Practical Ecommerce

4 Tips for Better Ecommerce Returns and Exchanges

More than 60 percent of online shoppers returned or exchanged at least one item in 2013, up from about 51 percent in 2012. Importantly, about 95 percent of customers will go back to a online merchant and make additional purchases after a positive return or exchange experience, making managing the process important for ecommerce success.

Exchanges and returns will shortly be a hot topic for online retailers as Christmas gift recipients contact sellers in the wake of an exceptional holiday selling season. These Christmas gift recipients will want to exchange and return unwanted gifts, items that are the wrong size, or even items that may have been damaged in transit.

Endicia infographic

Endicia, the postage provider, reports that returns and exchanges are increasing for online merchants.

comScore, the trend tracking firm, reported yesterday that desktop ecommerce (excluding travel and mobile ecommerce) totaled about $37.8 billion in the U.S. for the first 45 days of the Christmas shopping season. Total spending since Thanksgiving, comScore reported, has been up about 21 percent over 2012, reaching $19.2 billion in U.S. desktop ecommerce spending for the period. This increase in sales will also represent an increase in returns and exchanges.

Returns and exchanges are important for building long term customer relationships, with some 95 percent of shoppers going back to online merchants that have offered a good exchange or return experience in the past, according to data from Endicia, an electronic postage solution provider. Conversely, about 85 percent of consumers will not return to an online shop after a poor return or exchange experience, again according to Endicia.

What follows are four tips for offering a better exchange or return experience for online shoppers.

1. State Return and Exchange Policies Clearly

Let customers know exactly what to expect from the return and exchange process. Post clear, simple-to-understand policies on a page of the site specifically designated for returns or shipping policies.

Online retailer Zappos is an excellent example of how to make returns seem easy for shoppers. The company has a dedicated returns page, lists its policy in bullet points, and even includes a video that explains how to complete a return using Zappos’ self-service model.

Zappos' returns page

Zappos has a dedicated returns page, listing its policy in bullet points and including a video.

It is worth noting a couple of things about Zappos’ return policy. First, every return is free. While each individual online retail business will need to examine the financial impact of a free return policy, taking the expense out of sending back an item can go a long way toward making loyal customers for life.

Zappos also offers to accept returns with no questions asked for up to a year after the purchase.

2. Provide Return Instructions or a Return Label in Every Order

Shoppers don’t want to wait for return labels. In fact, about 62 percent of online shoppers want a return label included in the initial shipment, according to Endicia. Including a return label is not difficult, and many online sellers may find that the ability to do so is either built directly into the retailer’s ecommerce platform or is available via an extension to the ecommerce platform.

A second option may be to offer shoppers a simple, self-service way to print a return label from your site. This self-service option does not require the customer to contact the shipper to get authorization or wait for an emailed label. According to the Endicia data, about 61 percent of shoppers will be happy with an easy way to print return or exchange labels.

3. Know the Cost of Returning

A guitarist for a popular party and event band recently ordered a new guitar strap from a merchant on the Amazon marketplace. Unfortunately, there was an error in the shipment, and the merchant apparently sent a shorter strap than expected. When this guitarist contacted the seller about an exchange, he was told that a new strap would be shipped that day and that he could simply keep the smaller strap.

This solution was great for the customer, who did not have to repackage the strap or arrange for a carrier to pick it up. He was generally happy with the experience. This was probably also better for the merchant, who might have simply been able to order a new guitar strap from its distributor for about the same cost has having the strap returned.

To make this sort of business decision, it is important to understand the real cost of managing a customer return, including the cost of the shipping and the labor necessary for processing the return once it arrives back at the seller’s warehouse. If it cost as much or nearly as much to return the item as it would to simply purchase another one wholesale, consider letting the customer just keep it, saving everyone involved time and expense.

4. Create an Opportunity

Returns and exchanges are also an opportunity to make additional sales. As mentioned above, about 95 percent of shoppers will return to an online store and make an additional purchase after a positive return or exchange experience.

Similarly, about 45 percent of shoppers will actually recommend an ecommerce merchant, again according to Endicia, after a positive return experience, meaning that taking care of an existing customers could lead to new customers too.

Consider sending each shopper who returns or exchanges an item a follow-up email, asking for feedback about the experience. Identify ways to improve the return process, and business in general will improve too.

Armando Roggio
Armando Roggio
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Comments ( 6 )

  1. Yvette December 19, 2013 Reply

    Great tips! Thanks for sharing with us!

    http://www.activo.com

  2. Jerry Jao December 23, 2013 Reply

    Another great and timely post Armando.

    I esp agree w/ your second point. I sometimes would make a purchase just because I know that the store provides a simple / seamless return experience so in the case I don’t like the product, it’s no hassle to return. Bonobos is a perfect example of that. They get extra orders from me cuz of the convenience in including return shipping label in each order.

    I’d also encourage merchants to be careful too, since obviously, providing these great services come at a high costs too so you need to really understand what your customers want.

  3. Elizabeth Ball December 23, 2013 Reply

    Great advice. I would add that retailers can use the returns process to note where problems lie in product copy (product not as described), fit, colour fidelity or in packaging issues to address these.

  4. Charlotte Monk-Chipman May 6, 2014 Reply

    A self-service returns portal will become increasingly common practice in the eCommerce world, enabling online retailers to capture visibility of returned items whilst they’re still in the end consumers hands rather than being inundated by heaps of unexpected packages. This doesn’t mean retailers must abandon pre-packaged return labels though, as these can be activated through the portal to validate the pre-paid label. Having a successful returns policy is about providing consumer choice and convenience, but in a controlled way.

    ReBOUND addresses these problems;
    http://www.tsbsupplychain.com/what-we-do/rebound-returns-management/

  5. Karen June 19, 2014 Reply

    “Including a return label is not difficult . . .”

    What planet are you on? While including a return label may not be difficult it can be costly since smaller companies have to pre-pay for USPS return labels and then if the customer doesn’t do a return you have to request payment back from Endicia and you only have a certain window to do so or you are out the money.

    It isn’t difficult with UPS or Fedex but if you are selling an item that doesn’t weight much you would be paying more for UPS or Fedex as opposed to USPS.

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