Returns in e-commerce: how to reduce them and manage returned products
Reduce the rate of returns and turn the inevitable ones into an opportunity: replenishment, resale, and sustainable practices to minimise costs and waste.
E-commerce returns: how to reduce them and what to do with returned products
Returns are another part of the purchase process, in the management of an e-commerce business. They are inevitable, but knowing how to handle them correctly can make all the difference.
Poorly managed returns can not only affect the profitability of your online business, but also the overall customer experience and brand perception. That is why it is important to have a clear strategy and know what to do with the products that have been returned.
The average e-commerce return rate globally, according to a study by Statista, ranges between 15% and 20%. For example, this means that if one country sends 400,000 items a year, approximately 70,400 of them will be returned.
According to the 2023 Government Greenhouse Gas Conversion Factors for Company Reporting the average CO₂ emissions of an item traveling on a short-haul flight is 0.0009 kgCO₂/kg-km.
Let's assume that all returns weigh 1kg and travel 1,500km, in this case we would be talking about an emission of 95.04 tons of CO₂. That's why reducing return rates and offering more sustainable options can significantly decrease these unnecessary emissions.
In this article, we'll tell you how to better manage returns on your e-commerce, from how to make improvements to your website and how to offer more sustainable reverse logistics options.
How to reduce return rates
Returns are a part of business impacting the environment and resulting in loss of revenue. Therefore, the fewer returns your e-commerce has the better it is for your company. Many of these returns occur because customers receive products that do not meet their expectations or are not what they imagined, some of the practices that you can adopt in your online business to reduce return rates are the following:
Best product descriptions
If the product has a complete, clear, and detailed description, indicating any relevant data such as size, manufacturing materials, functionalities, and even limitations, customers will have a better understanding of what they are buying. This will avoid surprises and mistaken expectations about the product.
Size guide
One of the main reasons for returning shoes and clothing is from selecting the incorrect size. To avoid these mistakes, it is ideal to add an easy-to-understand size guide with detailed measurements and even comparisons. Additionally, incorporating interactive tools or personalised recommendations based on previous purchases can help customers choose the right size.
Customer reviews
One of the biggest conversion factors in e-commerce is reviews. The opinions of other customers help to understand the product, solve doubts and set real expectations. For example, other people's experiences can be used to have a more realistic view of the size of a piece of clothing or the color of a piece of furniture, especially if the customer shares photos or videos.
Cost-effective and sustainable management
Even if you've managed to reduce the return rate in your online business, some returns are inevitable. When this happens, what should be done with the returned products?
The answer depends on several factors, such as the type of product or the condition it is in. It will all depend on your return policy, it is not the same to return a piece of clothing with all the tags, versus an electronic product that has already been used.
Some of the most cost-effective and sustainable options and strategies for managing returned products include:
Restocking: products that have been returned in perfect condition, with their original packaging unopened, with all the tags and without signs of having been used, can be put back on sale immediately without problems.
Refurbishment: products that have been opened or used, but are still functional and do not have major damage, can be refurbished before being resold at a lower price, such as a mobile phone.
Resale: those products that have been refurbished, but still have signs of use or visible damage, can be sold in a special section of your e-commerce outlet or second-hand products instead of discarding them. Many people are willing to assume small damages if the price is reduced.
Reuse: if the product cannot be refurbished or resold for any reason, one way to take advantage of it is to use some of its parts or components to repair or manufacture new units instead of discarding it.
How to offer more sustainable returns
The return process has a significant impact on the environment, generating waste and CO₂ emissions. To make inevitable returns more responsible and eco-friendly, you can adopt some sustainable return practices in your online business.
Eco-friendly packages
Using recyclable, biodegradable or reusable packaging significantly reduces the environmental impact by generating less waste. It is committed to cardboard instead of plastic and offers the possibility of reusing the same packaging so that customers can make their return.
In addition, it tries to optimise space with more compact boxes and envelopes, reducing unnecessary material and allowing more items to be transported in a single truck, making fewer trips. Companies such as Finland's RePack manufacture reusable shipping bags, which are cleaned and reused at least 20 times, significantly reducing emissions and waste.
Donation options
When returned products are not suitable for resale or reuse, one of the best options to avoid waste generation is to donate these products to non-profit organisations. This way they can have a second life while your business collaborates with the community.
Low CO₂ solutions
To minimise the carbon footprint, some of the practices that can be implemented are planning more efficient routes with logistics providers or returning to physical stores or specific pick-up points to optimise shipments and reduce the amount of transportation needed.
New regulations
Sustainability in e-commerce is also being shaped by new EU regulations, such as the Ecodesign for Sustainable Products Regulation (ESPR).
These regulations will prohibit companies from destroying products that have not been sold or returned, especially in the textile and footwear sector. Instead of discarding unsold items, companies will need to improve their inventory management to prevent overproduction, improve product design to make them more durable and recyclable, and explore alternatives such as donation or resale.
By implementing some of these strategies in the management of returns in your e-commerce business, you will not only be improving the profitability of returns, but you will be taking care of the environment by reducing your carbon footprint and offering an improved returns experience to your customers.