Why Product Returns Don't Have to Be a Nightmare

The majority of online retailers most likely consider product returns a necessary evil. However, return policies are an important factor for many shoppers today when making purchase decisions.

Recent statistics show that 92 percent of consumers will buy something again if the return process on a brand's website is easy. Another study shows that if an e-tailer doesn't make returning a product hassle-free, the numbers can work against them. Furthermore, over 80 percent of shoppers say they're unlikely to shop again with a brand if they've had a bad experience when making a return.

While returns and e-tail typically go hand-in-hand, successful businesses today are realizing the advantages of properly analyzing products in new and innovative ways. By understanding the underlying reasons that can often contribute to returned goods, online merchants will begin to appreciate that a good return experience can offer them a serious competitive advantage.

When e-tailers implement a transparent and systematic returns policy, they have a better chance of building a more reputable brand, improving customer loyalty and protecting their bottom line.

To better understand the consumer-centric mind-set as it relates to returns, it can be helpful to gain some insight into product return statistics. First, it's a good assumption to make that most people don't like to pay for return shipping. In fact, approximately 79 percent of consumers say they want free return shipping, according to recent research by TrueShip. However, many e-tailers struggle to offer this option, as they're unable to absorb the cost into their bottom line.

Current statistics portray a staggering picture: Between 30 percent to 35 percent of all products that are ordered online are returned by consumers for one reason or another. The National Retail Federation (NRF) reports that 8.6 percent of total sales are returned, a figure that represents more than $3.1 billion annually.

By making the return process easy, e-tailers ultimately create happy customers, who are then more inclined to shop with them again. Thanks to emerging technologies, online retailers now have a new way to approach the returns management process.

Smart brands are increasingly working to streamline their returns process by using cutting-edge software solutions. By leveraging these easy-to-use technology tools, e-tailers can better manage and process returns, as well as use captured data and intelligence to glean key metrics that drive returns. Ultimately, this can empower brands to safeguard their bottom line.

Returns can generate a multitude of questions for an e-tailer: Are the set-up instructions too confusing? Is it a doll house that's missing parts? Is it a pair of rain boots that are being returned because the cut is too narrow? There can be numerous reasons why products are returned, but rather than assume that these reasons are illegitimate, online merchants would be smarter to pay attention to and identify product improvements that can eventually reduce their return rates across the board.

Consider Zappos and its free return shipping on every order, a policy that attracts this brand to consumers. According to a Fast Company article, Zappos best customers typically return 50 percent of all their purchases. Zappos says it considers these shoppers its best customers because they're its "most profitable customers." By catering to these customers' needs — and making the return process easy and seamless — Zappos continues to reap the rewards of repeat, high-profit-margin sales.

Analyzing what gets returned — and understanding why — helps e-tailers identify patterns that can reshape product design and selection. For example, businesses that see a spike in returns of a particular product can capture valuable information as a way to address what may be a design flaw or a product characteristic that's a turnoff to various customers.

Online returns obviously matter a great deal to today's consumers. By developing a policy to address their interests, e-tailers can improve customer satisfaction and loyalty. Beyond covering return shipping charges, merchants also can allow consumers to return items to a brick-and-mortar location as well.

Once your brand has a hassle-free return policy firmly in place, be sure to promote it (or at least make it easy to find) on your website. This is because you won't be able to reap the benefits of an easy, convenient returns process if your customers don't realize that it exists in the first place. This also is the point where it makes sense to call in a third-party vendor, specifically a well-qualified provider with experience and a good track record in returns management.

E-tailers that focus solely on the possible pitfalls of customer-friendly returns are ignoring real opportunities and tangible advantages that solid return policies can offer. When handled correctly, an e-tailer's returns process can actually be an extremely effective way to connect with customers, earn loyalty and become a source of new revenue.

Chris Dunn is the director of operations at TrueShip, a provider of e-commerce shipping software.