A webshop's return policy consists of several components, including possible return costs and the return period. - These conditions have an impact on your webshop's purchase and return rate. How do I know I have a good return policy? What do I need to take into account? We are going to give you a first start in this blog.
Return policy is a must
Returns you'd rather not have, it's not fun for the customer, but also not for the seller. Actually, it's nothing new. In fact, consumers have had this right ever since “distance selling” existed. For younger readers, you used to be able to receive catalogs by mail, call or fax your order, and then a transaction by mail followed.
For e-commerce, a more specific law has been established that requires you as a webshop to offer at least 14 days of returns when purchasing products through a webshop. Of course, there are some conditions attached, but the majority of webshops adhere to the legal 14-day return right. Is this justified? Or can we provide new insights through various studies?
Bottlenecks of a return process
There are another set of factors to consider such as competition, profit margins, customer experience and buying behavior, among others. Returns may seem like a “necessary evil” but it is an opportunity to boost customer satisfaction and drive sales. The impact of returns is always dependent on the type of goods and even variable from country to country.
In the image below you can see some differences in return rates by product group at a large German webshop (source: Paazl).
You can see here that the fashion sector has proportionally more returns than, for example, furniture or electronics. So make sure you take that into account in your processes and margins:
So what is a good return policy?
A good return policy takes into account 4 key elements:
1. RETURNS PROCESS: SHORT, SIMPLE AND CLEAR
The steps a customer needs to take to make a return should be described briefly and clearly on an easy to find page. Just like shipping, customers attach importance to an online store's return options even before they place an order. Are they clearly described and easy to arrange? A clear return process provides more clarity and security. This ensures that customers can place their orders with peace of mind, because what do they have to lose by making a bad purchase?
So make your return policy highly visible on the homepage (footer) and product pages (USPs). Furthermore, you can also provide a link to the returns page in every transactional email. Want to score really well? Offer a form or step-by-step process to assist the customer online. So never leave visitors in the dark and treat your return policy as part of your unique value proposition!
2. COSTS ASSOCIATED WITH A RETURN
You are obliged to refund the full amount including the shipping costs paid by the customer in case of a return. However, you are not obliged to pay the cost of a return. So you can choose to offer a return for free or charge the shipping costs.
A good return policy gives confidence to the consumer. This boosts your sales and that brings returns with it. So, unfortunately, also additional costs. Be careful not to see your margins evaporate on these costs. How can you avoid this?
Free returns or not?
A study by Afterpay with a focus on the fashion and sports industries, shows that the chances of returns hardly differ between webshops with a free return policy (41%) versus webshops that do not offer free returns (42%). Stores that offer free returns do have a higher average net order value (€62 vs. €47) than stores with a paid returns policy. Charging a return fee can lead to a decrease in sales, but not necessarily to a decrease in the return rate.
More than half of the products are returned with one of the following three reasons:
- Received wrong size
- Looks different, does not meet description
- Damage to product
The choice to charge a return fee or not has to be made by you as a company. Either way, you need to make sure that return rate stays as low as possible. You do that by giving very clear descriptions of the size, showing pictures on model with the sizes used and also by making a size chart that is also effectively correct. In short, provide the right information! Nowadays, there are plenty of methods to remotely help customers find the right product: AR apps, body scanners, product videos, 360-degree images and more.
3. TIME FOR RETURNS OR APPROVAL PERIOD
The trial period in Belgium is at least 14 days. Of course, there are larger webshops that are known to have longer return periods for their customers. What effect does a longer return period have on the return rate?
The results of the research by Afterpay show that the return rate is just lower for webshops with a longer trial period (30+ days: 25%):
Possible explanations mentioned are:
- Customers will experience returns as something abstract due to a longer trial period.
- Attachment to the product.
- Lost sight of returning the product and therefore keep it.
- The product has already been used more than once, so the customer no longer returns it due to conditions that have expired.
4. CONDITIONS FOR RETURNS
Again, you want to communicate concisely and clearly. Strict or unclear return conditions are going to put people off. In addition, you also come across as customer-unfriendly.
On the other hand, illegal conditions such as not being allowed to try on a garment at home, for example, cannot be an argument for not accepting returns. You may refuse a product with a personal engraving. A customer may perform all the actions they are allowed to do in a store.
WE RECAP THE MAIN POINTS FOR A GOOD RETURNS POLICY:
- Keep it short and clear
- Consider a longer return period
- Return fees can, but expect customer restraint
Do you have any other e-commerce questions?
Do you have other e-commerce questions? Feel free to contact one of our knowledgeable experts! We will make you a nice cup of coffee.