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Omnichannel Marketing Automation

A Marketer’s Guide to Ecommerce Returns in 2024

By Donna-Marie Bohan

02/28/2024


In the ever-evolving landscape of ecommerce, one aspect that continues to challenge marketers is handling ecommerce returns efficiently while maintaining customer satisfaction and profitability. 

Research from McKinsey indicates the escalating concern over the costs of online return rates, which can range from $21 to $46 per returned product on average. The significant financial burden of returns sees some retailers absorbing costs upwards of a trillion dollars annually, prompting some to even discard returned products due to the expense of processing them.

A webinar hosted by Bloomreach with Boohoo Group and Tory Burch delved into this topic, offering valuable insights and strategies for marketers to navigate the complexities of ecommerce returns in 2024. 

Let's explore some key takeaways from the discussion.

Understanding Returners: The Challenge for Marketers

One of the key factors influencing return rates is the type of product, with consumers being 2-3x more likely to return products purchased online vs. in brick-and-mortar stores. Another contributing factor is the correlation between return rates and product cost, as customers tend to scrutinize higher-priced items more intensely.

For one Bloomreach retailer customer, 8% of their shoppers make up to 70% of returns, highlighting the disproportionate impact of a small percentage of customers who account for a substantial portion of returns. This means that identifying and understanding these high-returning customers is crucial for mitigating losses. But how exactly do you do this? 

Identifying frequent returners has traditionally been a daunting task for marketers. The process often involves aggregating data from multiple channels and platforms, making it challenging to compile a comprehensive picture of customer return behavior. While aggregating return data is common, linking it to individual customer records remains a challenge. This lack of accessibility makes it hard for marketers to segment customers based on return rates effectively.

With the right technology, however, marketers can aggregate and better analyze return data and understand return patterns in order to address them.

Using customer data to understand ecommerce returns

The Future of Returns: Using Technology To Reduce Return Rates

As ecommerce continues to evolve, so do the tools available to manage returns. Technology, particularly AI, plays an important role in improving the returns process. For example, AI-powered solutions offer the potential to enhance product descriptions with content generation, provide virtual try-on experiences, and even automate customer support through chatbots.

AR and VR Technology 

The growth in returns is in large part fueled by factors such as the shift to online shopping and uncertainties around sizing and fit. The adoption of augmented reality (AR) for virtual trials, especially in industries like beauty and fashion, is expected to reduce return rates by allowing customers to visualize products more accurately before purchase. However, it can be difficult to implement virtual try-on technology for clothing due to different body sizes and fabric behavior.

Feedback Collection and AI Integration

Collecting feedback during the return process helps identify reasons for returns, such as fit issues. This feedback can be paired with review data to identify patterns and proactively address potential returns before they happen. AI can also analyze feedback and review data to proactively suggest sizing or fit adjustments on product detail pages.

Many brands are experimenting with AI to help with content generation and improving SEO for better product descriptions and on-site experiences. Meanwhile, other brands are focusing on data aggregation for better customer segmentation and customer journey optimization. With Bloomreach Engagement, for example, brands can track return events and segment customers by their return rate. This makes it much easier to identify and suppress marketing to serial returners.  

Woman using Bloomreach Engagement to segment audiences based on ecommerce return behavior

Conversational Chatbots

Chatbots can also help reduce return rates through immediate customer support. By providing real-time assistance and answering customer queries efficiently, chatbots can streamline the returns process and improve overall customer satisfaction. However, the effectiveness of chatbots depends on their ability to provide accurate and helpful responses, which requires ongoing optimization and improvement.

Bloomreach Clarity is Bloomreach’s answer to conversational commerce and next-level shopping experiences. Powered by the latest advancements in generative AI, Clarity engages and guides customers across every channel in their shopping journey, ensuring customers are supported with answers to their queries and remain confident along their path to purchase.

Strategies To Reduce the Cost of Returns

Despite advancements in technology, several barriers to reducing return rates persist. Mass buying and bulk returning, driven by factors like uncertainty about size and fit, pose significant challenges for marketers. Over-reliance on discounts and offers, coupled with poor customer experiences on ecommerce platforms, contribute to higher return rates and erode brand loyalty.

To address these challenges, marketers can adopt various strategies to reduce return rates and optimize profitability: 

Identify and Suppress Marketing to Serial Returners

As highlighted earlier, leveraging data analytics to identify high-return rate customers and implementing targeted marketing strategies, such as suppressing marketing communications to frequent returners, can help mitigate the impact of returns on business.

“Once brands start to integrate AI as a data aggregating tool, they’ll be able to have more efficient segments and really create a great customer experience and customer journey.”
Jillian Borde
Senior Manager, Global Integrated Marketing at Tory Burch

Incentivize In-Store Returns

Optimizing the returns process by offering incentives for in-store returns can alleviate some of the logistical issues associated with online returns. For one, it cuts down on processing times and shipment costs. In-store returns also improve the likelihood of the returned item being resold at full price due to the ability to immediately check that there are no issues with the product. 

Identify Bracketed Cart Items

Customers often add multiple sizes or variations of the same product to their cart, intending to return the items that don't fit or suit them. This behavior, known as bracketed cart items, can lead to increased return rates. Utilize tools like sizing chatbots or guides to assist customers in choosing the right size before purchasing. Implementing a callout during the checkout process that suggests they seek assistance with sizing can help reduce returns and improve customer satisfaction.

Using AI to show a sizing guide to prevent ecommerce returns

What Does a Good Ecommerce Returns Experience Look Like? 

Despite efforts to reduce returns, however, it’s inevitable that returns will always exist for one reason or another. When it comes to a good returns experience, simplicity, cost-effectiveness, and speed in processing returns are all elements that constitute an ideal return journey. This includes seamless processes such as prepopulated return forms, printable labels, and in-store return options to enhance customer satisfaction and loyalty. Growing expectations among consumers, particularly Gen Z and millennials, for rapid refunds further highlight the importance of expediting reimbursement processes.

How Boohoo Group Used Returns Data To Improve Paid Media Performance and Increase Profitability 

Boohoo Group, a leading fast-fashion brand, faced a common challenge in the ecommerce landscape: accurately measuring the effectiveness of its marketing channels while grappling with high return rates. Like many businesses, Boohoo Group relied heavily on paid media to drive conversions and increase sales. However, the brand recognized the need to look beyond traditional metrics like click-through rates and cost per conversion to truly understand the impact of its marketing efforts.

Boohoo Group said on the webinar that it realized that its approach to evaluating marketing performance was incomplete because it was overlooking a crucial factor: returns. By failing to account for return-related costs, including processing and restocking fees, Boohoo Group was unable to accurately assess the true return on investment of its marketing campaigns.

In response, Boohoo Group implemented a comprehensive strategy to incorporate returns data into its marketing analytics. The brand conducted an in-depth analysis to understand the correlation between marketing channels, return rates, and lifetime value. This involved recalibrating the company’s budget allocation to prioritize channels with lower return rates and higher profitability.

One key finding from Boohoo Group's analysis was the disproportionate impact of social media on return rates. While social media campaigns generated high engagement and conversion rates, they also resulted in a significant number of returns. To address this issue, Boohoo Group said it revamped its social media strategy with user-generated content and micro-influencers.

Instead of relying solely on ads featuring a single model, Boohoo Group diversified its ad content to showcase the same product with individuals of different shapes, ages, and races. This approach not only increased engagement but also helped customers make more informed purchasing decisions based on their body type and preferences. According to Boohoo Group on the webinar, the company saw a notable reduction in return rates associated with social media campaigns.

Going Forward: Navigating the Complexities of Ecommerce Returns

Ecommerce returns remain a significant challenge for marketers in 2024. However, by leveraging technology, data analytics, and strategic initiatives, brands can minimize return rates, enhance customer satisfaction, and drive profitability in an increasingly competitive landscape.

As the ecommerce industry continues to evolve, staying informed about emerging trends and best practices will be essential for marketers seeking to optimize their returns management processes and deliver exceptional customer experiences.

Remember, the key to success lies in understanding your customers, using technology effectively, and continuously adapting strategies to meet evolving consumer expectations.

Interested in discovering more best practices for managing ecommerce returns? Watch the full on-demand webinar here.

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Donna-Marie Bohan

Copywriter

Donna-Marie is a senior content marketing specialist, writer, and editor with extensive experience in communications and B2B software marketing.

A former analyst, she enjoys exploring how digital marketing, media, and new technologies are shaping the future. She has authored a number of digital industry reports and her work has been featured across a number of publications, including City AM, the Financial Times, Forbes, Econsultancy, Marketing Week, Adweek, and MarTech Series.

 

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