Reducing the returns rate made easy

Reducing the returns rate made easy

The returns rate is an important indicator of the success of your returns management and has a strong influence on the variable costs of your online store – if the rate is too high, your profits may even collapse. Knowing the reasons for your returns is a high priority. After all, reducing the returns rate also means optimizing your store and your processes. In this blog, you can find out what measures you can take to reduce your returns rate.

How do I estimate my returns rate?

Calculating the returns rate is simple: put the number of returns in relation to the number of orders shipped and voilà, the rate is calculated. So if you have sent 100 parcels and receive 42 back, you have a returns rate of 42 per cent.

The returns rate can vary greatly from sector to sector. As a survey conducted by the EHI Retail Institute in summer 2023 showed, around a quarter of the online retailers surveyed in the DACH region stated that their returns rate was between 26 and 50 per cent. For most others, it is lower. Experience shows that the returns rate is higher than the average for fashion retailers in particular.

Why is it important to reduce the returns rate?

The returns process is expensive, but in many cases it is worth it, as online customers are now paying attention. No returns process is therefore also not an optimal solution. If, on the other hand, you get a lot of returns, your costs increase and your profit decreases at the same time. Too many returns are therefore doubly damaging for your business. You can get the most out of returns if you keep the rate at a healthy level.

Reading tip: Find out how you can increase your success with clever returns management.

How do I reduce the returns rate?

Reducing returns starts with your store and can have an impact on the store functions, your partnerships and your marketing. There are many areas where you can start. Let’s start from the beginning.

Good and detailed product descriptions

It is actually obvious. When shopping online, customers lack a physical connection to the product, which is why they sometimes order several variants and return most of them. Your task is to bridge this physical distance by any means necessary. Product descriptions are the cornerstone of making an item assessable for your customers. Here are a few basic tips for good product descriptions:

  • Be precise and give detailed information about the features and function of the product. Always stick to the truth. Enrich your description with feature lists or property tables. Elements that can convey a lot of information quickly.
  • Write in easy-to-understand language. If possible, avoid using technical terms or explain what they mean. Be aware of your customers and don’t assume more prior knowledge than they really have.
  • Use strong adjectives in your texts. After all, the product description should also encourage people to buy. The right adjectives help to generate images in the reader’s mind. But be careful: stick to the truth here too.
    The children’s fashion retailer Namuk takes a more visually appealing approach to supplementing product descriptions with informative overviews:

Size finder for fashion

In no other industry are there so many returns as in the fashion sector. This is sometimes due to the fact that customers often order several versions of a product, try them on at home and then return some of them. You can offer support here by providing your customers with enough information to help them choose the right size when shopping.

  • Measurement charts: The most basic aid for clothes today are measurement charts. Since clothing sizes differ in cut, especially between brands, you should provide product-specific charts. You can help by giving instructions on how to measure your body mass correctly.
  • Fitting tools: An even more customer-friendly solution are so-called fitting tools, which support customers interactively in finding the right product-specific clothing size. One example is the Fitfinder from the company Fitanalytics. The customer clicks through a simple questionnaire and enters information about their physique and the brands of clothes they wear most often. The tool then automatically calculates a size recommendation for each product page. The Fit Finder accesses the store’s purchasing data in the background and compares orders with the respective customer details. The recommendations therefore become more accurate as the data set grows. You can find an example in the Bergzeit store.

Product ratings.

A study conducted by Bitkom in 2019 showed that every second online shopper in Germany reads reviews and testimonials. And in the Swiss Post’s E-Commerce Sentiment Barometer 2023, around 60 percent of respondents confirmed that product reviews are important to them when making a purchase decision. Reviews are a good tool for your returns management to sell products and minimize the returns rate. You can view the reviews as an independent addition to your product description and should therefore place them prominently on your product page.
Do you have difficulties getting customer reviews? With financial incentives, for example with a voucher, you can encourage customers to write a review for the product page afterwards.

Professional product images.

In addition to the product description, a good illustration is also important. Make sure that the pictures are professionally taken and show the article unaltered and from different perspectives. We also recommend that you show the product in its original size. Model photos are suitable for clothing, for example. In this case, please also indicate the size of the model and the size of the product being worn in the picture. For other products, you can also place reference objects next to them to help the viewer estimate the original size.

3D tools.

Tools that show a 3D scan of the product or augmented reality tools that place an object in the room using the cell phone camera are also suitable as a supplement to the product images. With tools like these, you can help your customers make purchasing decisions and prevent bad purchases at the same time. In a recently published blog, Westwing shows how they established their augmented reality tool and what lessons they learned from it.

In the fashion sector, Zalando and H&M are even testing the use of virtual changing rooms, which are being developed by NEXR Technologies. Using a body scan via app or a scanner in a store, customers can transfer themselves to the online store as a model and try on clothes straight away. This should make it even easier to decide which clothes to buy in the future, and fewer color and size variants will need to be purchased.

Product comparisons.

You can also support your customers’ purchasing decisions with product comparisons and thus further reduce the return rate. A comparison tool is always worthwhile if you offer many different brands or variants of a product. Your customers can compare their favorites and select the most suitable item according to their criteria. This provides certainty when making a purchase decision and can reduce the number of variants purchased.

The Swiss wholesaler Galaxus goes one step further in its product comparisons and lists the return rates at brand level in the product details. For example, on the iPhone 15 product page, Apple’s warranty case and return rate can be compared with other smartphone brands. For customers, this is an additional source of information that can help them make better purchasing decisions. In addition, listing the return rate strengthens trust in your store and thus improves the shopping experience.

Chat bots.

If images and product descriptions are still not enough, you can also provide your customers with a digital advisor. A chat bot, for example, can answer further questions, suggest alternatives to your customers or even help them find a specific product in your store. Many store systems already offer you a chat bot as standard or can be added via a plug-in. In this day and age of AI and machine learning, chatbots offer the advantage of getting better and better over time as data sets grow. However, they will not be able to completely replace human support in the next few years, but they are an excellent extension of your customer service.

Customer loyalty measures.

You can also minimize your return rate with financial incentives. Instead of punishment, it is better to use a reward system. For example, you can reward consignees who do not initiate a return with a voucher afterwards. Or you can check your customer data and reward customers who have a particularly low returns rate with a small gift from time to time. This also allows a gamification approach to be integrated into the customer account, with customers collecting points for orders that they do not return.

Immediate payment.

The payment method also has an influence on your return rate. If your customers have already paid for the order in advance, they are more reluctant to return a product. So you can counteract the returns rate with prepayment, credit card, PayPal, TWINT and the like. However, please note that payment methods can also differ according to culture and age and that some people still prefer to order on account. In Switzerland, for example, purchase on account is still one of the preferred payment methods according to the E-Commerce Sentiment Barometer 2023.

Secure logistics.

In addition to your store itself, your logistics may also be responsible for one or two returns. For example, if a parcel arrives damaged or too late, it is not uncommon for it to be returned. Therefore, rely on secure shipping packaging and reliable carrier partners to prevent such problems.
At this point, we also recommend that you specify an approximate receipt period for the product on your product page. Depending on the carrier, the delivery time is not always definitely predictable – in this case you should rely on experience.

Prevent customs formalities in cross-border business.

If you are delivering across the border to countries with customs controls, there is another important factor to consider: customs duties. Depending on the carrier, parcels are only delivered once customs duties have been paid. In other cases, an invoice will follow after delivery. Customers who are surprised by such costs can refuse a parcel or simply return it. In both cases, the parcel will be returned to you. It’s better if you take care of the entire customs clearance process so that your customers don’t notice anything. This is standard in today’s e-commerce. However, if you don’t want to worry about customs clearance costs, you must inform your customers of the additional costs to be expected in the shopping cart.

Efficient returns processing.

Are you looking for customer-friendly and efficient returns processing? Whether domestically or across customs borders, MS Direct supports you with cost-efficient, customer-friendly and digital returns services. With over 45 years of experience, we are the leading service provider in Switzerland and can help you deliver on your brand promise.