According to the “2019 Consumer Returns in the Retail Industry” report, the overall value of returned merchandise in the United States during the past year was $309 billion, and the cost of ecommerce returns accounted for $41 billion of that total.

However, the invisible cost to the business that is unaccounted for in that number is on the front end, where the return policy for a business affects whether a purchase is ever made. Like shipping, consumers want returns to be convenient, on their time schedule, and free or affordable.

Businesses who understand this can leverage it to build loyal customers who are comfortable ordering online because they feel secure that they can make returns if needed. This security is even more important for pure e-commerce businesses where there is no option to buy in-store. The customer must be able to trust that they will receive the exact product that they see online and that the business will provide compensation if the product does not meet their standards or is not the right item.

What can retailers do to reduce the impact of ecommerce returns?

How can you account for, compensate and mitigate risk from ecommerce returns before the purchase happens?

Be upfront on your return policy

If you can offer a no-questions-asked return policy with free shipping, do it. If you can offer seamless store inventory fulfillment services like Buy Online Pick Up/Return in Store (BOPIS/BORIS), even better. This makes shopping with you easy for the consumer and develops confidence in your business that the consumer can trust. It even leads to higher basket spending and higher lifetime customer value. That’s the motivation for over 50% of retailers that now offer ship-from-store capabilities (and growing).

If you are unable to offer free one- or two-day shipping or ship-from-store, try to balance it with a free exchange policy. Not everyone can afford to offer free exchanges, depending on the item size or cost. Regardless, it is very important to be upfront on the cost to return the item with or without an exchange.

Account for future business

A loyal customer is easier to keep than a new one. For the unpredictable circumstances of a return getting lost in the mail or damaged, it is important to have the flexibility for customers., especially for those who have been loyal to your business.

The last thing you want is to cost yourself future sales because of an error that may be no one’s fault.

In terms of customer loyalty, the environmental cost of ecommerce returns is also well worth examining.