How To Reduce Returns In E-Commerce

How To Reduce Returns In E-Commerce

Return rates across the UK are on the rise, driven mainly by the surge in online shopping, with e-commerce retailers shouldering the costs.

In fact, return rates in digital channels can be 15% to 40% higher than those in physical stores, placing added pressure on already tight margins.

Yet customers still demand a seamless post-purchase journey. So, how can you rein in rising expenses while meeting high expectations?

In this article, we’ll discuss how e-commerce businesses can tackle these challenges head-on. We’ll break down why returns in their current form exist, outline practical steps to identify their impact, and share strategies to reduce them.

Why Does E-commerce Have Returns?

Thirty years ago, the chances of you needing to return something were generally smaller. You would go to the store, pick out an item, try it on, and make sure you were happy before you went to the checkout counter.

And, if you decided you wanted to return an item, it wasn’t a simple process. You’d need to go back to the store, receipt in hand, wait in the queue and awkwardly stand around as the shopping assistant filled out mountains of paperwork to process your refund.

E-commerce has turned the old dynamic upside down. Retailers now face more pre-delivery uncertainty, post-purchase convenience, and additional logistical responsibilities. The shift to online shopping has also marked a change in consumer expectations around shopping and returns.

Nowadays, the majority of online returns occur for reasons that existed before the internet. The main culprits are size and quantity issues, damaged goods, late delivery, and items that are not “as described” on the website.

Arguably, these factors are often outside an e-commerce business’s control. A person may order a size that is slightly too big or small, a careless delivery driver could damage goods in transit, someone may misread a product listing, or a container ship could block the Suez Canal and cause a global logistics nightmare.

So what’s the alternative - scrap returns altogether? Unfortunately, that’s not an option.

• E-commerce is too large an opportunity to ignore. Online sales now account for 26.9% of all retail sales in the UK, with some industries, like clothing and footwear, experiencing higher penetration rates of over 50%.

• Returns have become the norm in online shopping. 8 in 10 consumers check return policies before purchasing online, and more than half (53%) of online shoppers avoid buying from brands due to unfavourable return policies.

In short, returns are a reality for e-commerce businesses. The only option is to find ways to manage them and their associated costs.

What Can You Do To Reduce Returns?

Even if you know the reasons for high returns in your business, it can still feel like a monumental task to fix. If you’re stuck on where to begin, remember that high return rates are caused by:

• Pre-purchase uncertainty.
• Product-related issues.
• Overly-generous policies and practices.
• Unmonitored logistics and supply chain processes.

Let’s look at some ways you can address each area and start getting your return rates down.

Address Product-Related Issues

If a common reason for returns comes down to product quality and damaged items, here are some practical steps you can take:

• Flag, fix, or remove “toxic” products. Identify the products with the highest return rates and determine if you can fix the issue by changing suppliers or improving your design. If there aren't immediate solutions, it may be better to remove the item altogether.
• Invest in better packaging. Damaged items are one of the leading reasons for returns. Considering the costs and lost sales, it makes sense to invest in durable, fit-for-purpose packaging that minimises damage during transit.

Reduce Pre-Purchase Uncertainty

One of the most effective ways to lower return rates is to help shoppers feel confident about their purchases before they hit “Checkout.”

• Update sizing guides and product images. Clear, accurate sizing charts and high-quality, detailed photos can reduce returns caused by incorrect sizing or a product that looks different to what they expected.
• Use videos to showcase products. Videos give a better sense of an item’s look, feel, and functionality, especially for fashion, electronics, or other categories where visuals matter.
• Get reviews from customers. Feedback from other shoppers on product pages can help potential buyers understand sizing or quality quirks before they make a purchase.
• Leverage technology for a better fit. Introducing features like augmented reality (AR) tools and virtual try-ons can help customers find the right size or style before they make a purchase.

Review Your Business Policies and Practices

Review and update business practices and policies that are overly generous and cause higher rates of return.

Here are some ideas on how to go about this:

• Introduce paid returns. 35% of people say they would reduce their returns if it cost them money. This strategy isn’t always popular, but introducing a small charge can help reduce returns.
• Stop promotions that enable overordering. Marketing campaigns such as “Buy more to get free delivery and returns” can lead to customers ordering multiple sizes or variations, driving up returns.
• Offer a variety of return options. Offering return alternatives besides pick-up returns can reduce return rates and costs. Some examples include live exchanges, free in-store returns and PUDO lockers.
• Root out serial returners. Consider charging for returns or blocking future orders from individuals who repeatedly engage in staging, bracketing, or overordering.

Tackle Logistics and Supply Chain Issues

Logistics and supply chain problems can have a massive impact on return rates and costs. Here are ideas you can implement to identify and combat high returns:

• Start monitoring returns. Collecting data on your return processes can help you identify return reasons and issues, which can then help you refine your products, packaging, and processes. Is it a product defect, incorrect size, or simply a change of heart?
• Hold unreliable carriers accountable. Late deliveries or rough handling can damage goods or frustrate customers. Ensure your logistics partners adhere to agreed-upon service levels and find new ones if they don’t.

Returns Around The World

Nearly 3 in 5 (57%) of consumers in the UK shop online at least once each week, which is more than both France (36%) and Germany (46%), the other two principal European markets for e-commerce.

In the global market, the UK sits in the middle of the pack in terms of return rates. Still, if you’re an E-commerce store, you should expect that dealing with returns and their costs will be a part of daily business.

The Impact Of High Returns

High return rates can feel like a constant drain on company time and resources. But they also have real-world consequences for businesses, such as:

Hidden costs: Each returned item has a price tag. Shipping, handling, labour, and lost sales can quickly eat into profit margins. Our research found that returns cost E-commerce companies an average of £10-£20 to process.

Stock stagnation: Products that are stuck in a perpetual return loop aren’t available to sell. Tied-up inventory can lead to outdated or off-season items that no longer command the same price.

Discounted items and lost opportunities: Returned products can take time to process for resale, forcing retailers to clear inventory, including offering discounts or selling at a loss.

A sign of customer dissatisfaction: High returns are often a red flag that you’re not meeting expectations. If customers are consistently returning items, it could mean they’re unhappy with what they receive.

Damaged brand reputation: A pattern of returns or slow returns processes can affect how potential customers perceive your brand. It may suggest quality issues, confusing policies, and poor customer service.

Do You Need To Reduce Returns?

Yes, all businesses want to reduce their returns, but whether they can or should is a different question. Here are two approaches you should use to figure out why your return rates are high and where you should look to improve.

External Analysis - Consumers, Industry, Competitors, and Competition

High return rates could affect you and your entire industry. Benchmarking returns against competitors and your industry is a necessary first step to understanding why returns are happening and where you should focus your attention.

This includes:

• Customer expectations.
• Competition.
• Product quality.
• Policies.
• Carrier-related issues.

Consider that some sectors, such as clothing, health and beauty, and footwear, commonly experience higher return volumes than DIY, electronics, furniture, and flooring.

Source: ZigZag

Additionally, reasons for returns vary considerably by industry. In clothing and footwear, sizing and quantity errors often lead to returns, whereas in electronics, defects or damage are more frequent.

Source: ZigZag

A clear picture of your business's position relative to the industry will help you identify how your return rates compare with those of other companies, understand why return rates are high and potential steps you can take to lower them.

Internal Analysis – Costs, Processes, and Policies

The next step is to turn your focus internally to understand how returns are handled and whether operations are compounding the problem.

Key areas to keep in mind include:

Costs: Calculate the total costs associated with returns, including shipping, packaging, labour, depreciation, and lost sales.

Policies: Examine your returns policy to see how it might be inflating or influencing consumer behaviour. Consider factors such as return windows, return eligibility criteria, and marketing strategies.

Processes: Analyse your returns procedures, warehouse management, customer communications, and tracking. Identify potential bottlenecks or issues that are adding unnecessary expenses or complexity.

By the end of this process, you should have a better understanding of industry benchmarks, why returns occur, how your company manages returns and what they are currently costing your business. This should also give you a solid foundation to start finding the right solutions.

Start Reducing Your E-Commerce Returns With ZigZag

The fact of the matter is that e-commerce returns are here to stay and will continue to grow as more shoppers move online. However, if your e-commerce store is dealing with high return rates, it’s not all doom and gloom.

The key to addressing higher-than-normal return rates is to pinpoint the real causes of your return levels and costs and then systematically address them.

That’s where we come in. ZigZag’s returns software is designed to make returns easy for e-commerce businesses and customers. Businesses across the globe use our solution to:

• Implement cost-saving measures quickly: Live exchanges, paid returns, paperless returns, and in-store dropoffs can added with the click of a button in multiple regions.
• Automate processes and returns logic: Create custom logic to reduce returns based on location, order dates, reasons for returns, and item condition.
• Monitor and track returns: Our returns platform allows e-commerce businesses to track customer returns behaviour and carrier performance in one place.
• Refine returns policies: Use real-time data to understand how return policies and marketing strategies are influencing return rates and implement fast solutions to correct them.

If you’d like to see it in action, book a demo with our team to learn how ZigZag’s platform can reduce your returns.

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