Online selling has many advantages, but not when it comes to product returns. The average return rate is three times higher for online purchases than those made at brick-and-mortar retailers.
Melissa Gieringer spent the last eight years working at online marketplace companies that provide solutions for retailers’ and manufacturers’ returned, excess, or other liquidation inventory. Now a director at B-Stock, she’s shares some advice with EcommerceBytes Editor Ina Steiner on how readers can deal with returns.
There are many reasons behind product returns. Online shoppers can’t see or try on items until the items arrive on their doorstep, which can lead to disappointment. Some shoppers develop a case of buyer’s remorse. And then there are the chronic returners and out-and-out scammers.
Given the hassles and costs associated with returns, it’s understandable why online sellers want to find ways to reduce them, especially during and after the busy holiday shopping season.
According to B-Stock’s Melissa Gieringer, ecommerce sales have an average return rate of 30% compared to 8-10% for brick-and-mortar purchases. But those numbers vary widely by product category. For example, the return rate for Housewares is 12%, while Apparel has a 30% return rate – and that number grows to 50% around the holidays, she said. With the diversity of products (and types of sellers), there’s no “one size fits all” strategy for dealing with returns, but there are some tips to keep in mind.
B-Stock operates the world’s largest network of liquidation marketplaces – it recently launched a B2B marketplace for DICK’S Sporting Goods. Gieringer said that across B-Stock’s 40 retailer marketplaces, close to 70% of the inventory is customer returns, with the remaining inventory consisting of overstock or salvage.
Reduce Returns
How can sellers avoid returns in the first place? Retailers are employing a variety of strategies, she said. For example, Jet.com offers a lower price if the consumer opts out of the free return policy, while companies like Dockers.com provide additional fitting details such as inseam and thigh-opening measurements.
Some retailers are using augmented reality apps to give shoppers a better way of visualizing the product and thereby cutting down on buyer’s remorse, which accounts for 25% of online returns, she said.
Some businesses are even monitoring returns to identify chronic returners with the help of third party solutions. In an article about Best Buy’s outlet store where it offers discounts on returned goods, the Houston Chronicle wrote, “Retailers in recent years have reined in return policies, shortening return periods and cracking down on serial returners. Companies are also increasingly investing in so-called “reverse logistics” to inspect, sort and find alternative outlets to recycle, donate or resell its returned goods.”
Reduce Shoppers’ Returns Anxiety
It may be helpful to think about returns from the buyer’s perspective. In its third annual report on returns, “The State of Online Returns: A Global Study,” Narvar identified the top complaints from consumers with regard to returns:
- paying for shipping;
- lack of communication regarding return status;
- and not knowing when they will get their refund.
The study found that 16% of customers were frustrated with checking the refund status of their return. The key to minimizing customer angst: “Communication can resolve most of these concerns,” according to Narvar’s findings.
Dealing with the Inevitable Returns
Returns are inevitable for most merchants, so having strategies in place to deal with them is important. That’s even more true as retailers find themselves increasingly placed under the microscope for sustainable business practices. “Landfilling is not an option any longer, and destroying inventory puts a brand’s reputation at risk,” Gieringer said.
She offered two tips on when it comes to returns:
Make sure you have a favorable and clear return policy:
“Favorable return policies drive customer loyalty: studies show around 82% of online customers will complete an online purchase when there is a favorable returns policy. While it seems counterintuitive, offering free returns and longer return windows is a smart move as it actually encourages initial and repeat purchases.
“Around 67% of customers check the returns policy before buying, so make sure yours is clear and understandable. If the return policy is confusing, but the competition has a simple and clear policy – guess where a customer will be making their purchase?”
Process back on shelves as quickly as possible:
“To maintain retail margins, you want to get returned items – the ones in good resellable condition – back on the shelves, and inventoried as fast as possible. There are SaaS returns management systems available that provide real-time updates when merchandise is returned into the inventory system.
“Keep in mind, the faster it is re-inventoried, the faster it can be shown to other customers, online. Real-time re-entry into the inventory system also means the store can reshelve the merchandise immediately.”
Gieringer noted that unless there is a defect with the product, or the packaging has been damaged, or the product has become obsolete, you should not feel the need to discount a product’s price. “As much as possible, avoid discounting goods on your primary sales channel. This will set customer expectations,” she said.
Create a Resale Channel
She also recommended merchants create a resale channel. “For returned inventory that can’t go back on primary shelves and sold at full price, a recommerce or resale channel – like the one B-Stock provides – is essential. This should be an ongoing, strategic solution that enables you to move the returned inventory out of your warehouse quickly.”
The channel you choose should ideally allow for: high recovery, a fast sales cycle (to prevent warehouse overflow), and brand protection.
Companies like Patagonia and Madewell have created their own private-label sites to resell used, repaired or rebuilt items to consumers, she said – all the items have been inspected and are sold at a discounted, set price.
Third-party resale marketplaces like eBay, Amazon, Poshmark or ThredUp are also good options.
Gieringer also recommended a B2B (business-to-business) online auction marketplace like the B-Stock Supply marketplace, which can provide a faster sales cycle while maintaining decent pricing.
If you’re worried about channel conflict, set limitations for buyers including the following:
- exclude resale on 3rd party sites;
- establish geographical limitations;
- set remarketing rules;
- sell only to exporters;
- mandate all items be delabeled prior to resale.
Donate or Salvage the Unsellable
For returns that can’t be resold, what’s the best way to dispose of them?
Consider donating to a recycling company, Gieringer said. Many recycling facilities will take end-of-life goods in order to break down parts or – in the case of textiles – recycle into new goods.
“Believe it or not there is a large buyer base interested in Salvage/Grade D inventory. For example, when it comes to end-of-life electronics, the inventory can often be sold to recyclers or refurbishers that use parts in other devices. B-Stock has a large base of buyers who solely purchase salvage goods for recycling or parts harvesting.”
Gieringer called Amazon’s recent launch of FBA Donations a great program as it allows merchants a charitable disposition channel and prevents obsolete/unsold goods from being destroyed. “No doubt a win, win.”
However, she said merchants may not be okay with their items ending back up for sale on Amazon or another marketplace.
“For merchants with brand sensitivity concerns, chose a donation method that gives you full visibility into where your merchandise will ultimately end up and/or the ability to dictate that.
“You might also want to consider delabeling your goods prior to donation.”
To sum it up, Gieringer said, “Returns are the rule in retail; an ongoing, proactive plan for them is crucial. This should include a secondary market/resale channel for goods that can’t go back on primary shelves. The channel you choose should ideally allow for: high recovery, a fast sales cycle (to prevent warehouse overflow), and brand protection.”
It’s also worth noting that those resale channels also provide opportunities for resellers. On B-Stock, resellers can buy anywhere from a few pallets to multiple truckloads of inventory across dozens of categories including apparel, appliances, electronics, home décor, mobile phones, and more, Gieringer said.
As a plus size woman, I have known for years that for sure one size definitely doesn’t fit all. But one thing I have learned after getting a lot of clothing online, that not having consistent sizes across the board makes it difficult to be sure you are getting the correct size. I have also noticed that this is not so much of a problem with men who I suspect would never put up with clothing not fitting when they buy their size. At least my husband and son have gotten clothing that always fit if it is their size. Why can’t they do this with women?
Of the clothing that I have gotten this year, I had no choice of size only whether I would take it or not. The biggest disappointment was a bathing suit 2 sizes LARGER than my size and was made for plus sized women. I could barely get it on and I looked like a stuffed sausage. Other items I have seen that it is technically my size in plus sizes and then in parentheses it gave the size as three sizes smaller than the plus size it was showing. Who want to take that risk. I just got a top that fit perfectly and was my correct size. Glory be! I estimate that 1/2 – 2/3 of the clothing that I received didn’t not fit including pants that I couldn’t get past my knees while jeans in the same size fit me to a T! Granted as I said, I had no choice with some of the sizes, but ordering something 2 sizes larger than your size and finding it doesn’t fit is ridiculous. I don’t know why women put up with this. I have sewn most of my clothing for the majority of my life, so this is new to me to have clothing that doesn’t fit.
If companies wanted to reduce by a lot, the returns on clothing, start making sure that your sizing is consistent or at the very least, put the measurements that go along with the size on the listing. Quit making and listing vanity sizing.
I appreciate these tips; however, my worst experience with returns is with fraudulent buyers on eBay who attempt to return something that they did not receive from me, either the same thing in a broken or worn-down state or an entirely different object.
My issue is with the whole concept of making returns cheaper\easier. The more we do that, the less thought shoppers put into purchases. Who cares? They can just return it – and make someone else pay for it! Yes, “free returns” ease shoppers’ minds. Except that there isn’t such a bird as free returns! Someone else pays for it, those of us who rarely return things foot the bills for those who do – and who return items which are used, or missing half the product.
The bottom line is, the easier\cheaper you make something, the more you will get of it. We need FEWER returns, not more. The less skin customers have in the game, the less that they will care, and the more the rest of us will pay overall.
I refuse to leave an open door in my policies for serial returners or fraudsters — and that would be why I’ve never had a problem with returns or fraudsters. So I don’t agree with having policies that are so favorable that you’re opening yourself up to unnecessary problems.
Furthermore, people NEED to learn to shop more responsibly. If they don’t have all the information they need in the listing, then they should either ask for it or move on. I don’t cater to those who think they are entitled to do whatever they want at everyone else’s expense.
So, my policies attract responsible customers. They can see that it DOES cost money to shop willy nilly, but they can also see that I provide all the information they need so there shouldn’t be any need for a return. I even encourage customers to ask questions BEFORE buying if there happens to be a bit of information that I missed.
So, as far as I’m concerned, you will invite what you allow. If you allow too much, then you can certainly expect to have issues. You would also be adding to the problem with serial returners and fraudsters by teaching them that it’s okay to put such a burden on small businesses. Even large businesses can be negatively impacted by such things. They just have more of a cushion to make up for the loss.
One other thought, I don’t appreciate anyone pushing businesses to do business in a manner that perpetuates bad behavior. Having worked in the corporate world for so many years, I am fully aware of the importance of the wording of one’s terms and that the very reason for their existence is to protect your business from bad behavior and to legally ensure the other party that you’re not in the habit of doing bad business.
To push sellers to offer free shipping and free general returns when THEY ARE NOT FREE is ludicrous! Especially when you consider that claiming “free shipping” is a violation of FTC regulations. Yes, you might see an increase in sales, but you will also see an increase in problems that WILL cost you money. So, I don’t see that as being a trade-off that’s worth it. Metaphorically speaking, it’s like selling your soul just to make sales.
Whatever happened to perpetuating good, honest business on both sides? Stop catering to the entitled mindset and TELL them they MUST wear a shirt and shoes in your store! Of course, that’s not a requirement for shopping online unless you’re doing it out in public, but you get the idea. LOL
I cannot remember the last time I had a return. Maybe last year but I am not sure. I guess it depends on what you sell and how good you are at describing the item.
Example of a return I had and I quit running this one item on eBay because of the problem. It was a 8×10 photo of a M1A1 Abrams Tank under “camouflaged netting” during Desert Storm. I had a customer buy the item because he thought I was selling camouflaged netting. This happened more than once…
I asked him why he didn’t think he was buying a tank but I never got a response. Oh, I forgot, he thought I was shipping this huge product for $5.