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eCommerce and strategy returns management

How customer shoes return affect eCommerce revenue

22 January 2019

You will agree that the eCommerce industry isn’t what it used to be. Continuously evolving technology has shaken up the industry so much that a downward trajectory is unimaginable. In fact, Statista predicts that global eCommerce sales will hit a record high of over $4.8 trillion by 2021.

But as the numbers continue to look up, we can’t forget the existing problems in eCommerce. Amazon, for instance, is still the dominant retailer in the industry accounting for about 49% of the market in 2018 . This reigning dominance forces other online retailers to either shape up, or exit the market.

And then there’s the growing concern for lack of identity verification, information security, competition in against other retailers and manufacturers, shipping and pricing, consumer loyalty, and the headache that is product returns and refunds.

Speaking of product returns, let’s get into the main topic of the day.

 

How Does Shoes Return Affect Ecommerce Revenue?

To fully understand this, we must first look at the current state of the return concept.

At Addi.fit, we’re in the business of helping eCommerce businesses improve the way they sell shoes to their online customers. And you might already know this. What you might not necessarily know, though, is that we are in agreement that there’s nothing wrong with having a return policy that works for your customers.

In fact, according to this 2018 study , 67% of online consumers will browse the returns page before proceeding to checkout. 79% prefer to shop with brands that allow for free return shipping. And 92% of shoppers will buy an item again if they find the return process easy. So, clearly, businesses with a return policy in place have a lot to be thankful for.

But while these statistics demonstrate the good in customer product returns, all isn’t as rosy and golden. The downside of customers making returns could be more detrimental to a business than many people think. And it could get worse if shoppers believe the policy you have in place is more inconveniencing to them than it is helpful.

Case in point: at least 81% of shoppers want a brand’s return policy to be so hassle-free that they don’t pay for shipping costs. You will agree with us that such an occurrence is guaranteed to cause your business losses if the returns are many. And if we’re to go with this report saying that about one in three products sold online results into a return, then you have something to worry about.

And that’s not all.

The business of product returns has a lot of loopholes causing your business more harm than good. And we’re going to cover the full extent to which shoes return affect eCommerce revenue. But first, let’s explore the basics by answering some questions you may have.

 

Why Do Customers Make Returns?

There are various reasons why customers may choose to make a return on an item they purchased online. Based on this report , however, top reasons include the receipt of a wrong product at delivery, the product looking different from what was online, and the product being damaged.

Image credits by invespcro.com

But with top reasons aside, let’s take a look at the common causes of product returns in relation to the shoe retail business.

1. Incorrect Shoe Size

When buying in-store, a customer has the advantage of trying on a pair of shoes before making a purchase. This allows them to see how they fit and decide whether they like them or not. But with online shopping, one has to wait until delivery to try on and see how well or bad they fit.

 So, it goes without saying that the top reason shoppers make a shoe return online is because it didn’t fit right. Or with some cases where one is unsure of their size, the customer will choose to place an order for two different sizes. This way, they can keep the one with the right fit and return the one without.

 

2. Optical illusion leading to an order on the wrong pair

Shopping online has a lot of loopholes. Especially if the customer isn’t an expert of colour and dimensions, and doesn’t take the time to read the description.

Remember the notorious dress of 2015? The one that made rounds on the internet and people couldn’t agree whether the dress was white and gold or blue and black? Well, allow us to remind you of the mayhem with this link. It was so confusingly famous that it made an entry on Wikipedia.

 That’s how bad optical illusion can get. A customer may hurriedly place an order for burgundy shoes, thinking they’re actually maroon in colour. So when they’re delivered, they believe your business sent the wrong product and demand for a refund or return. And this problem brings us to our next reason.

 

3. Delivered shoes didn’t match what was in the description 

While the blame for the previous reason lies solely on the consumer, the fault here lies solely on your business. About 22% of all returns on products purchased online are due to a product looking different. And sometimes, the reason behind this problem is usually in the product description.

If your website puts up shoes and describes them as “patent leather Italian dress shoes”, then they shouldn’t be calf leather or lux leather at delivery. They should be exactly what was ordered.

Otherwise, the customer has every right to make a return on the product and make a complaint. And if your customer care doesn’t take responsibility for the mistake, your business might end up losing a customer. And every other potential shopper the customer interacts with later.

 

4. Impulse Holiday Purchases 

According to this study by Shopify , eCommerce returns during the holidays usually go up to 30% or even 50% on expensive items. That means if you were happy to sell several pairs of Walter Steiger, Alexander McQueen, Jimmy Choo, or Manolo Blahnik shoes during the holidays, a return on the shoes isn’t unfathomable.

And this type of return has nothing to do with the product being faulty, wrong or different. It was probably an impulse purchase where the shopper didn’t know what to do with the product. Or maybe it was a gift for a loved one who didn’t really want it and had to be returned. And in fact, according to this report , 16% of shoppers returned up to six or more gifts, because they just weren’t right.

 

5. A change of mind

The human race can be very unpredictable. A consumer may see a beautiful pair of shoes on your website or catalogue and decide to make a purchase. But when the product arrives at their doorstep, they realise they no longer like it. And according to them, another similar pair on a different online store looks much better.

 And so with the help of a brand’s free return policy, they send back the shoe and opt for the other. In such cases, as a business, you don’t have much control over a consumer’s change of mind. But you can always control the type of returns you accept.

 

6. Better pricing on a different online store 

Many people work on a budget. And if a consumer can get the same exact product at a different cost elsewhere, then why not? The problem for your business, though, comes when this discovery is made after a purchase.

There’s not so much you can do as the reason for the return is valid. Just to accept the product back and take responsibility for how such shoes return affect eCommerce revenue for your brand.

 

When are the Most eCommerce Returns Made?

So far, we already understand what drives customers to make returns online. It’s the reasons we gave in the previous section. The next step is to open our eyes to the timings of the returns and see what we can derive from this.

Image credits by Shopify

Based on the Shopify study, normal eCommerce returns usually average 20%. However, this goes up to 30% and 50% during the holiday season – an occurrence that can be attributed to Black Friday, Cyber Monday and Christmas shopping deals.

And there’s more.

Consumers almost always wait until the last minute to return a product, with the average time being 2 to 3 days before the return period has timed out. This, of course, raises questions on why a consumer will wait this long for policies that allow up to 30 days.

But our role isn’t to raise questions. Ours is to help you uncover what’s wrong with your shoes return policy, why you’re getting too many shoe returns, and what can be done to avoid it.

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Enter the Downside of Making Shoe Returns

While clear benefits of offering a return policy of up to 30 days exists, we cannot ignore the disadvantages that loom. Yes, having this policy could increase your customer base by over 57%. But have you surveyed what the other side of the coin looks like?

We’ll give you an idea by highlighting the probable headache of customer returns.

  • If your return policy isn’t right, you’re bound to lose customers. Statistically, it has been proven that it’s 7 times harder to retain a customer than it is to acquire a new one. And with 81% of shoppers preferring a fast, easy and free return policy, a big problem exists. For instance, only about 25% of online brands provide free returns. So if you’re not in this particular bracket, you don’t necessarily have bargaining power.
  • If you encounter too many returns, losses in your business are inevitable. Back in 2018, Amazon decided to start banning shoppers for returning too many products . And expectedly, there was uproar from consumers. Many people couldn’t understand how the retailer could do this, yet it boasts of one of the best return policies available. But everyone and every business have a limit, especially, if the issue has a direct impact on your business. And this was Amazon’s.
  • Lack of respect for your brand’s return policy. There’s only so much you can do to control how consumers use your return policy. And manufacturers like L.L Bean may have had to learn this the hard way. Before changing its policy, the American company allowed customers to return purchased items if and when they were not satisfied. The policy didn’t have a timeline, either, making it possible for shoppers to return items they’d already used and gotten tired of. Or items they’d bought at a thrift store in some cases. Case in point: this customer was able to get a brand new pair of shoes as exchange for a pair that was as old as 4 years , with no cost to him.
  • Damaged products as a result of return fraud. Have you heard of Wardrobing? Being that you’re in the online retail industry, you probably already do. It’s the highest form of return fraud where a shopper purchases an item (shoes in this case), uses it and then returns it just before the return period expires. The problem with this is that you end up with an item that has been tampered with. You can’t sell the item, and when you do, it can only make it to the list of items on sale. And the worst part, you probably already made an exchange with a newer product or refunded the money.

And there’s more.

 

What about the Damages in relation to eCommerce Revenue?

Image credits by Small Business Trends

For any business, making a sale is great. But for online retail businesses where there’s always a product return, an increase in sales doesn’t always translate into a profit increase. Sometimes the returns are too many and the costs incurred too great that your business feels the impact.

Let’s say you sell several pairs of shoes from running holiday deals. You feel great about this and start to celebrate. But then some of your shoppers aren’t satisfied, for whatever reason, and so they return the shoes. These returns will then affect your net sales, which in turn, will affect your profit.

This is the kind of damage we’re talking about.

If your company offers free shipping and returns to entice customers, then you probably already know how high the cost of processing a return can be. In fact, some stats show that the cost can go up to 65% of the goods sold. You will agree that that’s a number high enough to affect your profit margin.

And you may be thinking that retailers selling clothing, accessories or electronics are the most affected. Maybe because you’ve personally not seen how shoes return affect eCommerce revenue for a business. Well, if that’s what you think, you couldn’t be more wrong.

While the clothing & accessories businesses suffer more returns than any other industry, shoes come in second. In fact, according to this report, shoes accounted for 21% of all returned items in 2018 , that’s after the holiday season of 2017. So don’t count yourself too lucky too soon.

Online businesses suffer a return rate of about 30% of all products sold . And with 49% of retailers currently offering free return shipping, there’s no telling how much damage can be done. In the US alone, the cost of return deliveries is expected to reach $550 billion by 2020 .

That’s an estimated increase of about 44%. And this just goes to show how an increase in eCommerce sales can result into a direct increase on returns, and therefore, a direct impact on revenue.

 

Conclusions

Having a return policy is one of the easiest ways you can get people to buy from your online shoe business. We’ve highlighted how, without a doubt, a policy allowing customers to make free returns can boost the sales of your business. But it doesn’t stop there.

Many eCommerce businesses today are suffering a hit on revenue because they don’t create policies that work in their favour. Instead, a business will put up a hard-to-read document and never go back to check what they can do to avoid many returns. And in turn, control the amount of damage returns can have on their bottom-line.

Yet, there’s so much that can be done. In the shoe business, for instance, players can protect their eCommerce revenue by paying more attention to the reasons behind returns. Take incorrect shoe sizes as an example.

The hardest part for online shoe customers is usually not being able to try out how it fits. But with latest technologies, this is a problem that already has a solution. Case in point: our itFits! Smart sizing tool helps shoppers to select their most appropriate shoe size according to their foot measurements.

If you could incorporate such a tool for your customers, it would reduce the number of shoe returns made. And in turn, protect your bottom-line.

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