E-commerce returns are a pain for everyone involved. They can be inconvenient for customers, while for businesses they can be costly and time-consuming to deal with. They can have a significant impact on sustainability too.

But the challenge of managing e-commerce returns isn’t going anywhere. The proportion of products that get returned is much higher in e-commerce than in bricks-and-mortar retail. Estimates vary, but some claim that as many as 1 in 3 items bought online are returned.¹

Yet the fact that returns are such an integral part of the overall e-commerce process means they can be turned to your advantage. Smart decisions can help to drive customer retention and repeat business.

So, here are six ideas on how you can make e-commerce returns better for your business, your customers, and the planet.

Returns eat into your profit margins, using up business resources in marketing and fulfilment. But there are steps you can take to reduce the impact and even increase sales.

As a first step, why not explore what improvements you could make to prevent customers from wanting to return items? This is something that many businesses are not managing to do successfully enough, according to one survey that suggests that, while reducing return rates is a top priority for 83% of retailers, only 21% of them think their current processes are effective at doing so.²

One of the keys to understanding how to tackle returns is data. The more you have, and the more knowledgeable you become about the reasons for returns, then the more likely you are to be able to reduce the volume of them – while giving customers a better experience and, hopefully, encouraging further orders too.

So make sure you get accurate customer feedback when returns are made. This could give you the information you need to make a real difference.

For example, among the most common reasons for returning an item are the product quality not being as expected, and the colour or product description proving to be inaccurate.³ Both of these things can be addressed by the retailer to reduce the chances of returns in the future.

Returned goods shouldn’t be an afterthought. The fact that the returns rate in e-commerce is so high means they need to be planned for accordingly.

That means, among other things, making sure your reverse logistics operation is working effectively. After all, the quicker a re-sellable item makes it back to the shelf, the quicker it can be resold.

Software to support your returns processes could help you to make the process more efficient. And it goes without saying that ensuring your returns are handled by an effective, reliable logistics provider is an important part of the mix too.

But you could even consider outsourcing your returns management. Working with a reverse logistics company could prove to be a cost-effective strategy, depending on how much you spend on returns. Or you may even wish to outsource all of your fulfilment operations to a third-party provider (3PL). As specialists, they could be able to access automated inventory management technology that your business can’t afford, making the processes quicker and more efficient.

The customer experience is paramount in e-commerce. And with returns making up an important part of the overall process, it’s a good idea to focus on the returns experience for your customers alongside the initial sale and delivery.

A good place to start is by making returns as simple as possible. Eight in 10 consumers read the returns policy before purchasing, and 72% say a simple returns experience would make them more likely to shop from a merchant again.⁴

So, by making sure your returns process is a clear, straightforward experience for your customers, you could be delivering a boost to your business too.

Free returns can be something of a thorny issue. An increasing number of retailers are now abandoning them and imposing charges, reflecting the scale of the cost to their business.⁵ However, free returns are key for some customers, with one survey suggesting over half would stop spending with a retailer if free postal returns were not offered.⁶

So, there’s an obvious cost / benefit balance to strike, and it’s likely that each business will have its own calculations as to whether it’s worthwhile for them. It’s important not to be too generous if your business can’t afford it and the drain is more than the gain.

If you can, try to offer a returns process that is as convenient as possible for your customers. For example, could you allow customers to drop their returns packages off at retail points or parcel lockers? The global market size for smart lockers is set to exceed $2.1bn by 2030 – a CAGR growth rate of 12.6% – suggesting these locations will become even more popular with consumers.⁷

And for those returns coming back cross-border, it’s important that the customs process is simple for customers. The shipments will need commercial invoices, so ensure you provide them – along with a returns label – and make it easy for customers to give a reason for the return.

This will be needed for smooth passage through customs although, depending on the shipment and the reason for return, you may be able to complete this in advance or on behalf of your customer if they contact you requesting a return.

E-commerce returns can have a negative environmental impact. They account for 24 million metric tonnes of CO2 emissions worldwide each year,⁸ while estimates suggest that around a quarter of returned items are thrown away.⁹

Chances are, your customers are not aware of the environmental impact of their e-commerce returns. But by gathering insights on the carbon emissions of your deliveries, you may be able to communicate this to them – for example, you could share this information on your website or include details as part of a delivery note with every order.

And, if you are transparent about the emissions associated with returning items – perhaps even suggesting some sustainable behaviours such as travelling by bike or on foot to drop off returns parcels – you could help to nudge consumer habits in the right direction.⁹

Returns can be especially wasteful if they are not sold on to another customer. And with such a sizeable proportion of returned goods thrown away, it’s an easy area to make improvements. One thing you can do is use reusable packing for your shipment, enabling your customer to return the item in the same packaging it was shipped in.

But beyond that, assess what would need to be done to make more products suitable for re-sale and take steps to implement them.

These steps will naturally depend on the business you run and the products you sell – for instance, it may be that you could use easier-to-clean materials to help you get soiled goods back on the shelf, or you might be able to set up a small repairs shop within your business to fix items that come back broken. But there will always be certain items that can’t be resold, for example for health and safety reasons. If this applies to your business, consider whether your customers need to return those products at all.