Mastering E-commerce Returns: A Comprehensive Guide
Nobody likes waiting for their money, especially when it’s for a simple return or faulty item. Speedy and reliable e-commerce returns help merchants convert and retain customers – but only if they have the right processes in place.
This article will examine how returns impact e-commerce, how to reduce returns, and the average e-commerce refund rates across Europe. We’ll also look at what merchants can do to improve their returns and refund processes.
How do returns impact e-commerce?
If you run a business, you probably know that returns directly reduce revenue – especially when the returned product can’t be resold or reselling takes time. For e-commerce, where returns have become the norm, the impact of this is significant – but it’s far from the only challenge impacting businesses that operate online.
E-commerce returns affect everything from finances to business operations and inventory management.
Some of the biggest challenges surrounding the rise of e-commerce returns include:
- Shipping expenses: Free returns policies help boost sales – but they also impose double shipping costs, both for the initial delivery and the return shipment. These expenses quickly add up.
- Product depreciation: Products are sometimes returned damaged, worn, or without their original packaging. These factors affect their value, making them harder to resell at full price.
- Reverse logistics: Managing the return flow isn’t easy. Unlike forward logistics, which are streamlined for bulk shipments, returns are unpredictable and require individualised handling, making them more time-consuming and demanding to process.
- Inspection and processing: Part of the individualised handling of returns is assessing each product for things like condition, usability, and compliance with the returns policy. This adds labour costs and often delays to processing.
- Inventory imbalances: No matter how well-structured inventory management is, returns will disrupt inventory forecasts. Products returned in different conditions or at different times than expected make it difficult to maintain accurate stock levels. The variability of return volumes also creates uncertainty in when inventory will be replenished.
Despite the challenges, however, the returns process plays a central role in the overall customer experience, making it an important area for e-commerce businesses to prioritise.
Why is it important to optimise e-commerce returns?
Consumers have grown to see returns as a part of their shopping process. Returns offer a way to recoup lost money on mistaken purchases. What’s more, the vast majority of consumers are hesitant to buy if there’s a fee associated with returns. Hence, the returns process is a critical revenue driver for e-commerce brands.
The majority of shoppers return 5-15% of what they buy. A minority of consumers return more than 50%. So, e-commerce return processes need to cater to both ends of the spectrum. Given all of this, retailers need to strengthen their returns processes. It’s a good way of attracting as many customers as possible and generating sustainable growth.
What’s more, a positive returns experience can significantly boost both customer loyalty and brand reputation.
A customer who has had a positive experience returning a purchase is much more likely to buy from the same business again. Clear and flexible return policies also encourage customers to complete their purchases – after all, they know they can easily reverse their decision if needed.
Repurchasing is far from the only benefit of a positive returns experience, however. Customers who had an easy time returning a product will often leave glowing reviews and personal recommendations, encouraging other potential customers to buy from the same business. Customers who feel valued also tend to share their experience with friends, family, and online communities – and word of mouth spreads.
In a competitive market, a reputation for hassle-free reviews can set a business apart from the competition. In short, a positive returns experience helps foster trust, loyalty, and advocacy, directly impacting a brand’s bottom line.
What are the minimum requirements for e-commerce returns?
Under EU law, customers have 14 days to cancel and return orders for any reason. Member states and individual businesses are free to offer longer periods. Many firms offer 28-30 days to give customers extra time.
During the pandemic, many brands extended their returns period in recognition of the delays in postage and lockdowns. Many of these longer returns windows remain, and e-commerce merchants have more exposure than ever to customers seeking returns.
How do e-commerce returns differ by platform?
E-commerce return processes differ slightly by platform. The return policies of platforms like Amazon, eBay, and Etsy are largely the same. Merchants must, at a minimum, offer 14-day return periods. Rather, it’s the operational side where e-commerce platforms diverge.
Third-party logistical solutions like Fulfilment by Amazon can help you outsource the headache of processing returns. However (depending on who you partner with), individual merchants are still responsible for actioning the refund process, so fast and easy payment solutions are vital to ensure customers have a positive experience.
How to reduce returns in e-commerce
As an e-commerce business, there are several things you can do to manage and reduce returns and refunds. Some of the most effective strategies include:
- Clear product descriptions and images: The more information, the better. Provide accurate, detailed, and engaging product descriptions highlighting dimensions, materials, and usage scenarios, and use high-quality images, videos, and specifications in every listing. Bonus tip: Include user-generated content like reviews or customer-uploaded photos for an authentic representation of the product.
- Fit and size tools: Sizing guides, virtual try-ons, and personalised recommendations help customers choose the right product size and style, reducing the number of fit-related returns. Comparison charts for international sizing or brand-specific fits are also a valuable addition to your product listings.
- Proactive customer support: Proactive support means helping customers both before and after their purchase. Through live chat, chatbots, or detailed FAQS, you can guide customers through their purchase, clarify doubts, and resolve potential issues early. Post-purchase, it’s also helpful to send follow-up e-mails asking if the customer is satisfied or offering support to ensure they feel taken care of.
- Customer feedback loops: Understanding customer expectations is essential for improving both your products and the overall customer experience. Engage with customers post-return to gather insights. Send surveys asking why a product was returned, what could’ve improved the experience, and how likely they are to buy from you in future.
- Analysing return data: You won’t find patterns in returns if you don’t investigate the reasons behind them. Review return trends and patterns to understand what’s causing your returns. For example, if data shows frequent returns due to colour discrepancies, consider improving your product photos or labelling.
Combining these strategies will help you effectively reduce return rates while improving customer satisfaction—and it will boost your operational efficiency, too.
Exploring e-commerce return rates by different categories
In general, UK data suggests that a quarter of customers return between 5% and 15% of their purchased goods. Meanwhile, 8% of consumers return over half of their online purchases. That being said, e-commerce return rates can vary by region, age, and product category.
E-commerce return rates by country and age
Data for 2021 shows that, across Europe, younger consumers consistently return more goods than their older counterparts. This may be because they are more familiar with e-commerce returns processes or have less confidence in what they want or need to buy.
By region, the same survey shows that Swiss consumers return the most goods on average, at nearly 15% of all purchases, while Spanish consumers return the least, at just over 8%. Results from other European countries are broken down below:
- UK – 10.76%
- Spain – 8.53%
- Italy – 9.97%
- France – 8.33%
- Switzerland – 14.67%
- Germany – 8.1%
E-commerce return rates by product category
Surveys show that, by product category, e-commerce returns rates are highest in women’s clothing (23%) and footwear (20%), followed by men’s clothing (14%), with health and beauty ranking at the lowest at 4%. Data on other product categories are available below:
- Average: 15%
- Clothing:
- Men: 14%
- Women: 23%
- Children: 11%
- Footwear: 20%
- Home and Garden: 9%
- Health and Beauty: 4%
- Electricals: 7%
- Gifts: 6%
How Instant Payments can transform your e-commerce returns and refunds
While consumers’ payment preferences are constantly changing, one constant is their desire for speed and convenience. Pan-EU research shows that consumers want both instant and free returns, so merchants must establish e-commerce refund processes that deliver on both.
Designed for online businesses, Brite Instant Payments enables super-fast refunds that keep customers returning. From start to finish, Brite protects funds using the highest encryption standard available, ensuring customers receive their money safely and securely.
Once an item has been returned and processed by yourself or your 3PL partner, consumers need to use their everyday authorisation to get their refund directly to their bank account. This means no card details, no downloads, and no problems.
Brite Instant Payments allows you to instantly repay your customers instead of having them wait days for the money to come through. Best of all, your customers can see exactly when their money will arrive, so there’s less confusion about the returns process.
Our single API means you only need one integration to get started – Brite handles all the rest. Available out-of-the-box, Brite adheres to all EU privacy and data protection law, meaning you don’t have to worry about compliance either.
Offer seamless e-commerce returns with Brite Instant Payments
With so many choices available online, customers are beginning to scrutinise everything online merchants offer in addition to their core product or service. As such, offering free and easy returns, with fast refunds, is now a critical part of attracting and maintaining customers.
The average customer tends to return just over 10% of what they buy, but this changes depending on your industry. With nearly one in four consumer goods being returned, merchants must establish reliable e-commerce returns processes that can scale with seasonal sales events.
Whichever business you’re in, move funds to customers across Europe in seconds with Brite Instant Payments and Instant Payouts for e-commerce returns.
Let’s talk if your business needs to transfer money quickly and securely.
