E-Commerce Returns: Cost or Opportunity?

The rise of e-commerce has transformed the retail industry, allowing customers to shop from their homes and enabling businesses to reach a wider audience. However, as e-commerce grows, so does the number of product returns. E-commerce returns are a complex issue, with some companies seeing them as a costly burden and others as an opportunity to create a positive customer experience.

Returns are both a cost and an opportunity, experts say. To optimize their benefits, companies should focus on reducing the frequency of returns as they represent a cost, while ensuring customer satisfaction, says Luis Pedraza, Marketplace Lead, Mercado Libre Mexico. Clients expect that companies deliver their products in a quick and efficient way and they expect the same for their returns. “At Mercado Libre, we have the option to deliver in less than 24 hours in 16 Mexican cities and with the protected purchase system, users can return their products no matter the reason. However, this was based on our own analysis and companies must start studying the reasons behind the returns made by their own clients,” Pedraza adds. 

Returns can pose a high cost for retailers, particularly to those that offer free returns. In addition to the cost of shipping and restocking returned items, there is also the potential loss of revenue from returned items that cannot be resold. However, returns can also be an opportunity for retailers to improve customer loyalty and increase sales. 

Retailers can turn returns into opportunities by focusing on customer-centric strategies. While these strategies can represent additional costs initially, they could pay off in the long term  and turn into an opportunity, says Benjamín Santa María, CEO and Co-Founder, Reversso. Additionally, retailers can use returns to gather valuable feedback on their products and services, which can help them improve their offer and better meet customer needs.

Companies cannot stop offering convenience to users during the return process, as it plays a major role in customer experience and can increase their shopping frequency, explains Javier Dolcet, CEO and Co-Founder, Dawa. “It does not mean free returns for everyone. In this sense, companies can lean on third-party carriers like 99minutos to offer different return solutions apart from return in-store,” adds Dolcet. 

To improve their return policy, companies must start working on omnichannel solutions, says Dolcet. This process can be easier for companies that began their omnichannel journey from a digital start point, rather than those that began as physical stores.

Implementing technological solutions like QR codes has made it easier to return products and customers are more likely to buy from a company that offers easier return processes. “Technology has helped in improve the efficiency of deliveries, but also the customer experience in the merchandise return process, which is very valued by them,” says Fernando Del Río, Commercial Director for E-commerce, Linio.

However, flexible return policies could open the door to fraud. Machine learning can be a solution to fight this problem, which can detect anomalies or suspicious return patterns, says Dolcet.

Ultimately, whether e-commerce returns are seen as a cost or an opportunity depends on the approach retailers take. By prioritizing the customer experience and using returns as an opportunity to improve, retailers can turn them into a competitive advantage and drive long-term success.