Bizrate Insights Hot Topic Series: Wanted: A lower returns rate

by Hayley Silver • , ,

Based on conversations with retailers, it seems that the two most frustrating events in the purchase cycle are cart abandonment and returns. Over a nine month period, Bizrate Insights looked more closely at returns in order to understand why consumers are making returns, how they are choosing to do so, and, most importantly, how some of these returns can be prevented in the future.

On average, 9% of consumers either made a return or planned to make a return. But this number is too blunt for benchmarking because the returns rate varies by product category. For example, in the Apparel, Footwear and Accessories (“Apparel”) category, the average returns rate 17%, while it is only 5% for the Health & Beauty category.

Returns By Category

What drives returns?

Overall, the overwhelming reason why consumers decided to make a return was due to their item not fitting correctly (43%) – but this is most likely attributed to the high Apparel returns rate for this reason. Digging a little deeper at the category level yields other reasons that fuel returns.

Top reason for product return, by category

Reasons for Returns by Category

Most consumers made their return with a pre-paid returns label (48%), but nearly 20% decided to return their item to the store, instead of sending it back via mail.

What happened to the money?

35% of consumers received their money back after making the return, while 18% made an exchange for another of the same item. Only 6% exchanged the item for an entirely different item. These numbers skew a bit low, however, as 39% of consumers did not know what type of refund they would receive at the time they took the survey.

With a goal of keeping the revenue earned in-house with the retailer, we also took a look at whether consumers would accept a store credit instead of a cash refund if any “perks” were offered along with it. We found that 65% of consumers would take a store credit, depending on the accompanying offer. The most popular offers involved shipping discounts, or a discount off of the next purchase.

Returns for Store Credit

What could have prevented the return?

While 29% of consumers said there was nothing the retailer could have done to prevent the return, the most actionable information that could have prevented the return was more detailed information about the size, dimensions or fit of the item(s) (22%). This prevention tactic was the most popular choice among all of the categories. Most of the other responses were all less than 5%, with better product images ( 7%) and product reviews (5%) rising to the top of that list.

How this data can help retailers

Here are some suggestions for consideration and testing:

  • Determine the most popular reasons why your customers are making returns, and then work to address their concerns pre- and post- purchase.
    • For example, if your customers are receiving damaged items, then revisit your packaging. If fit is an issue, then provide more specific sizing guidance on your site.
  • Consider adding product reviews that include fit dimensions and suggestions, to help consumers gain a better understanding of the product before purchase.
  • Add a custom question on your survey to determine which offer would result in the most exchanges and store credits, versus cash refunds.

About this Hot Topic

Data was collected from over 138,000 online buyers after order fulfillment, across retailers from every major product category from December 14, 2009 – September 15, 2010. Bizrate Insights provides free, independent surveys for retailers to utilize to gather actionable feedback from their customers. Free surveys are offered immediately after purchase (“point of sale”), after order receipt (“fulfillment”), and prior to purchase (“non-buyer”). Please contact us with any questions about this Hot Topic or any of our programs.

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