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Published On: Wed, Feb 17th, 2016

Why Offering Hassle-Free, Automated Ecommerce Returns Can Actually Improve Profits

The new look for retailers is one that is only found online. As ecommerce grows – at a pace that’s more rapid than any other industry – it’s expanded its reach worldwide. Experts have said that currently it draws over $1 trillion annually in sales, with predictions showing that it could cusp $2 trillion in just a few years. To put that into better perspective, that’s more than half the country’s in the world combined GDP.

Ecommerce is fed by the convenience of always-open online stores, competitive pricing, robust selection and front door delivery. In these areas, it’s easily outdoing retail with exception perhaps to apparel; because you can’t try on something that you buy online until it arrives at your door. But the biggest area where ecommerce is failing is with returns.

photo/ Public domain pictures via Pixabay

photo/ Public domain pictures via Pixabay

Most retailers are still hesitant to embrace a lenient return policy because they think that it will affect their bottom line and cost them more money in the long run, when this simply is not true. Take for example Zappos, which has a return rate of 50%. It’s one of the highest in the industry and they don’t charge return shipping. But they say this return rate actually helps them earn more money and improve the loyalty and the retention of consumers.

Can Easy Returns Boost Profits?

If Zappos can do it, so what, say many retailers. Good point. So let’s dig further. A study that was covered in Science Daily that followed several retailers over more than 26,000 transactions and throughout the duration of 48 months found that when easy returns were offered, sizeable revenue increases were realized in just six months. At the end of the study, the control group that was offering Zappos-like returns netted $600,000 more in revenue than the other groups, which made returns a hassle.

Lenient Returns Increase Purchasing

Still not convinced?

Let’s dig even deeper. The very recent Q4 UPS report, Pulse of the Online Shopper (2015), found that over 60% of consumers will read a return policy before buying online. If they find the policy to be cumbersome and inconvenient, they will just shop somewhere else, resulting in lost conversions. But if they find that the policy is lenient, they are four times likely to make the sale.

Most Returns Are Not The Consumer’s Fault

Don’t forget one crucial ingredient here: returns are usually your fault, not the customer’s.

What’s that we’re telling you? No way. Here’s the facts on why most returns are your fault.

65% of returns are due to retailer error, not consumer fault.

23% of online returns are because the consumer received the wrong product.

22% of online returns are due to the product being substantially different in appearance than was advertised online.

20% of online returns are due to the consumer receiving a damaged or a defective item.

Automated Returns Are Highly Desired

Studies have concurred: consumers want easy returns, they want automated ecommerce returns like Amazon features, and they want free return shipping. Or else. Basically, consumers have a lot of options online these days, and they are all just a click or a Google search away. Make sure you are aware of this when creating your returns policy, so you can maximize conversions and bring happy customers back to your store time and time again.

Guest Author: Pankaj Deb

About the Author

- Outside contributors to the Dispatch are always welcome to offer their unique voices, contradictory opinions or presentation of information not included on the site.

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