Returns are inevitable in e-commerce, influenced by psychological and practical factors. For example, “bracketing” is a practical problem where customers intentionally purchase multiple versions of an item, such as different sizes or colors, with the explicit plan to return the ones that do not meet their needs. This practice, now common among ~60% of online shoppers, highlights a desire to recreate the confidence of in-store shopping.

Impulse purchases, another significant driver of returns, are more psychological. Stress-induced purchases often result in regret, with 1 in 4 shoppers admitting to returning items they either did not need or could not afford. Furthermore, buyer’s remorse can stem from discovering better deals after purchase, leading to returns driven by price sensitivity rather than product dissatisfaction. Social influence and seasonal considerations also contribute, as it’s not uncommon for returns to stem from peer pressure or unused seasonal items that won’t create any value until a future season.

Unlike brick-and-mortar stores, online shoppers cannot physically inspect products before purchasing, leading to a return rate of up to 30% in e-commerce, nearly three times that of physical stores. To address this issue, understanding the myriad reasons customers request returns for online purchases, identifying their root causes, and crafting the perfect ecommerce returns program is essential to the success of today’s e-commerce merchants.

The bad news is that no magic solution will do everything for you automatically. But, the good news is that strategies are available to resolve or mitigate the risk e-commerce returns pose to your business. If you put in the work, the revenue retained from doing so is often considerably more than the value of the time put in.

We’re setting aside anything related to customer returns fraud and abuse for this article.

Top E-Commerce Return Reasons

1. Product-Related Issues:
   • Fit and Sizing Problems: Particularly prevalent in fashion and footwear, fit-related issues account for 70% of returns in these categories.
   • Damage or Defects: Products that arrive in less-than-perfect condition are a significant motive for returns. An estimated 4 out of 5 consumers cite damage and/or defects as the reason for their return, often a result of manufacturing defects or insufficient protective packaging that lead to damage caused in transit.
   • Inaccurate Descriptions or Quality Issues: Discrepancies between the descriptions or images on a product listing and the actual product delivered erode trust and can lead to disappointment. For example, variations in color from what was displayed on the product details page can cause disappointment.
   • Incompatibility: Products that do not fit with existing items can prompt returns.
     
     
2. Customer Behavior:
   • Gift Returns: Recipients often return unwanted or unsuitable gifts.
   • Price Sensitivity: As mentioned earlier, customers may return items if they discover a more competitive price post-purchase.
   • Changed Mind or Customer Error: Customers may simply reconsider their purchase after the fact, or perhaps they purchased the wrong item.
     
     
3. Operational Factors:
   • Shipping and Handling Issues: Late shipments, carrier delivery delays, lost packages, and other issues often trigger returns, especially if the items were intended as gifts.
   • Order Fulfillment Errors: Shipping incorrect items or shipping the wrong size, color, flavor, scent, or quantity increases the likelihood of returns.
     
     

Leveraging Data to Reduce E-commerce Returns

If you’re not already… you should be capturing returns data, which is a gold mine of actionable insights. Analyzing patterns can reveal:

1. Misaligned Expectations: Products regularly returned for size discrepancies indicate inaccuracies in product descriptions. Providing detailed size charts and fit guides can significantly reduce size-related returns (and minimize bracketing), so put effort into creating detailed, brand-specific sizing charts. Frequent returns of specific products suggest a gap between marketing and reality. Ensure descriptions are clear, detailed, and honest to set proper expectations.
   
   
2. Quality Control Issues: Modify fulfillment protocols to ensure safe delivery of damage-sensitive products. High defect and damage rates indicate manufacturing or shipping problems. Implement strict quality control measures to minimize defective items and hold suppliers accountable.

Merchants can use customer feedback to refine product descriptions, enhance quality control, and optimize customer education to reduce mismatches between expectations and reality.

Strategies to Minimize E-commerce Returns

1. Improve Product Presentation
   • Detailed Descriptions: Provide comprehensive information about size, materials, and functionality and offer educational content to help customers make informed decisions. This is not a one-time set-it-and-forget-it task but a recurring priority that uses continuous customer feedback to improve product data more and more over time.
   • Rich Visual Content: Include high-quality images accurately representing products, 360-degree views, and videos demonstrating products in action.
   • Augmented Reality (AR) and Virtual Reality (VR): Offer virtual fitting rooms or placement tools to help customers visualize products in their space
     
     
2. Engage with Customers Pre-Purchase
   • Live Assistance: To reduce return rates, customers should have access to excellent customer service representatives during the shopping process. These representatives can assist with inquiries before purchases are completed.
   • User-Generated Content: Encourage reviews, photos, and videos from previous buyers to create social proof and help customers make informed decisions.
   • Comparison Tools: Allow customers to compare items directly during checkout, which can reduce bracketing and near-guaranteed returns.
     
     
3. Optimize Promotions
   • Thoughtful Discounts: Avoid promotions that encourage excessive purchases and subsequent returns. Customers are inclined to artificially increase their cart size to qualify for free shipping and/or discount tiers, which can lead to returns of items not wanted or needed from the order.
     
     
4. Streamline the Post-Purchase Experience
   • Post-Purchase Support: Send follow-up emails with product setup, care, and usage tips. And, turn post-purchase interactions into new sales opportunities.
     
     
5. Incentivize Exchanges
   • Instant Exchanges: Offer immediate replacements for different sizes or styles (e.g., ReShop.com). Or, offer incentives for customers to keep items, such as discounts on future purchases.
   • Bonus Credit: Provide higher-than-expected refunds in the form of store credit for customers who choose exchanges over refunds.
     
     
6. Tie Returns to Customer Loyalty Programs
   • Tiered Policies: Offer free returns as a benefit for loyal customers/members while charging non-VIPs a modest return fee. Develop loyalty programs that encourage repeat purchases and reduce return rates.
   • Feedback Incentives: Encourage returners to provide detailed feedback, which will help refine future offerings. Use data analytics to track return patterns and identify areas for improvement.
     
     

Balancing Returns Management and Customer Satisfaction

An efficient returns policy is not just a cost center but a strategic opportunity to build loyalty. It’s how large retailers such as Amazon and Nike have increased loyalty through simplicity and predictability. Retailers should:

1. Simplify for Customers: Offer multiple returns options that meet the target demographic where they are, including the communication channels they prefer. It’s no longer acceptable to hide behind a website. Customers want several contact points: phone, email, chat, text (SMS), or support ticket/form submission.
   
   
2. Communicate Clearly: Be transparent about return policies, processing times, refund statuses, and return or restocking fees. Communicate final sale policies on product pages to avoid confusion before checkout. Don’t bury return policies three clicks deep (or more!). Consider offering perks for selecting exchanges over returns for a full refund (which helps retain revenue).

Implementing these strategies can help merchants reduce e-commerce return rates while maintaining customer trust and satisfaction. This leads to repeat business, a long-term relationship, and higher customer lifetime value (LTV). The key is turning your customers’ experiences into actionable improvement plans while anticipating and addressing potential issues before they arise.

Summary

As technology advances, innovations like AR, VR, and AI will play an increasingly pivotal role in reducing returns by giving customers an online shopping experience closer to what they’re used to ‘in store.’ At the same time, retailers must focus on fostering trust and transparency to align customer expectations with reality. By understanding and addressing the root causes of returns and implementing creative solutions, e-commerce retailers and brands can turn this challenge into an opportunity to engage with customers and nurture a long-term relationship that benefits both parties.

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