Returns to Revenue: Boosting eCommerce ROI
Rebecca Fox

June 25, 2023

Product returns are often viewed negatively in eCommerce – but what if we told you that embracing returns could actually boost your eCommerce ROI?

By implementing the right strategies, you can turn eCommerce returns into an opportunity to increase revenue and retain customers. 

Understanding the Financial Impact of eCommerce Returns

Returns can be costly. Processing returns manually can be time-consuming and labor-intensive. 

Let’s break it down: If, for example, each return request requires 10 touchpoints, each taking 12 minutes to process, that’s around two hours of wasted time and productivity per return, in addition to the associated labor costs.

In addition to the cost of processing the returns, there are costs such as shipping and restocking items and the cost of managing inventory.

However, the financial impact of returns is not just negative. With the right strategy, returns can also be an opportunity to increase revenue and profitability.

How to Turn a Negative into a Positive

The potential ROI of product returns is often overlooked. Returns can be an opportunity to increase customer satisfaction and loyalty. By offering hassle-free returns and exchanges, you can show customers that you value their satisfaction and are committed to providing a positive shopping experience.

By optimizing your returns process and automating it where possible, you can turn returns management into a profitability booster. 

Boost Your ROI Using eCommerce Returns

By implementing a few key strategies such as maximizing the value of returned items and retaining revenue with exchanges, you can maximize your ROI through returns and turn a potential liability into a profitable opportunity.

Maximize the Value of Returned Items

Maximizing the value of returned items is a key strategy for increasing your ROI on returns. While some returned items may not be able to be resold as new, there are still ways to extract value from them. 

Here are some strategies for maximizing the value of returned items:

  • Resell –  Instead of throwing away returned items that are in good condition, you can resell them at a discount. This prevents waste and offers customers an opportunity to purchase sustainable items.

A great way to do this is to work with third-party repair companies and reCommerce companies. 

Reselling returned items can help you get back some of the money you lost and even generate additional revenue.

  • Recycle – Incorporate recycling into your returns process to reduce waste and prevent materials from ending up in landfills. 

Returned products can be recycled and used as raw materials for new products, thereby extending the product’s life, reducing waste, and helping the environment.

  • Donate – Encourage customers to donate returned items instead of shipping them back. This can help reduce waste and demonstrate social responsibility, and generate customer trust.

Instead of letting returned items go to waste, find ways to reuse and repurpose items to create a circular economy, which both maximizes the value of returns and contributes to a more sustainable world.

Retain Customers Through a Positive Experience

When a customer returns an item, it’s an opportunity to engage with them and provide a positive experience so they’re more likely to come back and shop with you again.

Customer loyalty is one of the most valuable assets your business can have. Loyal customers spend an average of 67% more per purchase than new customers. 

To retain customers through a positive returns experience, it is important to make the process as easy and straightforward as possible. 

Provide a self-service return portal to make it easy for customers to request a return or exchange. 

Offering customers the convenience of initiating and tracking their returns online empowers them to feel in control of the process. This helps to reduce the frustration and anxiety that can come with returning a product and can lead to a more positive experience. 

Some ways to create a positive return experience:

  • Make returns easy – Provide a hassle-free returns process, with clear instructions and an easy-to-use online return portal.
  • Offer free returns – Offer free returns or return shipping to show your customers that you value their business.
  • Provide fast refunds – Process refunds and exchanges quickly to keep your customers satisfied.
  • Personalize the returns experience – Use personalized messaging to communicate with your customers throughout the returns process.
  • Offer incentives – Offer loyalty points or discounts on future purchases as a way to incentivize customers to shop with you again.
  • Analyze returns data – Analyze returns data and customer feedback to identify ways the returns process can be improved to improve the customer experience.

By providing a positive returns experience and showing your customers that you care about their needs and concerns, you can build customer loyalty and keep them coming back to your eCommerce store.

Increase Revenue with Exchanges

When a customer returns an item, you can offer them the option to exchange it for a different item rather than issuing a refund. This can help you retain revenue and even generate additional revenue if the customer chooses a more expensive item as a replacement.

For example, let’s say a customer purchases a shirt for $50 and then decides to return it. If the customer asked for a refund, the store would lose the entire $50 in revenue. 

However, if the customer requests an exchange instead, the customer might choose to exchange the shirt for a different one of equal value, in which case the store retains the $50 in revenue. 

Alternatively, the customer might choose to exchange the shirt for a more expensive one that costs $60, in which case the store retains the original $50 in revenue and generates an additional $10 in revenue from the exchange.

Here are some tips for using exchanges to retain revenue:

  • Make the exchange process easy – To encourage customers to choose an exchange over a refund, make the process as easy and convenient as possible. 

Provide clear instructions for how to initiate an exchange, and consider offering free shipping on the replacement item to sweeten the deal.

  • Offer discounts or incentives – To incentivize customers to choose a replacement item of equal or greater value, offer discounts or other incentives. 

For example, you could offer a 10% discount on the replacement item, or offer free return shipping.

  • Use data to personalize exchanges – Use customer data to personalize the exchange and make it more relevant to the customer’s needs. 

For example, if a customer is returning a blouse in a particular size or style, suggest similar items in that size or style.

  • Cross-sell or upsell – Use the exchange request as an opportunity to cross-sell or upsell related items. 

For example, if a customer is exchanging a pair of shoes, you could recommend a matching handbag or accessory.

By offering easy exchanges, you can retain revenue and even generate additional revenue from customers who choose to exchange their returned product for a higher-value product. 

Streamline Returns With Automation

Automating your returns process is a powerful way to reduce costs and increase efficiency since processing returns can be a labor-intensive and time-consuming task. Automating the process can help streamline the entire process from start to finish.

With an automated returns management system, you can automatically generate return labels, keep track of return shipments, and issue refunds instantly

By automating these tasks, you can save time and resources that would otherwise be spent manually managing returns.

Automating your returns process also improves accuracy. Returns management systems ensure that data is captured consistently and accurately, minimizing the chance of returns being processed incorrectly. This can make inventory records more accurate and reduce costs associated with incorrect or fraudulent returns.

By automating your returns, you can improve profitability and ROI in the following ways:

  • Reduce costs – Reduce costs associated with manual returns processing and free up your staff to focus on other tasks. 
  • Streamline return processing times – Speed up the returns process, from approving the return to issuing the refund to validating the returned items.
  • Prevent errors and inaccuracies – Minimize the risk of errors or inaccuracies that can lead to additional costs.
  • Gain data insights – Get insights into return trends and customer behavior, helping you make informed business decisions to optimize your operations and profitability.

By reducing the amount of time and resources required to process returns, automating your returns can help you reduce costs, improve efficiency, and maximize profits.

Chat with our experts to boost your customer return experience and LTV today.

Case Study: How One Project Turned Returns into Revenue

One example of a store that successfully turned returns into revenue is One Project, a multi-brand eCommerce fashion platform that uses exchanges and gift cards alongside refunds to retain and increase revenue.

Previously, One Project only offered refunds, which made it difficult for customers to exchange products. If customers wanted to exchange a product, they would have to go through a complicated process of receiving a refund and then purchasing a new product.

Because customers couldn’t easily exchange products, there was an increased level of frustration among customers and a higher workload for the team.

Using ReturnGO, One Project was able to offer an easy exchange process, making it quick and simple for customers to exchange items. This saved the company a considerable amount of refund revenue and greatly reduced customer frustration.

In addition to offering exchanges, One Project also started providing gift cards instead of refunds, which helped them retain even more customers and keep the revenue within the store.

“By allowing customers to exchange products, and not refund them, we manage to save a lot of money on customers who don’t make a refund and just make an exchange. This helps us achieve our KPIs from a revenue aspect.”

– Shmulik Konforty, CTO, One Project

By implementing these changes, One Project has reduced their average refund rate by 10% and kept the revenue within the store for 40% of return requests. 

With easy exchanges and gift cards, One Project has been able to generate new revenue and retain revenue that would have otherwise been lost through refunds.

Check out the full case study here.

Why Returns are an Opportunity, Not a Liability

With the right strategies in place, you can actually turn returns into an opportunity to increase your revenue and retain happy customers. 

Use strategies such as making the most of returned items, offering easy exchanges, and automating the returns process, to make returns management painless and profitable. 

Instead of fearing returns, embrace them as a chance to grow your business.

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