A central goal for Shopify merchants is to drive more exchanges and less refunds.
However, it's no easy task for retailers to encourage shoppers to select an exchange or store credit when shoppers overwhelmingly choose refund. Many times, anywhere between 60% and 90% of a retailer's returns are for refunds.
Shopify merchants want to provide the best possible returns experience for their shoppers. This includes allowing shoppers the type of return they want – whether it be a refund, exchange, store credit, or warranty.
The most fundamental reason retailers cite for wanting to drive exchanges over refunds is that in an exchange, all or some of the revenue from the original transaction stays within the company.
To retailers, a refund is cash immediately leaving the organization that is probably never coming back.
But the impacts of exchanges permeate far wider than that.
Many retailers are concerned more with the future customer relationship than their balance sheet when it comes to the impact of returns.
Intuitively, it's easy to imagine that shoppers are more likely to churn or become inactive after a refund than after an exchange or store credit.
The data supports that, across retailers, shoppers tend to spend more following an exchange than following a refund.
Additionally, exchanges offer the potential for the retailer to cross-sell other items or up-sell more expensive alternatives.
It's important to remember that shoppers will act in the way they perceive will most benefit their needs and preferences.
A refund is often the return type of choice, then, because the shopper receives her payment back, which she can use anywhere, at any time, for anything.
Refunds are not nearly as restricted as exchanges or store credit. And in most cases, little or no motivation is presented for the shopper to choose any option other than refund.
On the ReturnLogic team, perhaps no one is more in-tune with a shopper’s return experience than Candra Fried. Candra is a UI/UX engineer who spends her days meeting with Shopify merchants and designing experiences to delight their shoppers.
She continuously pushes to make the returns experience as seamless as possible for shoppers, while maintaining maximum efficiency for merchants.
Candra emphasizes that a positive returns experience is based upon trust and simplicity. The road to an exchange begins long before the shopper ever visits the Returns Center.
In addition to the design of the returns center, Candra cites the accessibility of the returns center as a driver of the return experience.
The link to the returns page should be located in the footer of the homepage. Candra observes time and time again that online shoppers expect to it there.
And simple navigation is key – it should require no more than 2 clicks to begin a return.
Candra acknowledges that online shoppers are becoming more and more savvy. The baseline of expectations is rising, and shoppers know what feels right.
She states that the returns center should be concise, responsive, and on brand.
But the returns center isn't the only focal point - the returns page can easily turn into a point of friction for shoppers.
Simplicity is key.
You want your shoppers to feel comfortable and confident, especially in the returns experience. This paves the way for the future customer relationship.
Similarly, returns data can inform your website from a UX perspective.
Low-Risk Returns Policies
Your ecommerce returns policy can both boost your sales, and create a better returns experience for shoppers.
The bottom line is: lenient return policies build trust.
It’s a sign that you stand by your products and want to help your shoppers find something they will love.
While it’s crucial to streamline the returns creation process, none of that will make a difference if the shopper doesn’t trust you as a brand.
According to Candra, the way products are represented can truly make or break the ecommerce shopping experience.
And the data shows that returns due to quality or inaccurate descriptions tend to have far lower rates of repurchase than reasons such as sizing.
If the shopper can’t trust one product, it will be difficult to trust another. So it's pivotal to properly align expectations before the transaction occurs.
Fortunately, there are a variety of ways to shape a shopper's expectation of a product.
Robust product descriptions, clear and ample pictures, and details of the model in the photo can help to alleviate some of the uncertainty.
Social proof, in the form of customer photos, reviews, and other user-generated content, provide even more contextual detail that shoppers trust.
In conjunction with enhancing the returns experience from a UI/UX perspective, we can leverage returns data to learn more about exchanges and refunds.
By doing so, we can lessen the occurrence of less preferred returns (for example, refunds).
It's simple enough to visualize what return type shoppers are selecting.
But the next step is to identify relationships between Return Reasons and Return Types.
Think of the return type is the “how" of a return - it tells us the way in which the shopper wishes to be compensated for the item.
Return Reason, then, is the “why" of a return. The Return Reason gives at least a surface-level understanding of why the shopper is returning the item in the first place.
Return Reason and Return Type are interrelated, in that the reason for the return is most certainly going to influence how the shipper will choose to be compensated.
From this visualization, it's clear that Return Reasons and Return Types are connected.
For this retailer, shoppers who cited “Changed Mind" or “Quality" as the return reason almost exclusively went with refunds, whereas those who cited “Damaged/Defective" or “Wrong Item Shipped" leaned more in the direction of exchanges.
Returns items due to sizing, as well, have a reasonable proportion that are for exchanges.
By prioritizing those return reasons such as “Changed Mind" and “Quality" which are heavily associated with refunds, we will decrease the percentage of returns that are for refunds.
In combining a UI/UX approach with the context of data, Shopify merchants can better understand what is leading shoppers to select one return type or another. This allows you to more effectively nudge their behavior toward more exchanges and less refund requests.
The road to an exchange begins long before the return is created. The customer relationship depends on trust - this cannot be lost in the returns experience.
Ultimately, consumers will do what is best for themselves. It should then be the priority of retailers to align themselves with the interests of their shoppers.