5 Must-Have Tacticts for Reducing E-Commerce Returns

Return management is a part of e-commerce and keeps online merchants busy every day. Free return policy and extended return time periods have caused sinking barriers among online shoppers in recent years in the competitive environment. Ordering and returning products has never been easier.

While ecommerce returns are an advantage for the consumer, they often have negative economic consequences for the online shop and are one of the biggest challenges for online merchants. To effectively reduce returns in the long term, proactive and reactive returns management can help. If this is successfully placed, returns can be avoided in advance and minimised with a comprehensive service afterwards. In this article, we take a look at what successful returns management looks like and show five ways in which returns cause less effort and costs.

The importance of ecommerce return management

Although free and easy returns are often used as a customer loyalty tool, they increase costs and effort for businesses. It is hardly surprising that, according to estimates, around 280 million parcels and around 490 million items were returned in 2018 . Shoes and clothing are most frequently affected.

According to a study, process costs of €7.93 are incurred per return, but these are highly dependent on the number of returns handled. For less than 10,000 returns, the processing costs are around €17.70. This shows that especially smaller online shops have to dig deep into their pockets for returns. A returned parcel is checked upon receipt, takes up storage space again and, in the worst case, is sorted out because it cannot be resold. If you add up the process costs with the loss of goods, which is around 13.1% of the value of the goods, total costs of €15.18 on average are incurred for an order of just over €50 per return.

Thus, ecommerce returns management is of great importance: on the one hand, to avoid returns and, on the other hand, to optimise processes that reduce costs in the long term and still increase customer satisfaction. The goal here is to secure sales and success in the long term.

Difference: proactive and reactive ecommerce return management

Proactive or preventive ecommerce returns management focuses on preventing returns from happening at all. Reactive returns management, on the other hand, ensures that goods that have already been returned are processed effectively. The goal here is to efficiently control the processing of returns, to reduce processing times by optimising returns processes and to automate entries by using intelligent IT and software solutions.

Since returns are an annoying part of e-commerce for online merchants, both areas are in need of optimisation for most companies and offer great potential to minimise returns permanently with an established returns management system.

In the following, we take a look at 5 strategies that are designed to avoid returns in advance and thus reduce the returns rate in the long term.

5 ways to avoid ecommerce returns

Researchers at the University of Bamberg and 43% of a surveyed group of online merchants estimate that a large number of returns could be minimised if they were charged for. This reduces the attractiveness of returns for the consumer.However, as long as there are no legal regulations for this, to which all online shops would have to adhere, the danger is too great that orders will be cancelled and one will no longer be able to assert oneself against competitors. In the following, we thus present 5 alternative ways to avoid returns in advance.

1. Quality

Poor quality of goods is a reason for returns for almost 29%. That is why it is important to pay attention to the origin, value and sustainability of the products on offer. The growing demand for durable and sustainable products is steadily increasing. More than half of the respondents in a study say they already wear sustainably produced clothing, and almost a quarter can imagine buying sustainable products. In this case, quality pays off by minimising returns.

2. Product information

The more detailed a product is described and visually presented with high-quality images, the fewer returns will result from incorrect purchases. A detailed product description leaves no questions unanswered and informs about all important features: handling, use, condition, delivery scope as well as the size for fashion and shoes, which we deal with in a separate point. The exact written description is supported by high-quality product images or product videos.

3. Sizes

The most common reason for ecommerce returns: the product does not fit. So it is not surprising that the fashion industry is confronted with the most returns. Online shopping offers numerous advantages, but certainly also the disadvantage that items cannot be tried on. To avoid returns, it is important to be as accurate as possible when it comes to sizes. Size charts, recommendations, size of the model in the picture, size calculators and direct assistance from customer support are measures to reduce returns due to inappropriate sizes.

4. Packaging

The second most common reason why consumers return a package is because it already arrives defective. To prevent this, make sure the packaging is of high quality and includes suitable filling material so that nothing is damaged during shipping. This also involves the selection of a suitable courier service. At the same time, the customer should be provided with a shipment tracking system so that he or she is informed about the location of the goods and can manage the delivery.

5. Delivery times

A product not only has to be available, it has to reach the customer quickly. Ordered today, delivered tomorrow – the customer expectations are increasing and online shops are faced with the challenge of meeting them. More and more customers are ordering products based on the assumption of fast delivery times. If these are not met, the customer may already have bought the product from a competitor and thus claim the return. Delivery times must therefore be clearly communicated.

To further minimise ecommerce returns here, shipment tracking is a suitable tool. The customer receives it with the dispatch confirmation email and is constantly informed about the location of the parcel. In this way, she can also manage the acceptance if she is not at home when the parcel arrives.

Reduce ecommerce returns in advance

Even a few optimisations (e.g. optimising the packaging and the product page) can reduce returns. This requires a shop analysis that reveals possible potential and provides the basis for a returns concept. With our 5 tips you can reduce returns in your online shop. But please note: these can of course never be completely avoided. That’ s why the second focus is on optimising the processing of returns.

Frequently asked questions about return management

What are the pillars of return management?

Return management rests on two pillars: proactive management, which prevents returns from happening in the first place, and reactive management, which handles goods that have already come back. The proactive side works on quality, product information, sizes, packaging and delivery times. The reactive side focuses on faster, largely automated processing. Most online shops have room to improve in both areas.

What is return management in e-commerce?

Return management covers everything an online shop does to keep returns low and to process them efficiently when they occur. It combines prevention through accurate product information, correct sizing, sturdy packaging and reliable delivery with structured handling of returned goods. The aim is twofold: cut the costs and effort that returns cause, and keep customer satisfaction high enough to secure sales in the long term.

How can online shops avoid returns?

Five levers reduce returns before they happen. First, product quality: poor quality causes almost 29% of returns, so origin, value and durability matter. Second, detailed descriptions with high-quality images or videos. Third, precise sizing through size charts, size calculators and the size of the model in the photo. Fourth, sturdy packaging with suitable filling material. Fifth, short, clearly communicated delivery times supported by shipment tracking.

What is reactive return management?

Reactive return management deals with goods that have already been sent back. Its purpose is to control the processing of returns efficiently: shortening processing times through optimised return workflows and automating entries with intelligent IT and software solutions. Because returns can never be avoided completely, this second focus protects margins, since a returned parcel has to be checked, restocked and sometimes written off.

How much does a return cost an online shop?

Process costs of 7.93 euros are incurred per return on average, and they depend heavily on volume: shops handling fewer than 10,000 returns pay around 17.70 euros each. Added to this is the loss of goods value, roughly 13.1%. For an order of just over 50 euros, that adds up to total costs of about 15.18 euros per return.

What are the most common reasons for e-commerce returns?

The most common reason is that the product does not fit, which is why the fashion industry faces the highest return rates: items simply cannot be tried on. The second most common reason is that the parcel already arrives damaged. Poor quality of goods accounts for almost 29% of returns, and slow delivery leads customers to buy elsewhere and send the order back.

Why is return management important for online shops?

Free returns and long return periods have lowered the barrier to ordering, so returns now cause substantial cost and effort for merchants and rank among their biggest challenges. Structured return management tackles both sides: it avoids returns and optimises the processes behind them, which lowers costs in the long term while keeping customer satisfaction high. That combination secures sales and lasting success.