eCommerce returns in India at 25-40%: What you should know for your DTC business

eCommerce returns in India
(Last Updated On: May 3, 2022)
The rate of eCommerce returns in India is pegged at 25-40% during the festive time. As the market gets more crowded and consumers have more options, here are some main statistics to know when drafting up your refund and return policy.

3 important facts on eCommerce returns in India

1. Not managing returns efficiently can reduce profits by 25% 

Smaller DTC brands have not yet started paying attention to the invisible costs that are generated because of a high rate of returns.

Larger brands have the luxury of providing lengthy return periods that range from 30-60 days to their customers. However, for smaller brands, it becomes difficult to track and account for the returned goods and the costs associated with them.

In fact, these invisible costs keep eroding your company’s bottom line and reduce profits by as much as 25%.

The costs involved when a product is returned: 

  • Logistics cost – These costs include expenses for return shipping, warehouse, restocking and reshelving charges
  • Damaged goods: Damaged goods cannot be resold hence the DTC brand would need to dispose of them
  • Faulty products: Can be repaired, but the repairs need extra additional charges
  • Reselling the product: You need to restock it, repackage it and refurbish it to resell it as an “as good as new” product

2. Apparel is the highest returned product 

Did you know 19% of consumers buy apparel in different sizes, shapes and fits, with the sole intention of choosing their best fit and returning the others? Not taking this into account can severely impact a business’s cash flow.

Clothes are also subject to a lot of impulsive buying. Your website visitors might often find themselves scrolling late at night for some retail therapy, but then they end up wanting to return it the next day. DTC brands that sell clothes online need to factor in a high return rate, especially during festive seasons.

After apparel, shoes and electronics are the leading products with high return rates.

3. Reverse logistics businesses on the rise 

As consumer consciousness grows, customers become more picky and choosy about what they want. Studies suggest 92% of people only buy a product because of its easy and free return policies.

The scope of easy and quick returns right from our doorstep has increased the return rate in countries like India. Another factor that has contributed to this is that India is one of the few countries that include free shipping services in their delivery and return policies.

Some small DTC brands sometimes put in limitations because of budget constraints. For example, some brands would require the customer to drop off the product at their nearest postal service or would charge extra fees for the return/exchange process.

In India, the reverse logistics business saw growth at a CAGR of 10% (2020). The rise of e-commerce in Tier-2 cities and beyond and the consequent rise of return rates have been contributing to the growth of the return logistics business.

Related read: 8 Shipping factors to consider when choosing a courier partner

3 ways to reduce the eCommerce returns in India 

1. Clear product descriptions

The customer should get as much information as possible just from the product description. More than the title, the description should tell the customer important things like:

  • Size  and dimensions of the product
  • Use cases of the product
  • Materials used
  • Extra care tips, if any
  • Where did the product come from
  • Is the product safe and non-toxic?

Here is a complete guide on writing informative product descriptions for selling online so that customers feel like they bought the exact item they wanted.

2. High quality and unedited pictures of the products

Indian online customers have high standards when it comes to the product they have ordered. Low-quality products or products that look different than what was promised have extremely high return rates.

Since your customers cannot see the product with their own eyes, they have to solely rely on the images/video that you provide.

Here are a few Dos and Don’ts: 

👌 Upload high-quality images
👌 The images should be well-lit
👌 The image can be taken from several angles
👌  Encourage customers to upload review videos/photos
👌  Choose from any of these cost-effective eCommerce photography hacks

❌  Low-quality blurry images are a big no-no
❌  Stock images from websites  (especially if they still have a watermark on them)
❌  Cluttered backgrounds
❌. The image you upload is of a different product
❌. Trying to oversell the product with over-the-top edits and filters

3. Transparent return policies

It is crucial that online stores have a clear transparent return policy stated. As an online seller, you have the complete right to not exchange, refund or resend a product if you had clearly mentioned the terms and conditions of the return on the product landing page.

It also helps the customer decide whether they really want to purchase that product based on the return policy. You might end up losing out on revenue if the customer doesn’t purchase the product.

However, in the long run, you are saving up on costs that are incurred when handling product returns.

An informative, transparent and detailed return policy helps you get more intentional sales on your online store while also decreasing your return rate significantly.

In case of returns, what to do next

There are two things that you can do to minimise costs to yourself and to the planet.

1. Reduce wastage

Damaged products often go into landfills that pollute the environment. The multiple efforts to ship and deliver to the same location contributes to more pollution and fuel consumption.

Additionally, repackaging and refurbishing the goods also result in a waste of resources.

  • Try to put quality checks in place at each stage of the supplier and delivery chain to reduce return rates in the long run.
  • You can also develop a network of resellers and upsellers that can directly take the unused or damaged products from third-party fulfilment centres.

2. Blacklisting and notifying customers 

You can keep track and flag customers that have shown “bad behaviour” by repeatedly cancelling ‘Cash on Delivery’ orders, or returning orders frequently without reason.

Once, you identify such consumers, you can:
– Disable the COD payment feature for them
– Notify them that they have returned excessively
– Charge return fees after a certain point 

You can also increase customer loyalty by indulging in rewards and loyalty programs that encourage customers to return products on time.

Related read: How to get repeat customers; 5 proven ways for customer retention

Worried about handling returns and tracking inventory for your online store? With Instamojo free or premium online stores, you can keep track of all orders and returns along with inventory stock levels – all in one place!

 


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