While e-commerce has represented a transformational difference for shoppers and retailers, it comes with its own set of downsides. Sure, the volume of sales and ability to provide personalization at scale has revolutionized the online shopping experience. However, the way consumers shop now has created logistical pressure and added costs for businesses.
The issue is mainly related to returns.
Knowing that the products will be shipped right to their homes, customers will buy products they’re mildly interested in, try on or try out their orders, and then return what they don’t want. For the consumer, this experience is frictionless and seamless, with the cost of shipping typically covered by their order. However, those logistical fees wind up coming out of the retailer’s bottom line.
These costs start to add up fast, often leading to retailers changing store policies to discourage returns. Though these changes are necessary, a category of returns stems from a retailer’s website that can not only lead to unhappy customers but can damage a brand’s long-term credibility and loyalty. By addressing product page errors, brands can reduce return rates caused by inadequate product information.
The Real Ramifications of Returns
As a consumer, it’s difficult to appreciate the cost of returns. We assume that if a business offers an intuitive return program, it has already included those costs in the price of the products we buy. For businesses, however, the costs of processing, warehousing, return fraud, return shipping, nonsalable inventory, and the labor associated with returns mean significant revenue disruption.
One study showed that of the $1.29 trillion in online retail sales in 2022, consumers returned $212 billion worth of goods — that’s a 16.4% rate. While those numbers represent a decrease from the highest return rate of 20% in 2021, it’s still a significant, sustained jump from the 10.6% return rate in 2020.
That 16.4% return rate is also just an average. Some retailers, particularly in clothing, see return rates as high as 40%. If, for example, it costs a company $25 to process a return, the cost of returns over the course of a year could eclipse $1 million for a company processing just 40,000 returns — an easy figure to hit if a company is completing 200,000 transactions with a 20% return rate.
Many companies are actively exploring strategies and policies to reduce return rates and mitigate revenue loss associated with returns. Many popular e-commerce retailers are instituting tighter return windows or implementing fees to combat these losses.
However, brands should exercise caution when instituting these policies.
A recent consumer survey found that 63% of customers feel negatively towards a brand when they begin charging for returns either online or in-store. So, while these policies may help with the bottom line in the short term, they could cause issues with repeat customers or loyalty efforts.
Balancing Costs With Customer Return Expectations
Returns occur for various reasons: customers may buy products just to try them on or test them out, receive unwanted gifts they wish to return, and other scenarios.
Many of these causes for return are outside of a retailer’s control. Still, it doesn’t make it any less costly. If the company’s return policy allows for flexible returns within a given time window, sellers should expect customers to take advantage of that policy.
The primary issue to contend with is customers seeking returns and indicating that it’s the retailer’s fault. According to some estimates, retailer errors account for as many as two-thirds of all returns.
These errors can range from customers receiving the wrong product (23%) to inaccurate product depiction (22%) to damaged merchandise (20%). Furthermore, 54% of customers have returned a product because of faulty or misrepresented information on the retailer’s website.
The volume of returns that should be preventable is staggering, and this problem has a long-term impact on customer loyalty and retention efforts. If a customer can’t trust that a product they purchase will be the same in person as what they see online, the chances of them going to that same retailer again are slim.
Smart Retailers Invest in Product Information Systems
The goal of every retailer should be minimizing returns that stem from the systems and channels they control, and it all starts with the product page.
By instituting product information management (PIM) and product experience management (PXM) systems, brands can confidently know that all of the products on site are accurate and up to date without sacrificing any of the compelling sales copy necessary to convert.
Though these systems are particularly effective for retailers with large, constantly changing product assortments, they’re just as valuable for a company with 1,000 products as for a company with 10,000. PIM and PXM systems leverage automation to enable bulk editing of product details, sorting and grouping, and other tedious, error-prone tasks when done manually.
E-tailers can also use PIM and PXM systems to scan and analyze entire product assortments for completeness. Knowing instantly if a product is missing any crucial fields of information or photos removes the need to test manually and QA each individual product page to know it’s ready for customers.
Finally, a well-executed PIM or PXM system can provide a critical validation mode, automatically scanning and cross-referencing product specs and descriptions to an internal source of truth that flags any discrepancies in information that a customer may encounter.
Having that extra set of eyes on a group of product pages can give retailers confidence that each page matches manufacturer-supplied documentation to the best of its ability.
Product Information Systems Lower Returns, Strengthen Trust
The benefits of product information systems are significant. Not only have some retailers been able to reduce return rates substantially after instating these systems, but turning over basic product page information construction to automation enables marketing and product teams to focus on what they do best: selling the product with rich, compelling content.
As retailers look to revamp their return policies, they must do all they can to reduce return rates for reasons within their control. Understanding the causes of returns and implementing systems that ensure accurate product information are essential first steps. These actions can significantly reduce return rates, thereby preserving brand credibility and fostering customer trust.
The modern retail landscape presents a host of challenges, especially when it comes to managing returns. However, these challenges also present opportunities for improvement and innovation. Investing in product information systems is not only smart — it’s essential for any retailer aiming to minimize costly returns and build lasting trust with consumers.
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