There's a $550 Billion Crisis Brewing in Online Retail


May 2, 2019 | by Tina Eaton

There’s a costly crisis brewing in online retail today.

It’s not omnichannel shoppers.

It’s not bad product data.

However it is the result of a lethal combination of the two: Product returns. 

As more and more consumers take to shopping across multiple digital channels, online brands and retailers are hardly able to keep their product information accurate and engaging on each. If they slip up, they can be sure it’s going to cost them in the form of an expensive return and a bad review to boot.

Not feeling the pain yet yourself? Well, it’s likely you will be sooner rather than later. Let’s look at the impact returns are having on modern ecommerce businesses and explore several awesome tactics to reduce returns from the get go.

The Crisis in Ecommerce: Returns Grow as They Become the “New Norm”

Returns are a sickness to businesses. They go straight for the profit margins and conversion rates to swiftly put the health of your entire business in danger.

And, unfortunately, returns are becoming quite normal in the online shopping world.

In the U.S., Statista predicts that the cost of delivering returns will reach $550 billion by 2020. That’s a 75 percent increase over just four years! And that number doesn’t even account for the restocking expenses or inventory losses that can wreak havoc on a bottom line.

Return rates in retail and ecommerce


Why are we seeing the instances and costs of returns rise? Because many online consumers are actually buying with a plan already in mind to return some—if not all—of their order.

In fact, free returns and exchanges are the second-most powerful factors in convincing a consumer to shop online (after free shipping, naturally). And over 60 percent of shoppers buy again from a brand that offers these free returns and exchanges.

96 percent of shoppers say they’d visit a retailer again if their return experience was pleasant yet nearly 70 percent would be deterred from a seller that asked them to cover return shipping or restocking fees. 

the current state of ecommerce returns

While we’ll explore some of the reasons why returns could be happening (and how to fix them!) later in this article, for now let’s focus on the impact they have on your business.

Brands that experience growing returns rates—which is most of the “successful” ones, ironically—have to bring on more employees, rent or buy more physical space in which to handle returns, and establish entirely new process or even departments to manage the logistics and minimize the losses caused by returns.

In a nutshell: Online shopping returns are now considered normal and even factor in to the customer’s overall shopping experience. And, they can be downright deadly to businesses—if they aren’t managed correctly.

That’s why, up next, we’ll dig into several tactics for decreasing return rates and positioning your products in way that sets you apart from your competitors and maybe even boosts your bottom line. 

4 Tactics to Sidestep the Product Return Crisis in Your Own Business

While some amount of returns will be inevitable as more and more transactions take place in the non-tangible digital world, with just a few marketing tweaks, lots of returns can be prevented.

In a large percentage of cases, returns happen because the product the consumer receives isn’t quite what they expected. Here are four tactics business can use to better set expectations and sidestep the $550 billion crisis that’s rocking the online retail industry.

4 Tactics to Sidestep the Product Return Crisis in Your Own Business 

Deploy Accurate, High-Quality Product Imagery

Over 20 percent of returns are made because the real-life product doesn’t look like what the website displayed. Thankfully, the solution here is pretty straightforward—use the most accurate, high-quality resources you can to display your products!

As they say, a picture is worth a thousand words. Imagery is one of the most important steps in capturing and then engaging an omnichannel shopper. While this certainly includes awesome photos, today it goes well beyond static imagery to 3D photography and product videos.

Whatever level of technicality you choose to go to, just be sure your imagery is detailed (Yes, we really want to see every angle!), clear (You better believe I’ll zoom in to see the stitching!), and above all so accurate that shoppers continue to choose you over your competitors because they trust they’ll always get exactly what they want and expect. 

Incorporate Product Reviews (and Other Forms of Social Proof)

“Social proof” boils down to a psychological reaction where people seek to adopt the actions of others due to the innate instinct that what “the rest” are doing is correct. When shopping online, sources for social proof can range from accredited experts to celebrities, influencers, peers, and beyond. Social proof itself can take the form of user testimonials, endorsements from well-known figures, case studies, media mentions, social media reactions, and of course the product ratings and reviews that Amazon has made so ubiquitous.

Nearly 80 percent of U.S. consumers consider reviews an important factor in their purchasing decision. Almost 90 percent trust online reviews from strangers just as much as they would a recommendation from their own friends or family.

A Boston University study found that reviews that specify details about product quality and usage contribute significantly to higher sales and lower returns. For real-life proof, just look at animal supply retailer Petco—who found that including customer ratings and reviews on their online product pages reduced returns by over 20 percent.

Set Clear Expectations with Detailed Product Descriptions

Nearly half of returns are a result of products not matching consumer expectations. However, this kind of return is completely avoidable. All a retailer has to do is provide the most accurate and descriptive product details possible, right? The problem is that, in this day and age, countless details across thousands of SKUs on tens of sales channels means that’s way easier said than done. 

Any product marketer, manager, or even business owner knows how time consuming it is to create and distribute product descriptions that aren’t just accurate but are engaging and live up to customer expectations. Unfortunately, this task goes from time-consuming to all-consuming when your product advertising and sales channels start to branch out to include everything from social media to comparison shopping engines.

Today, product descriptions serve as the around-the-clock and across-the-web customer service agents you can’t afford. They answer consumer questions, help get your product pages ranked in search engines, and stop scrollers in their tracks as they browse never-ending lists of competing offers.

If you aren’t taking advantage of technology to maintain your product descriptions, you’re certain to fall prey to the return crisis that’s brewing in online retail. 

Today’s product information management (PIM) platforms are built specifically to give companies a single source of truth where they can store, share, and update all their important product information. No more important data disappearing into organizational silos or time-consuming re-work taking place across disparate spreadsheets. And, with a cutting-edge PIM platform like Plytix, retailers of any size can even optimize and analyze product data to make sure it’s performing the best it can across channels—all with excellent service at a reasonable price.

Implementing a PIM solution has been shown to reduce time to market by up to 400 percent, increase sales up to 50 percent, and drop returns by 23 percent. If you want to learn more about what PIM is, which features matter, and who the best providers are—download the 2019 Ultimate PIM Buyer's Guide for free right now.

2019 Ultimate PIM Buyer's Guide for free right now

Avoid Surprises When it Comes to Those Few, Inevitable Returns

We’ve said it before and we’ll say it again, retailers must accept that some returns are going to happen. The best thing they can do is put clear policies in place to avoid surprises that can lead to damaged trust and tanking sales.

If you choose to offer free returns to set yourself apart from your competitors, just be sure you have the logistics and runway in place to back up the level of returns you’re inviting. While this strategy has certainly been shown to work for online footwear retailer Zappos—who found their most profitable customers are also the most return-happy—it did take them a while to become profitable as a company.

Or, you may decide to go the way of Amazon, which recently began to enforce a policy that permanently bans serial returners from shopping on the platform.

Whichever path you choose, just be sure it’s clear. When over 60 percent of customers review a business’ return policy before they make a purchasing decision, there simply isn’t an excuse not to have one. You need to be as transparent with your return policy as you are with the awesome product imagery and descriptions that drew shoppers in in the first place.

Sure, some degree of product returns is becoming the new norm in online retail. However, these tactics for deploying top-notch imagery, implementing peer-based proof, adopting PIM software to provide engaging descriptions, and outlining clear rules for those few inevitable returns will set the stage for your business to sidestep the $550 billion return crisis—and maybe even make a little money in the process.

Tina Eaton
Written by Tina Eaton

October 27, 2020 | by Christina Marfice

October 13, 2020 | by Christina Marfice

October 6, 2020 | by Christina Marfice

Like our articles?

Subscribe here and get featured content sent directly to your inbox once a month.