Why Your Ecommerce Business Needs A Returns Policy

Returns have become an expected part of the online shopping experience. If you want your customers to have the best experience at your ecommerce store and make sure they come back to purchase from you again, you need to offer convenient and hassle-free returns, putting the needs of your customer above everything else. 

Online shopping is significantly different than shopping in-person at a brick-and-mortar store. You ecommerce buyers don’t know how the product looks in real-life, how it will fit them, how different it may look in real life, how the colors may vary in real life, and much more. Online buyers cannot try the products before they purchase them and only get the opportunity to hold, touch, feel, and try the products once they are delivered. 

Which is why, the return rates for online stores are much higher. If you don’t have a lenient returns policy and efficient returns processing in place for your ecommerce store, your customers will be more hesitant to make a purchase. 

Looking at some statistics related to returns, you can get a better idea of what your customers want from your online store, and how you can improve the overall returns experience to make sure they have a positive experience and come back to shop from your ecommerce business again and again. 

General Ecommerce Returns Statistics Over The Years

• The average ecommerce store return rate is 18.1% (NRF, 2021)

Return rates for an ecommerce store are incredibly important. Having a return rate lower than 10% is generally considered positive, while having a return rate over 60% is not considered good for business at all. It is crucial that ecommerce stores keep their return rates low by providing on-time and accurate order deliveries, uploading product pictures that are as close to the real product as possible, and much more. Having a low return rate is crucial, as the return rate for an ecommerce store is one of the most tracked metrics. 

• 7% of products from ecommerce stores are returned because they are delivered late (Charlton, 2021)

Fast delivery is essential for every ecommerce business. If you cannot deliver your products to your customers on time, the orders are more likely to get returned. The delivery time you offer to your customers is one of the major deciding factor for online shoppers. If your delivery is slow, your online shopper is more likely to never return to your ecommerce store to shop and your sales are bound to go down. If you want to run a successful ecommerce store and keep your return rates low, you need fast and timely delivery. 

• 80.2% of orders are returned because the product is damaged or broken (Charlton, 2021)

As an ecommerce store, you have to make sure your products are stored and packaged properly, reducing the risk of damaged orders. When an item is damaged when it gets to your customer, they are more likely to return the order. You have to make sure that you are packing all products in high-quality, appropriate packaging material, and your mode of transportation can keep your items secure. It is also important that you check whether an item is already damaged or not during the picking process, and avoid sending out products that are already damaged. 

• 49% of retailers offer free return shipping (Tran, 2021)

Online customers are more inclined to shop from an ecommerce store that offers free return shipping. It is vital that you keep your returns policy as lenient and convenient for your customer as possible, so they feel more comfortable shopping from your ecommerce store. If they have to pay for the return shipping themselves, they will be more hesitant to purchase from your online store, knowing that your return policy is not flexible and is not in their favour. 

• Compared to 2019, the rate of returns for ecommerce stores increased by 70% in 2020 (The Wall Street Journal, 2021)

One of the reasons of growing ecommerce return rates is the growing number of sales made from ecommerce businesses. As online shopping became more common during the pandemic and lockdowns, the return of rates for these orders also increased. More people were ordering products online and returning if they were not satisfied with what they received or simply because they changed their minds. As ecommerce saw an incredible boost in 2020, so did the ecommerce return rates. 

• Online returns made up the majority of the overall returns and the rates doubled in 2021 (NRF, 2021)

Shopping online always comes with risks. Sometimes you don’t end up liking the product in person, sometimes the size is different, other times there is a variation in colour. This is why online returns are higher than the return rates of brick-and-mortar stores. For brick-and-mortar stores, people can see the product and test it out in person before purchasing it, keeping the returns low. The ecommerce sales also increased significantly in 2021, which also resulted in an increase in the ecommerce return rates for online stores. 

• 30% of all products bought online are returned compared to 8.89% of products bought in brick-and-mortar stores (Investp, 2022)

The products consumers buy online cannot be touched or felt by them before they make the purchase and it is delivered to them. On the other hand, products sold in brick-and-mortar stores can be checked thoroughly, tried, touched, etc., making the possibility of customers returning those items significantly less. It is no surprise that ecommerce returns are higher than in-person bought items. However, there are still measures online stores can take that can bring their return rates down. 

• By 2025, ecommerce sales are projected to amount for 24.5% of all global retail sales (Statistia, 2022)

Ecommerce is a market that has shown no signs of slowing down. With each passing year, there are more ecommerce businesses starting because the demand is growing. People have realized that shopping online is convenient and takes less time. You can browse any platform on your phone and make a purchase when you find something you like. Ecommerce is more accessible to customers, which is why it is growing at a rapid pace. 

• Due to ecommerce returns, retailers all across the world lost 218 billion USD in 2021 (O’Brien, 2022)

There is no doubt that ecommerce businesses all across the globe need to do everything in their control to bring return rates down for their stores. Ecommerce returns can drain a lot of revenue, especially if you offer free returns shipping. The process of inspecting, repairing, and repackaging returned items can also cost your online business a lot. This is why it is crucial that ecommerce businesses have efficient return management strategies in place, or outsource their returns management to third-party companies that can help your business save money even when products are returned. 

Global Online Consumer Behaviour Regarding Ecommerce Returns

• 84% of online shoppers in the UK will not purchase from a retailer again after a bad returns experience (Klarna, 2021)

Most online shoppers in the UK are more apprehensive after they have a bad returns experience. It is crucial that ecommerce businesses operating and delivering in the UK provide the online shoppers with a comfortable returns experience and retain their customers.

• 62.58% of online customers expect retailers to allow them to return items within 30 days of purchase (IMRG, 2021)

Online customers want ecommerce businesses to offer them the most convenient returns experience possible. As an ecommerce retailer, it is important that you allow your online customers to return items within 30 days, instead of a short time period like 7 days. 

• A large majority of ecommerce returns occurs during January (NRF, 2021)

As much as joy and happiness the holiday season brings for all, it also brings stress for ecommerce retailers. Most of the returns happen during January, when people finally have the time to go through their holiday gifts and decide which ones they want to keep and which ones they are most likely to return. Ecommerce retailers have a tough time during January because the return rates for ecommerce stores skyrocket during this month. 

• About two-thirds of online shoppers are more likely to purchase from ecommerce stores if they can return the products to the physical store (Investp, 2022)

Most people want to have a hassle-free returns experience, and returning products to the brick-and-mortar store is significantly more stress-free than going through the ecommerce returns process. This is why people are more likely to shop from online stores that allow them to exchange or return products in-person. There are countless people who only shop from an online store if the in-person return option is available to them. It helps them make the initial purchase, knowing that if they are not satisfied they can just go to the store and pick something they will enjoy more. 

• 58% of online shoppers want a “no questions asked” returns policy that provides a  hassle-free experience for them (Investp, 2022)

Almost 60% of online shoppers want a hassle-free returns policy. If they are buying from your ecommerce store and receive the package, they want to be able to return the package without having to fill out any survey, answer any questions, or pay for return shipping or repackaging costs. 

• 30% of online shoppers across the globe overbuy and then return the items they don’t need intentionally (Barclaycard, 2022)  

One of the most terrible online shopping habits is buying a wide variety of products and then choose the one you want to keep and return the other products. This is another reason why ecommerce stores’ return rates are higher. People order the same item in various colours or sizes and then choose the one they want to keep and return the rest. Although having a lenient return policy can help your store make more sales, it also comes with downsides such as this. 

• 67% of people will read through an online store’s return policy before buying from them (Investp, 2022)

The most important reason why you need to have the perfect return policy in place is because more than half of your online shoppers will read your return policy before making their decision to purchase from your online store. It is essential that your return policy makes their shopping and return experience convenient and simple, which will make your online customers more inclined towards buying from your ecommerce business. Having your return policy stated in clear, easy-to-understand language is essential. You should also have your return policy easily accessible on your website, and your customers should be able to find it. 

Ecommerce Return Statistics By Global Ecommerce Marketplaces And Platforms

• The average rate of return on the Amazon platform is between 5% and 15% (Williams, 2021)

The average return rate for Amazon is between 15% and 5%. However, the return rate for the various categories can be more than 15% or less than 5%. Amazon is a platform that has lenient return policies, which is why people return items more often. However, if an Amazon user returns items more frequently than normal, Amazon can block or restrict the account. 

• 10% of Amazon products were returned because the shoppers did not like it (Narvar, 2019)

There are many reasons why an online customer will return items. However, in a surprising statistic from Amazon, 10% of the products were returned by online shoppers simply because they did not like the item once they received it. 

• 34% of Amazon products were returned by shoppers because the colour, fit, or size was wrong (Narvar, 2019)

Amazon sells a vast variety of items online, including apparel, clothes, shoes, etc. The return rates for such items is generally higher because the customers may receive the wrong size, colour, or fit. This is why it is essential that you provide accurate size charts on your ecommerce store and let the customers know exactly which size they need to order. It is also crucial that, as an ecommerce store, you do not make any errors when packing a specific order for a customer and sending them a wrong order. 

• Amazon has a list of 72 official reasons that the shopper has to choose from when returning an item (Williams, 2021)

One thing all ecommerce marketplaces can learn from Amazon is creating a thorough list of reasons why an item is being returned. It can help you keep track of why the item was returned, which reason is leading to the highest return rates, and the areas you can work on and improve to bring the return rates down for your ecommerce store. Having a list of 72 official reasons of return is sufficient, and can help improve the overall performance of your ecommerce store. 

• According to Shopify reports, there has been a 40% decrease in product returns since implementing 3D product visualization (Wizeline, 2021)

3D visualization and augmented reality has become a real game changer in the ecommerce world. Online consumers can now see and examine items a lot better before they place an order, knowing exactly what they will get when the order is delivered. Incorporating 3D visualization and AR into your ecommerce store can drastically improve the user experience and help bring down return rates for your online business.  

• 61% of online shoppers claim it is easy to return an item bought on Amazon (Williams, 2021)

According to a survey, most people believe that Amazon offers the most hassle-free and easy return policy compared to other ecommerce marketplaces. This is good news for Amazon customers, as they know they can return an item without much trouble if they are not satisfied with what they receive. However, it is also a statistic that should push other ecommerce stores to work on providing their customers a better return experience. 

• A Swedish start-up, Returnado, helps online retailers by converting 30% of their returns into exchanges (BBC, 2021)

Returnado has become a game-changer for most online retailers by managing their returns process on the behalf of numerous brands. It is an app that asks users to upload an image of the item they want to return, letting the brands examine the condition of the item. After that is done, they can decide whether the item needs to be repaired, disposed, returned, or partially refunded. This has helped retailers turn 30% or their returns into exchanges, saving them money. 

• In December 2020, Chinese ecommerce giant Alibaba revealed that 85% of all products sold on the ecommerce marketplace will be eligible for returns (Post & Parcel, 2021) 

Ecommerce return policy for Chinese marketplaces had always been complicated, with most platforms not even offering the option for returns. However, in a historic decision, Alibaba, the giant behind most of China’s ecommerce marketplace, revealed that 85% of products available on the platforms will be eligible for returns. Some of the products that cannot be returned include perishable goods like food, drinks, etc.

Ecommerce Returns Statistics By Product Categories

• In the U.S., only 8% of music, movies, books, and games purchased online were returned in 2021 (Statistia, 2022)

There are some categories that see a low return rate on the whole. For example, book, games, music, and movies are not returned very often because buyers already know exactly what they are getting when they order these items. Some returns can happen due to the goods, like books, getting damaged during transport. 

• When it comes to ecommerce returns, clothing has the highest rate of return (Statistia, 2022)

It is not a shocker that clothing items are the most returned when it comes to ecommerce purchases. There is a lot that can go wrong with clothing orders. For example, the customer wants to size up or size down, the customer does not like the way the item fits them, they want to change the colour, and so much more. Ecommerce businesses that sell clothing items online are the ones that have to deal with returns most often. 

• In 2021, clothing items made up 26% of all returned products in the U.S. (Statistia, 2022) 

The ecommerce industry in the U.S. is huge and there are all sorts of items available online for customers to purchase. Out of all the products returned, clothing had the highest percentage of returns because buying clothing online is always a risk and people often change their minds by the time they receive their order. 

• In some online apparel markets, the return rates can be as high as 50% (ShopifyPlus, 2022)

Running and ecommerce business in the apparel sector is a tough path to take. When you enter the ecommerce apparel industry, you should prepare yourself for high return rates. There are many factors that contribute to these high return rates. However, providing 3D visualization for the items and using augmented reality on your ecommerce website can help your online customers make the right decision and lower the return rates for your store. 

• Shoes had the second-highest return rates in the U.S. in 2021 (Statistia, 2022) 

Shoes are also something that can be a risk when you buy them without trying. Your online customers don’t know how it will fit them, how comfortable it will be, if the colour will match the product picture, if the heel size is what they thought, and many other factors. This is why shoes are the second-highest returned items for ecommerce stores in 2021, and will likely remain as such. 

Why Online Shoppers Will Return Products

• 23% of online shoppers receive wrong items (Investp, 2022) 

If your online customers receive the wrong order or items, they are going to return the item. On average, ecommerce stores send out 23% wrong orders, which can increase the return rate for your store. 

• 20% receive damaged or broken goods (Investp, 2022) 

It is important that an ecommerce business uses high-quality packaging materials when transporting the orders to avoid damaged goods being delivered to customers. Regular quality checks are also important if you want your ecommerce store’s return rates to stay low. 

• 22% of online shoppers receive items that look different in real like than on the website (Investp, 2022)

As an ecommerce business, you should always keep your product pictures are close to the real product as possible. A large amount of ecommerce customers return orders because they feel the item looks different in real life than it did on the website, which can result in higher return rates for your ecommerce store. 

• There are 35% other reasons why online returns are made, including late delivery (Investp, 2022) 

35% of online customers will return orders due to various other reasons. One of the main reasons being late delivery. If your order does not reach the customer on the time you promised, it is likely to get returned to your store. 

You Need A Robust Returns Policy And Strategy In Place For Your Ecommerce Business

If the statistics mentioned above are any indication, you need to have a lenient and hassle-free returns policy in place for your ecommerce business. Without one, your customers are more likely to look for other options and other ecommerce businesses that provide them with relief when it comes to returning products. 

Online shopping is not a simple process. Your customers might not like what they ordered when they receive it in person, it might not fit them, there might be a difference in colours, or so much more. 

To be successful in the ecommerce industry, you have to provide your customers with the most convenient returns policy and make sure they have a good experience, bringing them back to your store to shop more. 

If you feel like you cannot handle your returns logistics adequately while running your online business, worry no more! Meteor Space is a leading 3PL company that also offers handling the returns logistics of the return for your business, along with your order fulfillment needs! 

We know how to inspect, repair, repackage, and add returned products back to your inventory as fast as possible, making sure your returns don’t end up draining your revenue. 

Want to find out more about our order fulfillment and returns management? Talk to us today!