|Laura Gayle is a full-time blogger who has ghostwritten more than 350 articles for major software companies, tech startups, and online retailers. Founder of www.BusinessWomanGuide.org, she created her site to be a trusted resource for women trying to start or grow businesses on their own terms. She has written about everything from crowdfunding and inventory management to product launches, cybersecurity trends, web analytics, and innovations in digital marketing.|
E-commerce opens up exciting profit opportunities for most retail businesses. Your customer base can multiply exponentially, there is unlimited space on your virtual shelves to display merchandise, and you can have 24/7 store hours. But as with most things, there are some drawbacks to tackle as well.
One of the biggest headaches for e-commerce businesses is product returns. The wrong size, color, model, damage in transit, or any combination of the above could be potential culprits. The return rate for online purchases is more than double that of brick-and-mortar stores with upwards of 30 percent of items being sent back. Returns can cut into retailers’ profits substantially, with added shipping costs, labor, and lost sales. Fortunately, there are some effective ways to limit the boomerang effect and decrease the amount of shipped merchandise that comes back.
1) It is All in the Details
Analysts estimate as much as 54 percent of all e-commerce returns are due to sizing or color issues. Online retailers can minimize this by carefully crafting detailed product descriptions which include everything the customer needs to make an informed purchase. Use sophisticated shopping cart software to help customers make good choices.
Successful strategies include:
- Provide expansive descriptions, including all details and limitations.
- Provide a variety of images from multiple angles, including front, back, side, and special detailing.
- Many e-commerce retailers have found success with 3D images—particularly for online furniture purchases.
- Customers should have the ability to zoom in on each picture.
- Whenever possible, provide a video of the product.
- The description should include information regarding materials, special care instructions, and a user guide.
- Sizing guides should be product specific. If an item tends to run small, advise customers to order a size larger. Whenever possible, offer recommendations based on the customer’s body shape, weight, and height.
- Include product reviews provided by customers.
Experts indicate that the standard profit margin for an e-commerce order is 10 percent, while each return costs the company an average of $15. In layman’s terms, this means that if a $50 pair of jeans gets returned, the retailer ends up with a net loss of $10. With 25 to 40 percent of online purchases returned, e-commerce businesses are taking a huge hit to their profits. To combat size and color accuracy issues, many organizations are now investing in online tools that help the customer verify product dimensions or fit.
2) Your Customer Service Department Should Be Available to Answer Questions
Customers will often have questions that are not answered in the product description. Studies indicate that 44 percent of those consumers prefer to have those questions answered when in the middle of their purchase. Customer service representatives should be standing by, via phone call or chat, to assist in getting the answers they need. Easy access to support at each phase of the customer journey not only minimizes returns, but it also avoids customer frustration, which often leads to cart abandonment.
Retailers are also urged to train their customer service representatives to ask customers why they are returning an item. Recording this information will help identify trends and prevent further losses. Management should also monitor:
- Customer feedback on products and service
- Social media outlets
- Customer forums
Implementing this strategy will help identify common consumer questions and minimize any miscommunication, regarding a product.
3) Inspect Orders for Quality and Correctness
A staggering 54 percent of all e-commerce returns are due to retailer error. Imagine the disappointment if you opened a package you have been waiting for, only to find the wrong item was shipped. This not only costs the company money, but it also leads to customer disappointment, further multiplying profit losses. To ensure order fulfillment accuracy, retailers are urged to implement a strict inspection process. To avoid human error, implement a two-step fulfillment process for outgoing orders, in which one employee pulls the merchandise, while another packages it.
4) Proper Packaging
No matter how streamlined your system for processing customer orders may be, accidents out of your control are bound to happen. In fact, it is estimated that 20 percent of all e-commerce returns are due to damaged or defective items. To prevent damage during shipment, and avoid other shipping errors, retailers must consider proper packaging as an integral part of the order fulfillment process.
Consider the following tips to prevent breakage and ensure the customer receives their product:
- Care should be taken in the packaging of all items. Sturdy boxes that are appropriately sized for the item should always be used. The properly sized box should have just enough space for extra padding. Leaving too much extra space means the item could shift in transit.
- Regardless of the delicacy or sturdiness of the item, always include padding in your packages. Cushioning material should vary depending upon the item being shipped. As a rule, bubble wrap is best for fragile items, while foam peanuts work best for those sturdy products.
- Even the most perfectly packaged item sometimes meets its fate. To protect both you and the customer, obtain insurance from your shipping provider.
The timeless adage of the customer always being right can be interpreted as an unspoken courtesy to the patrons of your business. Keep your customers around by making them feel as if they are a priority. Return policies, especially in the instance of e-commerce, should mirror this philosophy. They should be a safety net for the consumer who has a problem, yet desires to remain a regular shopper with you.
Many customers may already feel as if they are going out on a limb to purchase without seeing the items in person. Do not make them gun shy with a hardline authoritative stance, which gives little to any positive options. In this day and age, considering the growing e-commerce landscape, they’ll go someplace else.