5 Easy Strategies to Prevent Costly Retail Returns No longer seen as a cost of doing business, product returns are a real threat to the bottom line of all retailers.
By Peter Sobotta Edited by Dan Bova
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Product returns are an important issue on both sides of merchandise transactions. Consumers want liberal returns policies as insurance against making a bad purchase. Retailers want to do everything they can to attract shoppers and foster long-term customer relationships while still making a profit.
Neither side wants purchase to turn into a product return. So retailers are trying lots of different strategies to help the consumer understand what they are choosing and making sure it's the right fit the first time.
Five strategies to prevent returns include:
1. Better merchandise descriptions.
The infamous tumblr blue/gold dress aside, great online photography can do wonders in enabling users to get a more accurate and 3D-like encounter with merchandise, especially if it includes tools to see multiple views and zoom in on details. Accurate and detailed product specs and descriptions are also key. According to The Washington Post, Overstock.com is working to upgrade its product photography and descriptions in an initiative to prevent returns.
Related: 5 Branding Strategies for Smaller Online Retailers
2. Online fitting tools.
Customers who buy multiple sizes with the intent of keeping the one that fits are one of the biggest challenges to returns prevention. Bloomingdales, Gilt and Saks Fifth Avenue are among retailers providing these tools to help customers select the right size the first time, without having to bracket their purchase with other sizes to ensure a fit. Apparel ecommerce site Asos, for example, has reduced its fit-related returns by up to 50 percent using this strategy.
3. Customer feedback and reviews.
Asking customers to provide feedback on products not only helps other shoppers make informed choices, but creates valuable data for retailers to use to modify descriptions and fine-tune future product specs with vendor partners. If runners hate the new type of laces used in the latest style, for example, the retailer can take action to immediately substitute a new lace type for in-stock products and make sure future orders to not use those laces.
Related: 4 Ways to Maximize Your Loss Prevention Strategies
4. Free return shipping.
Several studies have documented the premium consumers place on free return shipping as a condition of making a purchase: A National Retail Federation study found that about 59 percent of retailers currently offer free return shipping. But providing free returns is costly. One strategy to lower this cost is to participate with PayPal, which offers to reimburse enrolled customers using its payment method for return shipping costs. PayPal says its program enables merchants who are not already providing this type of service a potentially lucrative revenue driver that can help grow their customer base to shoppers that may not have purchased from them previously, out of concern over shipping costs.
5. Returns analytics.
Retailers are relying more and more on data to drive merchandising decisions, but in many organizations they overlook the very best source of information: Data from returns. By inviting candid feedback and making simple observations about the products being returned, and then applying returns analytics to that data, retailers greatly enrich the insights they have about what consumers want.
Related: 4 Fundamental Strategies for Launching a Successful Ecommerce Startup
Taking steps to prevent product returns is a win-win for everyone: The customer, who finds the right product the first time, and the retailer, who lowers returns costs and fosters repeat orders.
