Struggling with Soaring Return Costs in Online Shopping
Despite considerable efforts to decrease returns, e-commerce businesses in Germany, Austria, and Switzerland are grappling with substantial return expenses. According to a study conducted by the retail research institute EHI, the average cost for returned items ranges between €5 - €10. Items in the home and furnishings sector are particularly costly, with returns costing up to €20 due to their size and value.
The research reveals that checking the quality and condition of returns is a significant contributor to the high cost, accounting for the majority of the return shipment expenses. The volume of returns varies across sectors, with fashion products displaying an average return rate of 26-50%. Customers often order multiple variations of fashion items to decide on their preferred item, increasing the likelihood of returning some of them.
Reducing Return Costs
- Clear and Transparent Policies: Clearly outline return policies, including requirements, associated fees, and available return methods.
- Offer Convenient Return Options: Allow customers to choose from various return methods, such as home pickups, in-store drop-offs, or curbside returns.
- Detailed Product Descriptions: Provide comprehensive product information, including user-generated content, to aid customer decision-making and reduce return rates.
- Employ AI Technology: Automate many aspects of the returns process, like inventory management and route optimization to reduce costs.
- Effective Communication: Ensure that return policies are easily accessible and clearly communicated.
- Returnless Refunds: Consider offering returnless refunds for low-cost or non-resalable items to save on shipping and processing costs.
- Implement Return Management Tools: Utilize self-service returns, return label QR code scanning, flexible refund management, and status updates to streamline the returns process.
- Fraud Detection: Utilize fraud detection tools to monitor return patterns and identify suspicious activity.
Factors Affecting High Return Rates
- Lack of Transparency: Unclear or complex return policies can contribute to higher return rates.
- Limited Product Information: Inadequate product descriptions can lead to misunderstandings, resulting in higher return rates.
- Scarce Return Options: Insufficient return options can frustrate customers, leading to higher return rates.
- Economic Factors: Cyclical market trends and economic downturns can impact return rates in specific sectors.
- Product Type: Certain products, like disposable items or medications, may have higher return rates due to their characteristics.
By implementing these strategies, e-commerce businesses can lower return costs and reduce high return rates, ultimately satisfying customers and enhancing overall efficiency.
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