One common mistake when managing returns is not knowing what your return rates look like and how much it’s costing your business.
Amazon’s lenient return policy can have a huge impact on your business’ profitability. If left unchecked, returns can severely hurt your profits. Moreover, Amazon takes down your product page if your product return rate is over the acceptable percentage.
Factors That Can Impact Return Rates
Here are a few of the most important factors to keep an eye on:
Many Amazon shoppers are Prime members, who are essentially incentivized to purchase and return items frequently. Members generally hold the expectation of returning most items (for any reason) within 30 days and receiving a full refund. In fact, many sellers report double or triple the number of returns on items fulfilled through FBA.
Did you know that the average return rate on Amazon ranges between 5–15%, and can even climb as high as 40% for some categories, such as consumer electronics, clothing, and fine jewelry? Products that are most frequently returned are usually ones you’d try on at the store. Aside from this, though, you’ll want to do some more digging and try to find any other patterns for returns in your product category. This will help guide you and your team in the right direction.
The perceived value of your product plays a big role in customer expectations. The level of disappointment buyers feel if products aren’t exactly how they imagined usually has something to do with how much they paid for them. For instance, when you buy a $10 shirt from H&M, you won’t necessarily expect the highest quality clothing article. But, when you purchase a $50 shirt from Nordstrom, you’ll likely become upset if the shirt only lasts a month. Many customers believe that quality comes with a price, so if you offer pricier items and they don’t deliver the expected quality, there’s a good chance buyers will return them and leave complaints.
The same logic applies to the products you sell on Amazon. Buyers are looking for products that are reasonably priced for the value they receive, so if your prices are high but the products don’t last or meet expectations, you’re more likely to see a higher return rate.
Lowering Your Return Rate
Lowering your return rate is crucial to the health of your business. Be diligent in tackling it before things get out of hand. Here are some tips to consider:
Gather Data on Previous Returns
Collecting data can help reveal trends in your returns. Use this information when making future strategies and decisions to lower your return rates. Some key aspects to monitor include product type, date of return, and reason for return. Also pay mind if more products are returned during a certain time of year, as well as the length of time between purchases.
Create a Detailed Product Description
If you find that one of your products is generating excessive returns, it’s quite likely that something in the listing content is to blame – perhaps your product description lacks adequate details for setting the right expectations with your customer. Ensure your descriptions include important information, including (but not limited to):
- Exact product dimensions
- Physical weight
- Sizes and colors available
- Manufacturing location
- Warranty information
- Return policy
- Instructions for use, if applicable
Include High-Quality Images and Videos
High-resolution, professional product photos and videos are critical to success on Amazon. Make sure to provide multiple zoomable photos at different angles showing your product’s stitching, material, logos, etc. Always highlight the unique selling feature. If you offer a product with various colors and styles, you’ll need to have photos per variant as well. All this helps to boost customers’ confidence when buying your product.
Generate More Reviews
Reviews are statistically proven to be effective against returns. Products with more reviews tend to yield fewer returns because social proof gives confirmation to future buyers about the claims of the product. Even negative reviews can help increase consumer trust because they’re made aware of any potential drawbacks that a product might have.
Create a Buyer’s Guide
Another preventive measure against returns is creating a buyer’s guide, particularly for sizing. Accidental purchase of the wrong size almost guarantees a return. You can use tables, charts, and infographics to help customers decide which product is best suited for them. The goal is to keep consumers completely informed about the sizing, function, and intended purpose of your product.
Keep Prices Competitive
Understand your target market and find out how competitors are pricing their products. Keep your prices competitive, and not just to boost sales – as mentioned earlier, more expensive products tend to have larger return rates due to customers’ heightened expectations of quality.
Amazon returns are unavoidable, but they can certainly be managed. As there are many factors that can drive your return rates up or down, it’s important for you to keep track of the key metrics and adjust your strategies accordingly.
Start lowering your return rate and see an increase in profit margins. Let us help you keep your business running smoothly. Book a call with us today!