Today many e-commerce business owners take the return policy for granted and feel that the policy can be very detrimental. In fact, one-third of all e-commerce sales will experience a customer return or return process. In fact, if used wisely and managed properly, customer policy will actually give your business big profits, attract more customers, retain repeat customers and increase the credibility of your brand.
Every seller or E-commerce owner certainly wants customers to be satisfied and do not need to return products. In other words, some business owners will focus on reducing returns. Yet creating and implementing a return policy is just as important. During the pandemic, many business owners softened their return policies but found the new policies actually helped them increase sales. Here are some studies that prove this.
In a study published in the Journal of Retailing 2014 showed that there are five elements of a return policy and what makes it a soft or strict policy include “
Time. Where the seller specifies a deadline in their return policy (e.g., 30 day policy, 90 day policy). Return policies that give customers more time to return products are considered more lenient.
Monetary. The lenient return policy allows for a full refund of the amount paid for the product purchased. Strict return policies will usually deduct customer funds for shipping or other fees.
Business. The seller establishes return guidelines for customers to return products (for example, requiring that the original receipt, label, or product packaging be retained). A softer return policy will certainly make it easier for customers without having to make a lot of effort.
Scope. Some stores limit the items they consider "returnable." For example, products purchased during flash sales or discounts may not be eligible for return. Policies with a higher "return-worthy" item level are considered more lenient.
Exchange. Some sellers offer cash refunds, others provide store credit or product exchanges for returned items. The return policy that allows cash refunds is felt to be more lenient for customers.
The study also concluded that overall, a soft return policy can increase sales and decrease customer returns. That way, if you want to lower your return rate, try to make a more lenient return policy, for example extending the return deadline or deadline from 30 days to 60 days or 90 days.
If you are still unsure about setting a customer-based policy or making a more lenient policy, you can check out some of the reasons below!
The first reason why you need a return policy is because buyers tend to check the policy before making a purchase. In a survey, 91% of consumers interviewed in a recent Harris Poll said that a store's return policy is an important factor in making purchasing decisions. In addition, according to a study conducted by TrueShip, more than 60% of customers review the return policy before finally deciding to make a purchase. The study shows that return policies can increase purchases and consumers are even willing to pay more for a satisfactory return option.
Customers who have had a good return experience are very likely to return to your store again. In fact, E-commerce businesses with at least 40% repeat customers tend to have sales with 50% higher sales rates.
This is also evidenced in a study conducted by UPS in 2019, where 36% of online shoppers surveyed made a return within the last three months. Of these buyers, 73% said that their return experience will influence their decision whether to buy again or not in the future.
By analyzing customer feedback, sellers can find out more information and a better understanding of why certain products are frequently returned by customers. It is likely that some of the products you sell will often be returned for a reason such as easily damaged during shipping or other reasons.
If a product is often returned because it was damaged in transit, the seller can contact the manufacturer to correct the defect or improve the goods so that they are not easily damaged. If you keep trying to research the product and improve its quality, of course the rate of return will decrease in the future and you can get more products sold and bigger profits. So, never underestimate the return policy in your business.
There are many reasons why a return policy can improve your brand image or perception of the brand of the product you are selling. The reason is because the longer customers have an item or items, the more they will feel attached. Another reason is because customers who have positive experiences when returning goods will tend to repeat orders or repurchase. This is in accordance with the Narvar study which states that 95% of online shoppers say that a positive return experience can boost their loyalty. Customers who have positive experiences with returns are also more likely to share their shopping experiences online. A positive return experience is considered to be able to make your brand image or brand better and known. Especially now that many customers are loyal to one brand because other than the products they use are appropriate and the return policy is always positive.
Many e-commerce stores spend as much as 80% of their marketing budget on customer acquisition. But it's actually more profitable to focus on customer retention. You need to know that 8% of repeat customers can generate 41% of your e-commerce store's overall revenue, so it's best if your business should prioritize getting customers to come back.
Loyal customers who often buy your products will certainly find it easier to buy, shop more and share positive reviews about your brand which will indirectly help you get bigger profits.
By implementing a lenient customer policy, you can derive many benefits and advantages. In order to function optimally, you can also use software that can help you manage returns more accurately, such as ReturnKey. ReturnKey can help you manage returns more easily and help you implement optimal return policies to increase your business profits.