedback may come in useful when offering support in the call centre or in chat support.

6. Predicting and avoiding returns

Better safe than sorry. With special software like the prudsys Realtime Decisioning Engine (prudsys RDE for short) the probability of a return can be predicted in real time for each individual visitor to the shop – before the order has been made. In so doing, an adaptive scoring method is used to include the movement data of the customer from the shop, customer master data, product attributes and previous return behavior in the calculation. If the probability of return reaches a previously determined threshold value, various measures can be taken to prevent the return. The following measures are possible at this point:

  • Limit the payment options
  • Adjust the shipping costs
  • Offer direct personal advice
  • Activate the size chart on the website
  • Mention the environmental impact of returns

7. Smooth shipping

Faulty or damaged goods are one of the top reasons for returns. Sometimes items are shipped that the customer didn’t even order. In this case a return is inevitable. The products ordered should be checked for errors prior to shipping. Proper packaging also reduces the risk of the order reaching the customer in poor condition.

8. Quick delivery

Spontaneous purchases make up a considerable portion of online purchases. If the goods don’t reach the customer until a few days later, the customer may have lost the desire to buy. And what is particularly annoying for customers is when they have ordered something for a specific occasion and it arrives too late. Offer your customers the quickest possible shipping options, for example next-day delivery. Inform your customers of the most important steps in the ordering and shipping process to hold their interest.

9. Payment methods

Customer-friendly methods of payment such as purchase on account have been quite successful for many online shops. However, it is exactly this kind of billing that prompts customers to order a large selection of products only to then return most of them. Payment models such as prepayment, direct debit or instant transfer reduce the portion of returns but may not be as popular with your customers. In this case, the scoring method may help determine the probability of a customer returning an item. Based on that probability, certain payment methods could be offered or withheld.

10. Reward for keeping a product

Reinforcing the desired customer behavior is certainly effective. There are different ways to reward the customer for keeping the entire order. Some retailers offer a discount for the next purchase or use a point system. Others will refund the cost of shipping. In so doing it is of course necessary to weight the cost-benefit ratio to decide whether this measure is suitable for each individual retailer.

Conclusion

Return costs are enormous. Strategic measures make it possible to sustainably reduce the rate of returns. Retailers must be aware, however, that these measures may conflict with other goals such as high quality of service. Instead of “suspecting” that every visitor to your online shop is a potential returner and, for example, limiting the payment methods across the board, it is advisable to identify probable returns prior to ordering. These customers can then be strategically addressed and influenced.

Author: Marie-Theres Plobner | Marketing Manager prudsys AG

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