While the uptick in online shopping during the holiday season provides the opportunity to increase revenue, online returns can quickly eat into those profits.
"With online customer shopping habits such as ordering multiples of the same item in different sizes and colors, the holiday season holds an increased 'intentional' return rate that erodes holiday sales revenue," says Lou Thurmon Shonka, vice president of marketing at Harbor Retail, a retail design and intelligence provider.
"In addition to the lost sales, returned items often can't be sold at their original cost or even resold at all due to damage. Some items that sell well during the holidays, don't out of season," says Mike Lindamood, founder of the online retailer sites WalletGear and Lamood Big Hats.
"It's tempting to look at online holiday sales revenue and think your company is doing really well, but this is only true if you're able to control the incidence of online returns," says David Ewart, director of Pavilion Broadway, a luxury furniture retailer and interior design house that sells in stores and online.
Tactics for Reducing Online Returns
While returns are always going to be a reality, there are steps you can take to minimize the amount of returns your company experiences this holiday season. Try the following methods of cutting down on online returns.
1. Provide thorough product descriptions and multiple images.
Oftentimes, products are returned because customers pictured something different during the order process.
"A good way to reduce the amount of online returns is to take many pictures of your products at every angle and write great product descriptions outlining features, details and benefits," says Lindamood.
"We've found it vitally important to provide high quality imagery of our products shot from multiple angles," Ewart says. "To that end, we invested in a 360-degree studio designed to deliver what our customers see in-store. The product images can be manipulated, giving a full picture of big-ticket purchases, such as sofas. This has reduced our online returns, since customers have a much clearer idea of how our products will look in their homes."
2. Confirm order details twice.
"We ensure that all details such as size, delivery time/date, address and color are all confirmed twice before we process the order," says Sean Clancy, director of Edge, a digital marketing company.
"Confirming twice enables us to catch any errors from the customer side," Clancy continues. "We've also found that even if customers are considering online returns, the fact they confirmed it twice may encourage them to accept the order, rather than admit their own mistake."
3. Offer try before you buy.
"Click and Collect systems offer try before you buy opportunities, which helps reduce intentional online returns," says Shonka. "Shoppers can reserve items online and set up specific times to go into brick-and-mortar stores to try on, review and compare the physical products."
4. Use Artificial Intelligence (AI) during the order process.
"AI shopping platform programs take cues from shopper behaviors to anticipate when a person is not 100 percent sure of a decision," says Puneet Mehta, CEO of Netomi, an AI customer service platform.
"For instance, if a person has clicked on the size guide a few times, a virtual agent would preemptively reach out, offering advice to help the shopper make the right decision and avoid online returns," Mehta explains. "Post-sale, retailers are leveraging AI to prevent returns by ensuring customer satisfaction with a product by proactively reaching out with care or onboarding tips."
5. Charge for returns, and make your policies clear.
"One way retailers can make customers think twice about online returns is to not send out prepaid shipping labels, so customers have some skin in the game in the form of a small fee when returning an item," says Stacy Caprio, founder of Growth Marketing, an online marketing agency.
We ensure that all details such as size, delivery time/date, address and color are all confirmed twice before we process the order. Confirming twice enables us to catch any errors from the customer side.
— Sean Clancy, director, Edge
"Another tactic that makes customers think twice before returning an item and reduces returns is to have a small restocking fee per item returned," she says.
Just make sure you state your policies very clearly on the website and in email correspondences.
6. Offer live customer service.
"Having a highly trained customer service team sympathetic to customer needs greatly helps prevent online returns," says Ewart. "Customers can phone in and be assisted by trained staff well-versed in product details and up-to-date trends and ready to offer tailored recommendations."
Shonka advises avoiding using chatbots during the holidays.
"Shoppers want human-to-human conversation for troubleshooting and engagement," he says. "Empower your customer service teams to be critical, creative thinkers."
7. Ensure efficient order fulfillment.
"Avoid online returns by installing effective back-end retailer processes that help prevent re-entry errors, guarantee faster shipping and rapidly track inventory," advises Shonka.
The smoother and more accurate the fulfillment process, the less likely you'll experience online returns.
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