Shipping returns probably cost you more than they have to
- Henk Herkink
- How to
- 29 Oct 2021
- Edited 3 Feb 2023
- 6 min
Shipping returns cost time and money. The transport costs involved are obvious, but remember that it also takes time (and money) to process returns and update your records. Do you want to accept these costs, or will you have your customers pay for returns themselves? After all, you are not required to bear the burden of returns yourself. In this article, we will share seven ways to cut down on returns, from updating your product information and packaging material to extending the cooling-off period.
You want to provide excellent customer service to your customers, and they expect nothing less. Still, the bar for returning an order can be very low (in Dutch). Returns are especially common for e-retailers in the fashion industry, with large online sellers facing return rates of up to 50% (in Dutch) according to the NOS. With a carefully curated return policy, you can prevent returns.
Disadvantages of shipping returns
Handling returns takes a lot of work: you have to unpack the returned items, check them, and get them back in saleable condition, as well as update your inventory and customer system, and refund the customer. It all costs time and time costs money, and so does shipping.
Besides, all the extra traffic (and carbon emissions) produced by shipping online orders to and fro is very harmful to the environment. There are several ways to reduce carbon emissions generated by returns. Click here to find out how you can reduce your carbon emissions (in Dutch). And what about damaged and unusable items that you cannot return to the warehouse or put back in your shop?
"Companies are finding more and more solutions that fit their prices and products", says Harry Bijl, retail expert at industry organisation INretail. "Low-priced items are increasingly sent to outlets, sold as used products, or even destroyed." According to Bijl, companies can set up special procedures and guidelines to prevent returns, but returns are also a consequence of buyer behaviour. "People want to have a choice and buy the best product. They order multiple items so they can compare and pick the best one."
Improve your shipping returns policy
You can reduce returns by helping customers make the right choice. Here are 7 ways to help them do just that.
1. Expand your product information
In the ideal situation, customers love their purchase right away and never even consider returning it. Comprehensive product information and clear, accurate photos can help, and so can additional explanation and instructions. If you sell household appliances, consider specifying the exact dimensions and colour of an appliance. For clothing, provide tips and information, such as: "This garment runs small, go one size up if in doubt" or "Model wears a size S. Height: 1.85m".
There is even software that can help customers pick the right clothing size. Tom Sans, director of Sans-Online, is a satisfied user: "We use a digital program with basic information about the size and fit of different brands. It is international and is always updated with customer reviews and reasons for returns. Customers are prompted to enter their measurements based on several questions, after which they are given tailor-made advice. With this software, customers can avoid having to order the same item in multiple sizes."
2. Research buyer behaviour
According to Bijl, designing an online shop is all about maximising conversion, or getting users to complete a desired action. "New business owners often think that starting an online shop is easy. To actually get people to do what you want them to do, however, you need to be very clever about how you design your website." Getting visitors to complete the right actions requires insight into buyer behaviour and user experience. "You have to conduct customer research, whether you do it yourself or outsource it to a market research firm. Whatever you do, it takes a lot of knowledge, time, and money to design an effective shopping site."
3. Think about returns
Come up with a clear strategy. Are you going to offer free returns or will you have customers pay for them? You will generally have to keep your prices as low as possible to remain competitive, but this also limits your margins. If customers decide they want to return their purchase and you pay for the return costs, you will effectively deal another blow to your profits. The maths are easy: if your customers pay the return costs, you do not have to.
With some major online sellers offering free returns, many consumers have come to expect free returns, but shopping sites are by no means required to offer them. Free returns are a service, not an obligation. Thuiswinkel.org states clearly that if your customer uses their right of withdrawal, they have to pay for the return. If you do not offer free returns, you have to state this clearly on your website, as well as tell customers how they can return the order no later than the delivery date. You are, however, required to refund the original shipping costs. If the customer paid extra for fast delivery, you do not have to refund the extra fee.
You are not allowed to charge customers to have defective products repaired or replaced. This is the law. You have to pay the return costs for repairs and replacements.
Customer pay for returns
In 2019, Sans Online decided to have customers pay for returns themselves to reduce the total number of returns, offering return labels on its website for €2.95. Sans was hesitant to implement his new return policy at first, but it soon became clear that most customers were happy to pay for returns. "Some people were upset, while others shrugged it off and went on with business as usual. There was a brief blip in turnover, but it recovered quickly." The new policy turned out to be effective. "People are now more aware of what they order and return. In the past, people would easily order seven items and return one item on the same day, a handful of other items two or three days later, followed by a final return after 10 days. This does not happen as often anymore."
Free returns are another option. However, Thuiswinkel.org’s Vincent Romviel has a word of advice: "There’s no such thing as free. Even free returns are priced in somewhere. Free returns are nothing more than a unique selling point, a service for customers. Some customers even deliberately shop on sites that offer free returns."
If you want to offer free returns, you would be wise to figure out the return costs before you launch and pay extra attention to designing your website so as to minimise returns.
If you are a dropshipper, be especially clear about the returns procedure. If you want your customer to return products to a foreign supplier, you have to tell them in advance. If you fail to do so, you will have to pay the return costs yourself.
4. Invest in a good inventory system
To prevent returns, an up-to-date inventory system is a must. Customers who order something from your online shop will usually expect it to be delivered quickly, unless you tell them otherwise. If you do not have certain products in stock and do not tell your customer, you will be unable to meet their expectations and they might even buy the same product from someone else while waiting for your product to be delivered. In the end, they will simply return your product because they already have what they needed.
Sans: "You are effectively promising customers that you will deliver. If they order a certain size and the system does not warn them that their size is sold out, they will assume that you will deliver the product on time. If you cannot deliver, you will have to cancel the order and might even risk a negative review."
5. Improve your packaging
Design smart packaging (in Dutch). Not to make it easier to return products, but rather to have them returned neatly and undamaged, so that you can sell them again. Carefully designed packaging has the added benefit of enhancing your brand image, especially if you make opening the packaging a fun experience in and of itself.
6. Extend the cooling-off period
By law, customers have a cooling-off period of at least 14 days. If they decide against keeping the product during that time, they are free to return it and you have to give them a full refund. Your customer should have several ways to cancel an order, such as by email, phone, or your website.
According to Romviel, consumers are less likely to return a product if they have more time to reflect. "If there is no rush to return, consumers will become attached to an item. Besides, if you extend the cooling-off period, customers are more likely to forget to return their purchase on time. Extending the cooling-off period beyond 14 days can cut your return rate by 10%."
7. Change your target audience
Who is your customer? Sans: "You should always try to build a relationship with customers. In the past, we focused on low-hanging fruit to generate turnover as quickly as possible. Now, we prefer building long-term relationships with our clientele. Know your customer and tie them to you. Satisfied customers will come back and order again and again."
Carefully curating your website can help you bind more customers. The more you personalise your products, the fewer returns you will get," Bijl adds. "And to tailor products to your customers’ needs, you either have to engage with them or get your hands on excellent data insights. You have to figure out what people need. If you target anyone within reach or fail to manage expectations, you will get more returns."
You can employ a variety of tactics to influence online consumer behaviour, but not all of them are allowed. Stay alert and avoid deception.