Is my high Product Return Rate due to incorrect Product Information?

Shamanth Shankar

By Shamanth Shankar

On November 21, 2017

Product Returns have become an accepted part of the shopping process for those retailers who have an established a digital presence, representing at least 30% of all the products ordered online. As a shopper, this sounds pretty reasonable if we take into consideration the need to try and test what we buy, but perhaps retailers can do more to reduce this rate. In comparison, only 8.89% of goods bought in brick-and-mortar shops have been returned during the last year. It is estimated that during 2016,  Americans have returned $260 billion worth of merchandise (a 66% increase from five years ago).

So why did people return the goods they bought during the last year?

  • 20% received a damaged product
  • 22% of the products received looked different compared to what was advertised on the website
  • 23% received the wrong item (product data and customer information wasn’t accurately transmitted to logistics)
  • 35% had other reasons which included:
    • product dissatisfaction (incorrect size, lack of measurements, poor description, lack of pictures/videos)
    • buyer’s remorse
    • false advertising, the product didn’t do what it promised
    • wardrobing/fraud

As you have probably noticed more than 60% of all returns stem from mistakes made by retailers in managing the flow of product information (which directly impacts sales and logistics). Negligence in handling and displaying product data across your business platform can significantly eat into your profits and increase operating costs.

In the long-term, a high-volume of returns can cause serious supply chain management problems. Notably:

  • Problems processing the items and moving the merchandise to the next best market
  • Additional storage, testing, inspecting and refurbishing costs (leading to lower recovery rates for some returned goods)
  • Impact on forecasting inventory levels, budgets, sales targets and personnel

Understanding product returns

How can you use product data to transform an inherently bad customer experience into something both beneficial to your customers and strategically valuable to your company?

Understanding product returns is one of the keys to customer behavior and a valuable source of information for identifying the weak points in the data management chain. Learning from your past mistakes and putting in place an effective product returns strategy that is supported by accurate product data can provide a number of benefits:

  • Improved customer knowledge and the opportunity to provide better customer service
  • Effective inventory management
  • The opportunity to prove to your customers that you respond to their needs (for example some people prefer to try things on at home rather than in store, even if it means making returns)
  • Gain valuable insights for improving/upgrading your products (and future marketing)
  • The chance to uncover information gaps in your product presentation
  • Returns can be an advantage in a competitive retail environment if you offer services such as unlimited return windows, no questions asked, free shipping/returns, etc.

The Role of Product Information Management

The Role of Product Information Management

Product data quality significantly influences product return volume. A Deloitte study revealed that digital data (in the form of specifications, digital assets, reviews) influenced 49 percent of consumers before they made an in-store purchase. Product data makes a product more accessible to the general public, aids the logistics process and improves the customer experience both pre- and post-purchase. An investment in a Product Information Management (PIM) system, that collates clean and accurate product information, will help you to diminish the number of returns and focus on hitting all the marks of excellent customer service.

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