Customer returns are, unfortunately, an inevitable part of any ecommerce business. Current statistics suggest that around one in five online purchases are returned each year, and the average ecommerce return rate is estimated at between 20 and 30% of total retail sales, with clothing and fashion goods accounting for the largest volume of returned goods.
Consumers return products for all kinds of reasons, which we'll explore in a moment, but the costs associated with the returns process can be a drain on any business. Aside from the financial costs, there are other factors to consider, such as the environmental impact and the amount of time required to process returns.
Again, we'll cover these in more detail further along, but first, it's crucial to recognise that ecommerce returns are a serious problem, and it appears to be growing.
So, what action can you take to reduce returns and minimise the risk to your business operations?
In this Direct Fulfilment 365 blog, we're investigating various tried and tested methods of reducing the volume of goods returned to your online store. By taking these on board, you can save a whole lot of time and money, improve your profits and keep your customers happy!
There are several reasons for this, and the answer is complex, but we'll try to explain as simply as possible.
First, we need to compare the figures for traditional brick-and-mortar stores, which have an average return rate of 9%, which is a pretty big difference!
When we understand the reason for this disparity, we get to the heart of the problem; it's generally easier to return an item bought online, as you don't need to visit physical stores.
Keeping this in mind, we're going to list some of the reasons why ecommerce returns happen. Get ready, though, as there are quite a few to plough through...
Sizing is one of the biggest culprits. Clothes and shoes are tricky to order online as there are no changing rooms, and no trying things on. Even with size guides, there’s a lot of guesswork involved. Brands often have inconsistent sizing, and what fits perfectly in one store might be completely off in another. Customers end up ordering multiple sizes to compare, with the intention of sending the rejects back - a practice known as bracketing.
We’ve all been there - scrolling through stunning product photos, only to open the box and think, “Wait, is this even the same thing?” Lighting, filters, and clever angles can make colours look brighter, fabrics seem richer, and textures appear different. When the item turns up and doesn’t match expectations, it’s back in the box and off it goes.
Nothing causes more customer frustration than receiving something that feels cheap, flimsy, or worse – damaged. When the quality doesn’t meet the price tag or if something arrives with a flaw, customers won’t hesitate to send it back. Whether it's faulty zippers, scratches, or missing pieces, the item goes straight to the returns pile.
Online shopping can feel a little too easy sometimes. It’s so simple to add things to the basket and check out that impulse buying is almost inevitable. But once the initial excitement fades, reality hits - and often, so does regret. Whether it’s guilt over spending too much or realising they don’t actually need that extra gadget, customers frequently change their minds.
When the description on the ecommerce store doesn’t quite match the reality, disappointment follows. Maybe the material feels different, the size of the item is off, or the features aren’t what was promised. If people feel misled, they’re quick to return the product.
This is surprisingly common and incredibly frustrating! Receiving the wrong item, size, or colour is a sure way to get that parcel sent straight back. Customers expect precision, and even a small error can feel like a big inconvenience.
A lot of shoppers play it safe by ordering the same item in multiple sizes or colours with the full intention of returning the ones they don’t like (called bracketing, as we mentioned above). It’s a practical approach when unsure about fit or style, but it contributes massively to the rise in returns!
Buying anyone a gift can be a gamble, and sometimes they miss the mark. Whether it’s the wrong size, style, or something the recipient simply doesn’t need, many items gifted during holidays or special occasions get returned or exchanged.
With the rise of subscription boxes and auto-renewal services, it’s easy for customers to forget they’re signed up for something. When another box of products lands unexpectedly, many people choose to send it back, especially if they weren’t planning on spending that money.
Timing is everything. If an item arrives too late for a special occasion - a birthday, wedding, or other special event - it often loses its purpose. When the moment’s passed, the item goes straight back.
Increasingly, ecommerce customers are becoming more conscious of sustainability and ethical shopping. Sometimes, after purchasing, they may reconsider whether the item aligns with their values and return it as a result.
Online prices fluctuate constantly. If a customer spots a better deal after making a purchase, they might choose to return the item and buy it again at a lower price.
Believe it or not, packaging matters. If an item arrives in shoddy packaging or looks like it’s been tossed around, customers may question its quality and opt to return it.
Sometimes, customer dissatisfaction due to poor post-purchase service can push customers to return items. Whether it’s a lack of assistance, slow responses, or unhelpful support, a negative experience can make people decide they’re better off without the product.
Have you ever added something to your basket twice or hit ‘Buy’ a bit too quickly? It happens! When customers realise they’ve ordered duplicates or the wrong item, sending it back is the obvious solution.
Unfortunately, around 7.5% of all customer returns are fraudulent, typically involving wardrobing, where the buyer purchases clothes, wears them once and then returns them. Other, more sophisticated scams exist, but these are less common, although they can impact businesses significantly.
Right, we've probably covered just about every possible scenario that would lead to a customer returning an item bought from an online store, so now we need to understand why it's vital to limit this from happening.
We'll get to the part where we offer advice on how to reduce returns shortly, but it's important to fully understand the problem in order to tackle it effectively...
Online shopping is clearly booming. People love the convenience of browsing, clicking, and having their purchases magically appear at their doorstep. But here’s the downside: returns. And not just a few – a lot of them. While returning items is relatively easy for online shoppers, it’s a massive headache for ecommerce businesses. Behind the scenes, every return sets off a chain reaction of problems that can seriously impact a company’s bottom line. So, why exactly are returns so bad for online sellers? Let’s unpack it and find out...
Returns aren’t just a minor inconvenience - they’re expensive. When an item comes back, the costs go beyond refunding the customer. There’s the price of shipping (sometimes covered by the business), handling, inspecting, repackaging, and restocking the item. If the product can’t be resold as new, there’s an even bigger problem. Add to that the cost of processing the refund, and you’re looking at a pretty hefty financial hit for every returned item.
Many online retailers offer free returns as a way to stay competitive, but that generosity often eats away at their profit margins.
On average, the combined cost of dealing with online business returns in the UK runs to around £7 billion a year.
Returns throw a spanner in the works when it comes to managing stock! When items come back, they need to be assessed, repackaged (if they’re still in perfect condition), and returned to inventory. But this isn’t always straightforward...
Some items can’t be resold as “new” and may need to be sold at a discount or through secondary channels, reducing potential profits. Seasonal or trendy items may come back too late to be resold, leaving retailers stuck with out-of-season stock that’s hard to shift.
This disruption in inventory flow can lead to overstocking, understocking, and a logistical nightmare that costs time and money.
For most ecommerce businesses, profit margins are already tight. When returns become frequent, they chip away at those margins, sometimes leaving businesses barely breaking even, or worse, operating at a loss.
In the arena of fashion and footwear, return rates can skyrocket due to sizing inconsistencies and style preferences.
With such high rates, even small losses per return add up quickly, putting financial pressure on businesses that rely on volume to stay profitable.
Handling the returns process isn’t just costly, it’s labour-intensive. When items come back, warehouse staff need to inspect, sort, and process them. This takes time and manpower that could be spent on fulfilling new orders or improving operations.
For large-scale ecommerce operations, managing a high volume of returns can slow down order processing and create bottlenecks in the system. Smaller businesses, meanwhile, may struggle to keep up, leading to delays, errors, and very unhappy customers!
Returns aren’t just a financial burden, they’re an environmental one too. Every returned item contributes to increased carbon emissions from transportation, packaging waste, and the disposal of unsellable goods.
The harsh truth is that many returned items can’t be resold and end up in landfills. As much as £5 billion worth of returned goods is thrown into landfill sites every year. This contributes an estimated 15 million metric tonnes of CO2 emissions globally.
This is clearly unsustainable, and something has to be done to improve this situation.
When a customer returns an item, it’s not just a refund (if it's eligible for one), it’s a lost sale. If they don’t exchange the item or make another purchase, that potential revenue is gone. Worse still, if their experience was negative, they may never return to the site, leading to long-term customer loss.
This is also linked to customer reviews; around 80% of potential customers won't consider using an online store with bad ratings and reviews. And most people will abandon a brand if they feel they've had a negative experience. The lesson here is that customer satisfaction is paramount!
Okay, we've given you a huge amount of information to digest, and we're rapidly approaching the halfway mark in our blog, so it's high time we got to the part where we offer the promised advice. Admittedly, we've painted a pretty negative picture of the situation so far, but don't despair! It is entirely possible to reduce the volume of customer returns and limit the stress, cost and damage caused.
But how exactly can you do this?
Let's find out...
Yes, it seems counterintuitive, doesn't it? After all, you want to cut down returns, not make it easier for customers to return goods!
However, remember what we said earlier about customer satisfaction? Statistics show that 92% of customers are likely to come back and make future purchases if the returns process is optimised and they have a positive experience.
The key to success here is to streamline the process and make it more efficient and keep customers engaged. You also need to consider offering free return shipping along with outstanding customer service to foster customer loyalty.
On the other side of the coin, a lenient returns policy (as suggested above), although great for customer satisfaction, can also invite abuse and unnecessary returns. Striking a balance between flexibility and accountability is essential!
You can refine your returns policy by:
Consider offering store credit or exchanges instead of cash refunds. This keeps the revenue within the business while still offering a solution for the customer.
One of the biggest reasons customers return items is that they’re not what they expected. Maybe the colour’s off, the material feels different, or the size is way off. All of this points to one thing: misleading or incomplete product descriptions.
You can fix this by being brutally honest and giving customers a realistic idea of what they’re getting. Include details about the fabric, texture, fit, and any quirks they should know.
Use precise dimensions instead of vague terms like “medium” or “large.” Provide exact measurements for size, length, and width. If a dress size runs smaller than average or a gadget requires assembly, say so! Transparency builds trust and prevents disappointment.
Consider adding comparison charts or fit guides that show how your sizing compares to popular brands, as it helps future customers make informed decisions.
Flashy marketing campaigns that over-promise and under-deliver are a recipe for high return rates! If customers feel misled by exaggerated claims or misleading promotions, they’re likely to send their purchases straight back.
The best way to avoid this pitfall is by being authentic and honest with your captions and descriptions. Highlight the genuine benefits of your product without overselling it, and you'll get the customer on your side.
In addition, if there’s a chance that the item will be delayed, be upfront about it. When you keep customers informed, they are less likely to become annoyed and impatient.
At the end of the day, you want satisfied customers. The best way to do this is by tightening up operational efficiency to make things run as smoothly as possible.
In essence, take a good look at how you run things and see what can be tweaked to improve the customer's buying journey. Analyse available information, such as purchase history and customer preferences, and make data-driven decisions that streamline the order fulfilment process.
User-generated content is pure gold when it comes to reducing returns! Positive reviews, photos, and videos from real customers help set realistic expectations and give potential buyers a better idea of what to expect.
You can boost this by encouraging honest feedback. Ask your customers to leave detailed reviews about sizing, fit, quality and overall satisfaction. You could also highlight reviews that answer any common concerns, such as a certain size being particularly small.
If you're tech-savvy, use AI tools to analyse reviews and trends to identify recurring issues that could be contributing to a high number of returns.
The best way to win this is to address these concerns rather than avoid them!
Positive reinforcement works wonders! Rewarding customers who don’t return items can encourage more thoughtful purchasing decisions and create a sense of satisfaction that goes beyond the initial sale. When customers know they’ll be rewarded for keeping their purchases, they’re more likely to carefully consider their choices before hitting the “Buy” button, leading to fewer impulse buys and ultimately, fewer returns.
You can achieve this using the following incentives:
A small reward can go a long way in fostering brand loyalty and reducing unnecessary returns! When customers feel appreciated and rewarded for making mindful choices, they’re more likely to stay engaged with your brand and far less likely to send items back.
Customers rely heavily on visuals to make purchasing decisions, so anything less than crystal-clear, high-quality images can lead to mismatched expectations, and - ultimately - returned goods.
Here are some helpful tips that might improve your shots:
Always try to show the product in context. For clothing, display it on models of different body types. For home décor, place it in a realistic environment. This helps customers visualise how it will look or feel in their own lives. It's all about enhancing the customer experience!
This is where you provide customers with a refund without all the hassle of the returns process. While it's really only viable for low-value items (especially personalised goods that are difficult to resell), it avoids the costs and bother associated with the reverse logistics process.
It's also another way of retaining loyal customers, as it builds goodwill and makes it more likely that they'll buy from you again.
Many of the biggest names in ecommerce are already adopting this system (including Amazon), and it's proving very popular!
Sometimes, returns happen because customers simply need a little extra guidance or information. A quick chat with a knowledgeable support agent can often prevent a return altogether.
Here's how you can optimise your customer service operations:
Follow up with customers after their purchase to see if they’re happy with their item. A proactive approach can reduce return rates significantly!
So far, we've suggested practical ways to reduce returns of purchases from your ecommerce site. These have all been fairly straightforward and achievable methods that can be applied to your own business, so our last suggestion may seem to be a bit of a curveball!
But stay with us here as we briefly explain why outsourcing customer orders to a company like Direct Fulfilment could drastically reduce ecommerce returns...
A 3PL (Third-Party Logistics) company like Direct Fulfilment 365 specialises in precision and efficiency. They use advanced technology, such as barcode scanning, automated inventory systems, and AI-driven algorithms to ensure that the right items are picked, packed, and shipped.
This dramatically reduces the risk of customers receiving the wrong item, size, or colour - one of the leading causes of returns. With fewer fulfilment errors, customer satisfaction increases, and the likelihood of returns plummets.
Check out our post “What is a pick and pack service”.
3PL companies implement rigorous product quality control measures to inspect items before they’re shipped. Any defective, damaged, or incorrect items are flagged before they reach the customer, minimising the chance of receiving faulty goods and the subsequent need for returns.
Some 3PLs even use AI-powered systems to identify patterns in defects and address potential issues before they become widespread. This proactive approach helps reduce returns caused by quality concerns.
Late deliveries often lead to returns, especially when items arrive too late for a special occasion. 3PL providers offer optimised shipping solutions with faster turnaround times and real-time tracking, ensuring that customers receive their orders promptly, reducing the likelihood of “missed occasion” returns.
By partnering with multiple carriers, 3PLs can also offer more flexible delivery options and select an appropriate shipping company that will cater to the customer’s schedule, further enhancing the delivery experience.
In addition, third-party logistics companies can negotiate much better rates than individual ecommerce businesses, meaning that you save money on shipping costs.
3PLs are experts in packaging optimisation, using materials that protect items effectively during transit. Proper packaging reduces the risk of items arriving damaged, preventing returns due to poor condition.
Many 3PLs also offer eco-friendly packaging options, appealing to environmentally conscious customers. Additionally, these providers conduct regular packaging audits to ensure materials and techniques are consistently effective in preventing transit-related damage.
Read our post "What is 3PL fulfilment and why do growing businesses need it".
Many third-party logistics providers offer customer service and streamlined return management systems via a dedicated returns portal. Their professional handling of return requests, exchanges, and troubleshooting can often resolve customer concerns without the need for a return, leading to higher customer satisfaction and fewer unnecessary returns.
Some 3PLs also integrate directly with e-commerce platforms, providing real-time updates to customers and reducing confusion or dissatisfaction that could lead to returns.
Whatever you take away from this blog, it's crucial to take returns seriously before it's too late. Whether you take on board all of the above suggestions or maybe just a couple, any action you take could be critical in the future success of your ecommerce business.
From a purely economic and practical viewpoint, the final suggestion - outsourcing your order fulfilment and returns process to a company like Direct Fulfilment 365 - is by far the best option.
Not only is the burden of dealing with the entire process lifted from your shoulders, but our expertise ensures that 99.9% of orders are completed accurately and delivered on time. And if there are any queries, we'll deal with these as well! In the event that goods are returned, we handle the re-stocking, recycling, refurbishment or sensitive disposal of the items.
But wait - there's more! Because we're taking care of order fulfilment, you have more time to devote to other areas of your business, such as marketing strategies, product development and all the practical tasks that will improve your chances in a highly competitive market.
Together, we can streamline the order fulfilment process, exceed customer expectations and virtually eliminate ecommerce returns. While we may not rule them out completely, it's possible to reduce them to a sustainable level so they won't negatively impact your business.
If you need help getting customer returns under control, contact Direct Fulfilment 365 now, and we'll form a partnership that minimises returns and maximises success!
At Direct Fulfilment 365, we take the stress out of logistics so you can focus on growing your business. From same-day dispatch to 24/7 inventory tracking, we’re here to make your operations seamless.
At Direct Fulfilment 365, we are dedicated to helping your business thrive by providing seamless logistics and fulfilment solutions. Whether you're looking to enhance your shipping options or streamline your operations, we are here to support your growth.
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