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The Surprising Truth: Whose Fault Are Product Returns?

Peter Sobotta
Updated 05/19/18 3:42 PM

Online shoppers return products for a variety of reasons. Some are easy to understand and track, like they received the wrong item or it was damaged. Others, not so easy because they're rooted in consumer behavior. These are a little more difficult for retailers to control and, some cases use to their advantage. 

Some of these "behavior-based returns" include:

  • Taking advantage of free return shipping because they’re not a serious buyer.
  • “Renting” an item by buying, using it once and sending it back.
  • Buying multiple sizes and colors and keeping only one.

Online retailers tend to blame a lot of these customer behaviors for their high product return rates. Many throw up their hands, figuring they can’t do much to change it. Other retailers, like Zappo's, have embraced some of these customer return behaviors.

But the surprising truth is that more than half of the time, product returns are the fault of the online retailer and not the customer.

According to Chain Store Age:

  • 65% of returns are due to retailer error, not consumer fault
  • 23% of online returns are because the consumer received the wrong product
  • 22% of online returns are due to the product being substantially different in appearance than was advertised online
  • 20% of online returns are due to the consumer receiving a damaged or a defective item 

What do we do with this information? Well, for starters, it suggests that a liberal returns policy might not hurt your business as much as you think it will. Evidence is strong that the benefits of a liberal returns policy outweigh its costs by driving increased purchases and sales lift.

It also points to some serious issues in merchandising and supply chain. That sounds bad, but it’s really great news, because that means most of the problems that are driving up product return rates are within the retailer’s control.

Wrong product shipped: That points to a slotting or picking error, both issues addressed through better warehouse processes and automation.

Product not as advertised: High quality photography and detailed, honest descriptions go a long way to helping consumers understand the product.

Damaged or defective product: Often these damages occur because product is not handled properly during putaway, storage, picking, shipping, or the packaging materials and processes are inadequate.

These are all pretty intuitive. The problem for most retailers is identifying the problem so it can be fixed. It’s hard to break down a trend into a specific issue with a specific SKU or related SKUs because their current returns data collection and analysis is too rudimentary and time-consuming – or non-existent.

Retailers need fast access to insights in order to act quickly to prevent future returns. Returns analytics applies natural language processing and sophisticated algorithms to structured return data and customer feedback, quickly uncovering issues causing returns.

Using returns analytics, retailers can work to prevent the errors that are causing the majority of returns, PLUS understand customer preferences and behaviors to drive better sourcing and merchandising decisions. Leveraging returns analytics can transform bad surprises into great outcomes.