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Lower costs and returns due to a smarter return policy?

The return policy of a online store includes various components, including any return costs and the return term. - These terms and conditions have a wrapping on the purchase and return percentage of your webshop. How do I know that I have a good policy on returns? What do I have to consider? We are going to give you an idea in this blog.

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A return policy is a necessity

You'd rather not have returns, it's not fun for the customer, but neither is it fun for the seller. Actually, it's nothing new. The consumer actually has these rights if " remote sales " exists. For the younger readers: you used to be able to receive catalogues by post, call or fax your order and then do a transaction by post.

For e-commerce there is a more specific right which obliges you as a webshop to offer at least 14 days return when purchasing products through a webshop. Of course there are some conditions attached to this, but the majority of webshops adhere to the legal 14 days return right. Is this correct? Or can we provide new insights through various studies?

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Bottlenecks of a return process

There are other aspects that deserve attention, such as competition, profit margins, customer experience and buying behaviour. Returns appear to be a 'necessary evil' but it' an opportunity to boost customer satisfaction and boost sales. The impact of returns always depends on the type of goods and even varies from country to country.

In the graph below you see several differences in return percentages per product group at a large German webshop (source: Paazl).

Here you can see that the fashion sector has relatively more returns than, for example, furniture or electronics. So make sure you take this into account in the processes and margins:

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What is a good return policy?

A good return policy incorporates 4 important elements:​

1. Return process: short, simple and clear

The steps a customer needs to take to make a return must be briefly and clearly described on an easy-to-find page. Just like shipping, customers attach importance to the return possibilities of a e-commerce store before they place an order. Are these clearly explained and easily managed? A clear return process provides more clarity and certainty. This ensures that customers can place their orders with peace of mind, because what is there to lose in the event of a mis-sale?

So make your return policy clearly visible on the homepage (footer) and product pages (USPs). You can also include a link to the return page in every transactional e-mail. Do you want to perform really well? Provide a form or step-by-step process to assist the customer online. Never let visitors grope in the dark and treat your return policy as part of your unique value proposition!

2. Costs associated with returns

You are obliged to refund the full amount including the shipping costs paid by the customer in case of a return. As a online store you' re not obliged to pay the costs of a returns. You can choose to offer a return for free or to charge the shipping costs. 

A good return policy gives confidence to the consumer. It boosts your sales and that brings returns with it. Unfortunately, this also means extra costs. Make sure you don't see your margins evaporate at these costs. How can you avoid that?
 

Free returns or not?

From a study by Afterpay with a focus on the fashion and sports sectors, it appears that the likelihood of returns hardly differs between e-shops with a free return policy (41%) versus e-shops that do not offer free returns (42%). Stores that offer free returns do have a higher average net order value (€62 vs. €47) than stores that have a paid return policy. Charging costs for returns can lead to a decrease in sales, but not necessarily a decline in the return percentage.

More then 50% of the products are returned for one of the following three reasons:

  1. Received the wrong size
  2. Looks different, does not meet the description
  3. Product damage

You have to choose whether or not to charge return costs. Either way, you need to make sure that the return percentage remains as low as possible. You do this by providing very clear descriptions of the size, displaying pictures on model with the sizes used and also by making a size chart that is truly accurate. In short, give the right information! Nowadays there are plenty of methods to help customers find the right product remotely: AR-apps, body scanners, product videos, images in 360 degrees and more.

3. Time to return

The return period in Belgium is at least 14 days. There are, of course, larger e-stores that are known to have longer return periods for their customers. What is the impact of a longer return period on the return percentage?

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The results of the survey by Afterpay show that the return percentage is just lower for webshops with a longer viewing period (30+ days: 25%):

Possible explanations that are mentioned are:​

  1. Returns are experienced as abstract due to a longer viewing period.
  2. Adhesion to the product.
  3. Lost the sight of returns and keeping it that way.
  4. The product has already been used several times, so the customer does not return it due to the conditions that have expired.

4. Terms and conditions for returns

Again, you want to communicate briefly and clearly. Strict or unclear return conditions will deter people. In addition, you also come across as customer unfriendly. 

However, unlawful terms and conditions, such as not being allowed to fit an item of clothing at home for example, cannot be an argument for not accepting returns. However, you are allowed to refuse a product with a personalised print. A customer may carry out all the actions they are allowed to do in a shop.

Here are the key points for a good return policy:

  • Keep it short and clear
  • Consider a longer return period
  • Return costs are possible, but expect a reluctance on the part of customers​

Do you have any other e-commerce questions?

Do you have other e-commerce questions? Feel free to contact one of our experts without any obligation!