How to handle large scale returns during peak shopping seasons

You are employed by an e-commerce merchant and serve thousands of online shoppers each day. You’re also an online shopper yourself and can relate to the needs of your customers on a personal level.

Perhaps the most common inconvenience of online shopping is the returns process. There isn’t a one-size-fits-all solution that every e-commerce merchant employs (wouldn’t that be nice!). Different merchants have different types of consumers, ship to different locations around the world, and carry vastly different products. A t-shirt that doesn’t fit quite right is much easier to return than a shrink-wrapped mattress that is 10x the size of its shipping box once opened.

As a consumer, the choices for return shipping are often grim. Consumers have the option to (1) pay an annual fee in exchange for “free returns,” (2) take on the risk of paying the full return shipping cost, or (3) pay a set flat-rate return based on the sales price. It’s rare to have return shipping costs fully covered by the merchant without having to jump through hoops to return the unwanted or damaged goods.

As a merchant, paying for return shipping can be the death of your margins. According to Barclaycard research, 30% of shoppers deliberately over-purchase and subsequently return unwanted items. As for the effect of returns on retailers, 57% of retailers said that dealing with returns has a negative impact on the day-to-day running of their business. Many online retailers offer free returns, but offset the cost by charging for delivery and other retailers said they would increase the price of products to cover the cost of returns.

In a world where there are more choices than ever for the consumer, there’s finally a solution to return shipping for small and medium e-commerce merchants — return shipping insurance. Online retailers often insure outgoing packages, covering the product from the time it leaves the warehouse until it reaches the customer. However, return shipping costs can be a gamble for online retailers. If you offer to cover the cost, you could see some hefty cuts into margins. If you pass the cost to consumers, you risk losing them to the competition. Return shipping insurance is a policy developed to protect you and your consumers from additional postage fees tied to returning an item to your store or warehouse.

Return shipping insurance is offered as a purchase add-on during the online checkout process. An insurance rate, often minimal, is calculated based on the purchase details. The consumer has the option to purchase the insurance, giving them full control over the total amount of their purchase, including return shipping. Because the fee is so minimal, it’s a win-win for both the merchant and the shopper. The merchant doesn’t have to increase prices or charge for shipping and the consumer doesn’t incur any hidden fees or additional costs to return an item.


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