It’s no secret that eCommerce has had its share of ups and downs in the wake of the pandemic, and that volatility is still going strong. While merchants need to be prepared for the growth of returns during peak shopping periods, it’s essential to optimize the process year-round to deal with any surprises.
Peak times for returns
While the number of returns keeps growing YoY, peak return times remain predictable. Looking at data from 2021-2023, returns began on Cyber Monday and extended through the end of January.
eCommerce Returns Peak vs. Non-Peak
December consistently witnessed the highest volume of returns each year, with a notable spike approximately 30 days after Cyber Monday. We expect that trend to continue, even as BFCM promotions roll out earlier each year.
Flexible returns led to recaptured revenue
AfterShip’s data showed that when it comes to return options, the more flexibility a merchant offered, the more revenue they were able to retain. In fact, retailers who enabled three or more return resolution options had a revenue retention rate of more than 30%.
Impact of Return Options on Retained Revenue
The top three returns resolution mixes all had something in common—exchange for other items. This option helped brands retain revenue, but even more importantly, gave them an opportunity to increase revenue when customers exchanged for higher-priced items. Merchants offering exchange for other items saw an average of nearly 12% in increased upsell revenue.
The impact of automation on returns: faster processing times, better customer experience
During BFCM 2023, merchants increasingly turned to automation to streamline the returns process, resulting in a shorter and improved customer experience. Here are some features that were commonly leveraged, along with their impact:
- Auto-approval: Merchants who leveraged automation for returns approval experienced a remarkable 100% reduction in the time taken to process returns, leading to a swift and efficient process for customers.
- Auto-mark as received: Merchants who used automation to mark returns as received saw an average reduction of more than three days (equivalent to a 31%+ decrease) in the time taken to process the returns, decreasing the wait time for shoppers.
- Auto-refund: Merchants who utilized auto-refunds based on certain conditions experienced an average reduction of more than five days (equivalent to a 43%+ decrease) in the time taken to process the returns, resulting in a significantly faster refund for customers.
Merchants who used automation to reduce friction in their returns processes provided greater transparency and quicker resolutions for peak-season shoppers.
The fashion industry: more returns, more opportunities
Fashion and accessories merchants see some of the highest rates of eCommerce returns, for a few reasons: shoppers can’t try on items the way they can in-store, sizing isn’t uniform across the industry, and shopper behaviors like bracketing and wardrobing result in higher returns rates.
AfterShip data showed that 75% of returns in 2023 were for the fashion and accessories industry, but that doesn’t mean all that revenue was lost. Merchants who offered a streamlined process and flexible options were able to reduce return times and recapture more revenue. In fact, fashion brands that enabled exchanges for any item saw an average of nearly 11% in increased upsell revenue.
Merchants who want to mitigate the impact of returns, cut operational costs, and retain more revenue should implement the following strategies:
- Have your returns process fully optimized before Cyber Week to deal with the peak time in December.
- Offer flexible returns options—ideally three or more, and include exchanges for other items.
- Enable automation to reduce friction in your returns process and improve the customer experience.
The primary findings in this report are derived from a fixed sample of 1,487 organizations that are AfterShip customers, analyzing over 200 thousand return requests (RMAs) between August 1, 2021 and January 18, 2024. For graph 3 (“Returns Resolution Mixes”), the sample includes 1,543 current paid users of AfterShip Returns who are: a) continuously using our plan for a least six months as of January 16th, 2024; and b) using Shopify as their eCommerce platform. Insights about the fashion industry are based on 98 users who processed 40,323 RMAs in 2023.
Since this report focuses on post-purchase activities, we define “peak season” as December, when AfterShip customers see the highest monthly return requests (RMAs).