6 Practical Ways to Reduce Amazon Returns

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6 Practical Ways to Reduce Amazon Returns

An excessively high number of online returns is one of the biggest problems of the e-commerce industry today.

In 2022, online retail returns totaled $203.22 billion, down 2.5% from 2021. This was about 16.5% of all retail purchases in the United States. The average ecommerce return rate is around 20-30%. In 2022, online sales accounted for approximately $1.29 trillion of U.S. retail sales. Of the approximately $212 billion returned online purchases, $22.8 billion (10.7%) were deemed fraudulent.

6 Practical Ways to Reduce Amazon Returns

With such staggering return rates, dealing with returns becomes a real concern for online sellers. More specifically, for every item returned, the online sellers need to:

  1.     Offer a postage-paid return label.
  2.     Issue a refund or ship a replacement item
  3.     Re-package, re-stock, or dispose of returned items

There is no doubt that these expenses will eat into profit margins. Moreover, online sellers might lose repeat customers if they aren’t happy with the returns process. How do we deal with this issue? Here are six practical ways to reduce your return rates.

Reduce false return claims and prevent outright return fraud

In a recent survey by the National Retail Federation, 30% of all online returns are estimated to be either fraudulent or abusive. This costs online retailers nearly $35 billion annually just in the U.S. Examples of return abuse include:

  1.     Customers claiming that they have not received a product at all
  2.     Customers claiming that their package is missing an item
  3.     Customers returning old used items instead of the new items they have received
  4.     Customers damaging a product and claiming they received a defective product

You can easily address these issues by keeping evidence. More specifically, you can record your packing process before each item is shipped and send the recorded videos to your customers. In addition, fulfillment solution companies like MARQ offers an easy way to record videos for free.

Customers who receive packing videos before their products arrive are less likely to return for a few reasons. First, your customers will appreciate the transparency and be more likely to trust your brand. Second, there seems to be a deterrence effect on return fraud when there is clear evidence that your product or shipment had no problem. According to Return Logic, online retailers who use packing videos see a 40~50% decrease in their return rates.

Make sure your customer has sufficient information about your product

A more indirect way to reduce online returns is to ensure customers buy the right product. You need to provide as much information as possible about your product to do this. At the very least, your customers should have access to information about:

  1.     Key features, benefits, and technical specifications of your product
  2.     Clear product photos and videos of your product and its use
  3.     Detailed answers to commonly asked questions and user inquiries
  4.     Ratings and reviews on your products

Providing customers with comprehensive product information will result in fewer returns and reduce your return costs.

Avoid making shipment errors

23% of online returns are due to incorrectly shipped items, and another 20% are due to damaged products in transit. Those mistakes cost you time and money to rectify and pose a big risk to your customer satisfaction and loyalty. To avoid sending incorrect items, you can adopt a scanner to tag items with the barcode to take out the factor of human error. To prevent shipping damage, you can wrap items individually in cushioning material or add material to fill any empty spaces in your package.

If you experience these errors regularly, you can outsource your fulfillment to a specialist provider with safeguards against shipment errors. Top international fulfillment companies include Shipmonk, Rakuten Super Logistics, and Shipbob.

Tighten your overly generous returns policy.

An overly generous returns policy invites return fraud and abuses. For example, recently, L.L. Bean put a limit on its policy of accepting returns. The company used to accept returns of any of its products after any period if customers were unsatisfied for any reason. But abusers, particularly over the past five years, took the company’s return policy as a replacement program to offset normal wear and tear.

According to Practical E-commerce, online sellers could decrease returns by as much as 20% by tightening returns policies in response to growing return frauds.

Collect data on the reasons for returns.

Knowing the reason for the returns is important to reduce returns in the future. You can adjust your products, website, or shipping process once you discover why. Return Merchandise Authorization (RMA) helps you deal with returns better. It requires your customers to visit a webpage and enter the reasons for their returns before generating a postage label and packing slip for their items. This lets you easily collect data from your website and forewarns that an item is returning, helping you manage your stock and cash flow accordingly.

Turn your returns process into a positive experience

Even if you take all of the steps above, returns do occur. But reducing the return rates by turning the returns process into a positive experience is important. In a recent survey, 92% of customers said they would buy from a business again if convenient for the returns. There are two different ways to provide positive return experiences: 

  1.     Offer to track: return is a lengthy process for your customers. They will feel even longer waiting without knowing where their products are.
  2.      The process quickly: customers want to receive a refund or exchange fast. The speed of the process will determine your customer retention.

Online retailers will maximize their sales in the rapidly growing e-commerce industry once they have the right returns strategy. Unfortunately, reducing returns is often overlooked, yet the most effective way to grow online for Amazon sellers.

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Eric loves to take a data-driven approach to uncover customer insights, accelerate the sales funnel, and generate revenue. Eric is currently working as Head of Growth at MARQ.

MARQ uses computer vision technology to address return problems for online retailers. Using MARQ, online retailers can dramatically reduce return claims and improve customer satisfaction. Please visit https://www.marqvision.com/ for more information.

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