Collection on returns: the impact on your store

Returns are an inevitable reality in e-commerce, and can have a significant impact on your store's profitability and reputation.

In this article we will explain what returns collection is, how it affects your business and how to manage it efficiently.

Information on returns

Returns are an inevitable reality in e-commerce , and can have a significant impact on your store's profitability and reputation.

According to the Mexican Association of Online Sales (AMVO), in Mexico, the product return rate in e-commerce is estimated at 20%, which means that 1 in every 5 purchases is returned to the business. This implies a total annual cost of more than 127,000 million pesos for the country's businesses.

Additionally, returns can be generated for legitimate reasons or customer abuse , which occurs when a customer makes a false claim or returns a different or damaged product.

This type of fraud has seen an increase of 119% in Latin America.

What is the collection of returns?

Returns charging is the practice of charging the customer for some or all of the cost of returning a product, whether for shipping, packaging, processing or reconditioning.

Its objective is to discourage unnecessary or abusive returns, and to compensate for the expenses generated by their management.

It can be of two types: explicit or implicit.

The explicit charge for returns is that which is clearly communicated to the customer in the returns policy, and which is applied directly at the time of requesting or making the return.

The implicit charge on returns is one that is hidden or disguised in the price of the product, the shipping cost or the purchase discount, and that is applied indirectly at the time of purchasing the product.

Image taken from SalesCycle

How does charging for returns affect your store?

Charging returns can have advantages and disadvantages for your store, depending on how you implement it and how your customers perceive it.

Some of the most common advantages and disadvantages are the following:

Advantages

Charging on returns can help you reduce the number of returns by making the customer think twice before purchasing or returning a product.

This can improve your profit margin by reducing the costs associated with returns. Additionally, it can improve the quality of your inventory by preventing returned products from deteriorating or becoming outdated.

Disadvantages

Charging returns can negatively affect your customers' satisfaction and loyalty by making them feel dissatisfied or cheated with your service.

This can damage your reputation by generating bad opinions or comments on social networks or rating platforms.

This can decrease your competitiveness by making your prices less attractive or your conditions less favorable than those of your competition.

How to manage collection of returns efficiently?

To manage it efficiently, you must take into account several aspects, such as the following:

Define your returns policy : You must establish the conditions, deadlines, methods and costs of returns, and communicate them clearly and transparently to your customers. You must avoid abusive or confusing clauses, and comply with current legal regulations.

Analyze your market and your competition : You must know the expectations and preferences of your customers, and adapt your returns policy to their needs. You must study the practices and offers of your competition , and differentiate yourself from them with added value.

Offer alternatives to returns : You should try to resolve your customers' incidents or complaints without resorting to returns, whenever possible. You can offer options such as exchange, repair, partial refund, discount coupon, etc.

Optimize your returns process : You must facilitate and streamline the returns process , both for you and your customers. You can use technological tools, such as prepaid labels, QR codes, collection points, etc. You can also outsource the returns service, hiring a specialized company.

How can I avoid returns in my store?

Returns are an inevitable reality in e-commerce, and they can have a negative impact on your store's profitability and reputation.

To avoid returns in your store, you should follow these tips:

• Create a useful product page : Provide accurate and complete information about the product , such as sizes, materials, colors, and any other relevant details. Includes high-quality images of the product from different angles and perspectives. Offer a live chat to resolve your customers' questions and show reviews and photos from other buyers.
• Provide accurate sizing information : If you sell clothing, you need to make it easy for your customers to choose the right size. You can use tools that allow them to enter their measurements and sizing preferences, or display the model's height and weight along with the size they are wearing. You can also offer a free or discounted exchange service, in case the size is not correct.
• Offer alternatives to returns : Try to resolve your customers' incidents or complaints without resorting to returns, whenever possible. You can offer options such as exchange, repair, partial refund, discount coupon, etc. These options can help you retain your customers and reduce the costs associated with returns.
• Establish a clear returns policy : Define the conditions, deadlines, methods and costs of returns, and communicate them clearly and transparently to your customers. Avoid abusive or confusing clauses, and comply with current legal regulations. If you are going to charge for returns, do so explicitly and reasonably, and not implicitly or disguised.
• Analyze the reasons for returns : Collect and analyze data on the reasons behind returns, to identify trends and opportunities for improvement. You can use surveys, comments, statistics, etc. to find out which products, categories, seasons, etc. generate more returns, and take steps to correct the problems .

If you want experts to advise you on how to improve your return rate and how to create an accurate and effective page, contact us.

Written by Moises Hamui Abadi : I am an entrepreneur, founding partner of Viceversa and SoyMacho. After leading several digital businesses and advising several other businesses; I decided to form MHA Consulting, a digital marketing consultancy dedicated to growing and enhancing digital businesses in more than 7 countries and generating more than 1,500 million pesos.