reduce returns

The e-commerce industry is booming. With so many online shopping options available, customers are starting to ditch brick and mortar retailers. As you begin to sell more products online, you’ll begin to encounter challenges such as returns or chargebacks.

A survey done by Deloitte suggests that having a solid return policy is a strong advantage in e-commerce sales. Think about it. If a customer knows they can return the product with ease, they will be much more likely to make the purchase in the first place. What’s the downside? You may see an increase in returns. Since a good return policy often suggests free return shipping, this can potentially hurt your bottom line. That being said, here are three strategies you can use to reduce e-commerce returns.

Allow and Use Product Reviews

Allowing your customers to leave reviews on your products is a win-win for all parties. Most of all, a review will give customers an honest view of the quality of your products. Instead of simply allowing customers to rate products, typically one out of five stars, allow them to leave comments as well. This may answer questions for your customers that you haven’t thought of or gotten around.

If you notice a product is consistently being rated low, take the time to read the reviews so you can improve your products. Amazon is a great example of a company that utilizes consumer reviews. I always look for a product with the highest volume and highest rated reviews, and i’ve never been disappointed with my purchase.

Be on Top of Product Quality

As you begin to scale your business and automate production, it’s common to see lapses in quality. If your customer receives your product with any sort of defect, you can be assured it will be sent back. Damages or defects can happen virtually anywhere. Whether it’s in the purchasing of materials, assembly or manufacturing, or even sometimes delivery, your company will always be held responsible.

The best way to attack this is to be thoroughly involved in every step of the process. Make sure you’re buying materials from trusted suppliers and you’re consistent with performing quality testing reports. The more controlled you are over the supply chain the less deviation you’ll see in product quality. It may require more time and money in the beginning, but it’s well worth it in the long run.

Utilize Your Data

The numbers don’t lie. In the end of the day you should always utilize your data to see where you can improve your business. The Pareto Principle, or the 80/20 rule, suggests that most of your returns will likely come from a small percentage of your products or services. That being said, you can use your data to figure out which products have the highest return rates.

Once you identify those products you can analyze data like customer reviews to try and adjust your products to reduce the return rates. If a product is consistently showing high return rates despite any iterations, it may be time to “take it behind the barn”.

Having a good return policy is always a best practice for online retailers. However, it’s never a positive to have a high return rate. Ultimately you’ll want to reduce the number of returns so your business can make more money. Use these three strategies to minimize the amount of returns to your online store.

 

Renzo Costarella is an entrepreneur, avid learner, and startup enthusiast currently living in Silicon Valley. He consults for several startups in the Bay Area and is pursuing a few ideas of his own.

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