In the world of ecommerce, high return rates can quickly become a nightmare. But don’t worry – we have some effective strategies for solving this problem. In this blog post, we provide valuable insights and practical tips for reducing your return rate and keeping it down in the long term. Read on to find out how you can reduce your return rate and minimize costs, while increasing customer satisfaction.
Don’t miss the chance to reduce your return rate and make your business more profitable.
Table of contents
Why you should reduce your return rate ☝️
Unfortunately, high return rates have become the norm
High return rates have become an everyday occurrence in ecommerce, with far-reaching consequences for companies. Current statistics reveal the extent of the problem. In Germany in particular, the situation is worrying. According to the trade research institute EHI, Germany is actually the European champion when it comes to having the most returns. [1] In addition, a research group at the University of Bamberg discovered that on average across Germany, one out of every four packages is returned. This could be because no other EU country has so many free returns. And online merchants usually offer generous return periods. [2]
In the US, too, the return rate has increased. In 2021, returns made up an average of 16.6% of all retail sales in the US. In the previous year, the figure was 10.6%. [3]
This impacts not only online merchants, but also the environment. According to the National Retail Federation, the average retailer faces about 166 million US dollars of return costs for every billion dollars of revenue. [4] The Bamberg research group found out that around 795,000 tons of CO2 were caused by returns in 2021.
Here’s why returns cause huge additional costs
Returns in online stores burden merchants with extensive additional costs and extra work. Here are some typical reasons why:
Merchants often cover the cost of returns, as well as investing in new packaging material and labor for processing the return.
Articles may get damaged while being sent back, which incurs costs for repair or replacement.
Returned articles have to be checked thoroughly before being offered for sale again. This requires staff and time, which increases costs.
Some returned products are not offered for resale, and are disposed of instead.
In addition, returns cause costs in other areas, such as storage and management of returned items.
A high number of returns also increases the workload in customer service.
Returns generate not only direct costs, but also indirect ones that can greatly impact merchants.
Customers don't enjoy returns either
We shouldn't underestimate the fact that returns are mostly a negative experience for customers, too. Although returns offer the opportunity to send back unsuitable or defective products, they are often linked to various problems. Uncertainty, for example, and time spent dealing with the returns process. In some cases, customers have to cover return costs themselves, which can be frustrating. And long processing times for returns can lead to a delay in refunding the money.
Then there’s the question of why a product was returned. Was it due to a careless product description or even incorrect information? Or did the product become damaged because of defective packaging? In the worst case, such reasons can cause customers to lose confidence in the online store and switch to a competitor.
So you see, online merchants and companies should prioritize measures to reduce their return rate in the long term. This helps them not only keep additional costs to a minimum, but also increase customer satisfaction and remain competitive. Above all, it’s important that when customers order a product, they can be sure that it meets their own expectations, making a return unnecessary. So before we move on to possible solutions, let’s have a look at the main reasons why customers decide to return products.
Most frequent reasons for returns 📦
Why do customers send their online purchases back? Here are the typical reasons for returns in online stores, divided into various categories.
Product-related reasons
Wrong size or fit
The classic reason. Especially with clothes and shoes, the sizes ordered often simply don't fit.
Color differences
The color looks different in real life to the way it was shown in the online store. This, too, is quite typical.
Poor quality
The product is defective or poorly made, and customers are not satisfied with it.
Wrong product
Customers often get a nasty surprise when they open a package and find a different product to the one they ordered.
Damaged goods
Smashed, broken or dented – time and again, products don’t survive the journey in one piece.
In the fashion sector in particular, the wrong size or fit is a typical reason for return. A Statista survey on the products with the most frequent returns also reveals that this sector has the highest return rate.
Customer decisions that lead to returns
Changed their mind
Spontaneous purchases are not uncommon, and the customer changes their mind after buying.
Price comparison
A customer might find the product cheaper somewhere else after purchasing, and returns the more expensive one.
Double purchases
Happens more than you might think – customers accidentally order the same product more than once, although they only need one.
Gifts
Not every gift is a success, and some end up back with the merchant.
Doesn’t meet expectations
Often, the product doesn’t meet the customer’s expectations, for example, due to misleading product descriptions or images.
Test purchases
Some customers order several variants of a product so they can compare them. Then they send the unwanted ones back.
Other reasons for returns
Delayed delivery
If the customer receives the product too late and no longer needs it, they’re likely to send it back.
Missing parts
Are parts or accessories missing from the order? Not many customers will let that pass.
Payment issues
Problems with the payment process can also result in returns.
Seasonal returns
The return rate often increases following public holidays or special occasions such as Christmas.
Online store error
When the wrong products or quantities are ordered due to a technical error, articles are mostly sent back.
For lots of these reasons, there are measures you can take to minimize the number of returns. Keep reading to find out more.
Tips to help you reduce your return rate 💪
Reducing the return rate in your online store is an important step that will increase profitability and customer satisfaction. Here are our tips for doing that effectively.
1. Provide detailed product information with photos and videos
You can drastically reduce the return rate in your online store by offering customers detailed product information that tells them everything they need to know. High-resolution photos and eye-catching videos are an important element.
Don’t simply rely on words to entice your customers; have them dive into crystal clear images that showcase every detail of your product. With close-ups and a practical zoom function, they’ll feel almost physically immersed in the world of your products.
And why stop there? Offer a 360-degree view! That way, your customers can rotate the article virtually and look at it from all angles, making it so much easier to get a feel for size, color, and quality. (Find out more about 3D and spatial commerce.)
For more complex products you can go one better: Explainer videos bring all the special features and functions to life, so your customers can see exactly whether the product meets their requirements.
In short, you can create the ideal shopping experience using high-resolution images and informative videos. This motivates people to buy and minimizes unnecessary returns. So let your products speak for themselves and they won’t need to be sent back.
2. Improve your product descriptions
Optimize your product descriptions to reduce the return rate in your online store while increasing customer confidence. Clarity and attention to detail are the key to ensuring that your customers purchase exactly what they’re looking for.
Your product description should include all the important information, from technical features and materials to the origin of the product. Be precise, especially when it comes to color shades, because even images may not convey the actual color, depending on screen settings and the device they’re viewed on.
In the case of clothing, don't forget to provide a sizing table or detailed information about the fit. That way, your customers can find out in advance whether the article is available in the desired size, which reduces the likelihood of returns due to sizing issues. Information from other customers who have ordered before can also be helpful.
In our post on How to write sales-boosting product descriptions for your online store, you can find out what else you need to consider when writing product descriptions.
3. Focus on customer and product reviews
Customer and product reviews are an effective way to reduce the return rate in your online store. These reviews give potential customers valuable insights into the products they’d like to buy. Because customer and product reviews often contain information, perspectives, and experiences that are rarely found in a product description. And it’s no wonder, because customers often answer questions that merchants wouldn’t even have thought of. Only customer reviews indicate how satisfied other customers have been with a certain product, and whether it has met their expectations. And this has a great influence on the purchasing decisions of potential customers, greatly reducing misunderstandings or false expectations.
Some examples: If customers read in reviews that the online store uses high-quality packaging to minimize damage during transport, they have more faith that the procedure will be quick and uncomplicated. Informative reviews can also reveal possible reasons why a particular article has been returned, reducing the risk of customers ordering the wrong item.
4. Offer first-class, personalized customer service
First-class customer service is key when online merchants want to reduce their return rates. Because customers who benefit from helpful customer service are more likely to be satisfied with their purchases and less likely to return them. How about providing chat support, for instance, to advise customers in real time while they’re selecting products? A chatbot or live chat is a good way to do that.
But there are also other ways of improving your customer service when it comes to returns. We’ve already mentioned that it’s important to provide detailed and informative product descriptions.
Another key point is to ensure that returns are handled easily and seamlessly. Clear instructions and a well-organized returns management process will help your customers navigate the returns process smoothly. And they’ll feel well looked-after.
In addition, personalized assistance and open dialog with customers can further reduce the likelihood of goods being returned.
5. Insider tip: Digital sales rooms
A secret weapon that can help reduce the return rate in your online store is a digital sales room. Research organizations such as Gartner predict that this technology will grow considerably, particularly in the B2B segment. The Gartner Magic Quadrant for Digital Commerce anticipates that a massive 30% of all B2B sales figures will be generated via digital sales rooms by 2026.
But what exactly is a digital sales room? It’s a virtual selling space where sales staff and potential buyers can come together to talk about products. The great thing about them is the personalized assistance and the interactive shopping experiences. There are different ways of offering this. At Shopware, for instance, users of digital sales rooms enjoy personalized shopping experiences; interactive assistance via video, chat, or co-browsing; and cutting-edge online product catalogs for selected customer groups.
All this makes digital sales rooms an effective way to reduce the return rate, as customers receive better advice before purchasing and become more familiar with the products. This reduces the probability of them sending goods back because they weren't properly informed.
More about digital sales rooms for Shopware users here: Shopware Digital Sales Rooms.
6. Sector-specific tips for fewer returns
There are different measures you can implement to reduce your return rate, depending on the sector. Here are a few examples.
For certain products (for example in the furniture segment), you can also provide color or fabric samples, to give customers a better idea before they purchase. Virtual room planners can also be a great help with reducing returns in the furniture sector, as customers can see immediately whether the new piece of furniture works well in the desired space.
In fashion, on the other hand, it can be good to offer a sizing guide that helps customers find the right size. Virtual changing rooms can also be helpful, because they give customers a better idea of how the new dress or suit will look on them.
In the food sector, you can offer small samples at a lower price or for free, so that customers know what they’re getting before ordering a larger, higher-priced pack.
In beauty, too, where personal taste plays a significant role, smaller samples can be a great way for customers to try out skincare products or perfumes, for example.
We’ve already learned that you can avoid returns by making sure customers are better informed about your products. In the case of technical products such as household appliances, entertainment electronics, or electrical tools, it’s a good idea to offer a product comparison function. This allows customers to view and compare hard data about the products they’re interested in: what wattage a certain drill has, how much electricity different televisions use, or which energy class their potential new fridge is in.
7. Optimize your shipping and delivery conditions
When it comes to increasing customer satisfaction and minimizing the number of returns due to delays, efficient and reliable shipping is everything. Rapid delivery makes all the difference, as customers expect their orders to arrive within a reasonable period of time. Especially when it comes to articles for special occasions such as Christmas, birthdays, or parties, longer delivery times can cause frustration. Not to mention increasing the likelihood of returns if products arrive too late and are no longer needed.
Another effective measure for improving the shipping process is to use robust, high-quality packaging. This protects goods from damage during transport and means that articles are less likely to be sent back.
A combination of speedy delivery and higher-quality packaging will not only help you increase customer satisfaction, but also make your shipping and delivery process considerably more efficient, which also reduces returns.
To summarize, there are effective measures and also good reasons for reducing your return rate
These tips will help you take effective measures to reduce your return rate. But how high is it, actually? Is your return rate normal for your sector? And how can Shopware support you on the subject of returns? We’ll reveal all that and more in the following FAQ section.
Frequently Asked Questions on "Returns in online stores" 💬
How do I calculate the return rate?
The return rate, usually expressed as a percentage, shows the proportion of returned products to all sold items. You calculate it with a simple rule of three calculation: Divide the number of returned items by the number of sold items and multiply the result by 100. This gives you the return rate in percent.
Here's an example: A fashion house sold 1000 items last month, and 50 of them were returned. The calculation of the return rate is as follows:
Knowing your return rate is crucial as it provides insights into customer satisfaction, the quality of your products, and the efficiency of your logistics. By analyzing the return rate, you can take targeted steps to lower it, save costs, and increase customer satisfaction.
What return rate is normal?
In ecommerce, returned items are a common phenomenon. According to a study by the University of Bamberg in Germany, the average return rate in German online retail is 24.2%, meaning that almost every fourth package is returned. However, this rate is very high compared to other countries. [2] Moreover, the average return rates vary significantly depending on the industry. The return rate is highest in the fashion segment, as shown by the European Return-o-Meter of the University of Bamberg [2].
Average return rate in Europe in 2022 by sector:
Fashion: 32.36% (package-related) and 19.36% (item-related), respectively.
Entertainment: 3.90% (package-related) or 3.43% (item-related)
Leisure: 7.70% (package-related) or 6.23% (article-related)
Interior: 3.86% (package-related) or 3.16% (article-related)
Others: 3.25 % (package-related) or 3.07% (article-related)
Also interesting is the following survey by Internet World Business. Here, 43% of the surveyed online retailers from the food sector stated that their return rate is zero or almost zero percent.
It is certain: The item-related return rate is an important indicator to measure the probability of return of a particular product. There are areas with above-average high return rates, such as fashion. No wonder, as fit, material, and color often turn out differently than expected.
Moreover, a certain return rate in ecommerce is normal, as not everyone informs themselves thoroughly before purchasing, and some reasons for returns are simply inevitable. However, a higher-than-average return rate for your industry should prompt you to investigate the matter and take countermeasures. And even if your number of returns isn't above average, it's worth lowering your return rate to increase customer satisfaction, cut costs, and reduce the impact on the environment.
How do I lower the return rate in the online store?
To diminish the return rate, prioritizing detailed product information is pivotal. Enhancing product descriptions, featuring multiple high-quality images, and potentially integrating videos can provide a comprehensive view of the products. Employing interactive online events and consultations through digital sales rooms emerges as a modern, effective strategy. Customer reviews also play a crucial role, enabling shoppers to make informed decisions pre-purchase. Furthermore, top-tier customer service fosters trust and preempts uncertainties, while timely deliveries and premium packaging safeguard the product and enhance customer satisfaction. Introducing a fee for returns may also serve to minimize the return rate.
Free or chargeable returns: Which is the better choice for my business?
In Germany, the return rate is notably above average, likely attributed to the prevalent option of free returns for customers. A study conducted by the University of Bamberg revealed that 88.7% of retailers surveyed offer free returns to their customers. [2]
Implementing chargeable returns can serve as an effective strategy to curtail the number of returns in your business. The rationale is straightforward: when customers incur a cost for returns, they may deliberate more judiciously before placing an order. Consequently, this could diminish the return rate and subsequently reduce your costs.
Nonetheless, this strategy is not without its risks. Instituting a chargeable return policy might dissuade potential customers, adversely impacting the conversion rate. Specifically, customers might be reluctant to make future purchases if they have previously incurred a cost for returning an item. This hesitation could be particularly pronounced among potential regular customers, potentially undermining overall customer satisfaction. Insights from a KPMG survey might offer valuable perspectives:
Interestingly, 23% of customers surveyed expressed a desire for chargeable returns as a measure to reduce return rates. [5]
A similar result was obtained when queried about the impact of chargeable returns on their shopping behavior, 36% of respondents deemed them acceptable.
However, a notable portion of respondents also indicated that chargeable returns would deter them from online shopping or prompt them to shop elsewhere.
This subject is notably polarizing and significantly influenced by the respective target group. Conducting a survey among your own customers might provide valuable insights to inform your decision-making process.
The choice to implement or abstain from chargeable returns warrants careful consideration, as the repercussions can diverge widely depending on the industry, product assortment, and target audience.
While introducing chargeable returns might diminish your return rate and related costs, maintaining customer satisfaction should always be paramount to avert adverse effects on your business. Nonetheless, if your return rate is conspicuously high and impervious to other mitigative measures, instituting a chargeable return might emerge as an efficacious solution.
How do I handle returns with Shopware?
Efficiently and intuitively handle returns via the Shopware platform, utilizing the specialized feature "returns management," available with Shopware Rise, Evolve, and Beyond. View plans and prices.
If your customers want to return products, you can easily manage returns in the administration. Record these directly with the order data, specifying the quantity and, optionally, a comment (e.g., the reason for the return).
Subsequently, customers can view and track the return status assigned in their account's order overview.
Additional functions in Shopware returns management:
Automated Notifications: Inform customers and employees automatically about return statuses or changes, enhancing transparency and service.
Mail Templates: Tailor notifications for your customers and team to align perfectly with your requirements.
Customizable Return Workflows: Adapt your return management processes to your preferences and processes with just a few clicks.
Coming soon: Returns management | customer account
A self-service portal is currently under development and will soon be available. Customers will be able to initiate returns directly in their account without your intervention, with all relevant information flowing into the administration and triggering the initial necessary steps automatically. This enhancement will make your return management even more professional, customer-friendly, and efficient!
Read more about Shopware returns management in our user documentation.
Third-party solutions
In addition to Shopware's in-house feature for returns management, you can also integrate a third-party solution. Thanks to Shopware's open source approach and a vibrant developer community, numerous extensions are available in this area: Return extensions in the store. Additionally, our adept technology partners offer solutions that can be beneficial in return management, such as Returnless or Return by Paqato. These can be easily connected via Shopware's API and seamlessly integrated with your ecommerce platform.
We wish you much success in optimizing your return management!
Sources 📚
[1] EHI Retail Institute study: Shipping and returns management in ecommerce 2022 by Sabine Vogel, Andreas Kruse, Thomas Kempcke, Niklas Stanislawski. (German source)
[2] Study results of the European Return-o-meter 2022 by the Bamberg University Research Group. Last accessed October 2, 2023.
[3] Online Sales and the Rise of Returns by Jia Wertz on forbes.com, last accessed September 12, 2023.
[4] NRF Press Release: Retail Returns increased to $761 Billion in 2021 as a Result of Overall Sales Growth, January 2022. last accessed September 12, 2023.
[5] Online Shopping: How Customers Want the Shopping Process to Work - Customer Journey, Shipping and Returns, page 21. Last accessed on October 2, 2022. (German source)
* Shopware AI Copilot is only available in Shopware Rise, Evolve, and Beyond.
