E-commerce has entered a new era. The days of growing as fast as possible without considering overall costs is a luxury most retailers can no longer afford.
Now, retailers face a new obstacle on the road to profitability: high return rates. And with an average return rate of 17.6% for online purchases (aka $247 billion in 2023), it’s gonna be a big one.
As more and more businesses see the impact of those returns on their bottom line, they’re resorting to some…well, extreme measures. Banning serial returners, for example.
But a seamless return policy is crucial for many online shoppers, and for good reason: There may be sizing or fit issues, broken products, or even just the occasional change of heart.
Fret not, retailers. There’s an easier way to reduce e-commerce return rates: your marketing team. Marketers have a number of tools that can help mitigate returns, so you don’t have to consider a strict return policy.
We teamed up with Bloomreach to show you how to prioritize your most valuable customers with a personalized shopping experience—all while keeping return rates down and profitability up.
Make it personal
Strict return policies do more than just deter serial returners; they discourage other shoppers from buying. If a potential customer is unsure about sizing (or just ends up not liking a product), an extreme return policy can prevent them from ever making it to checkout.
One of the simplest solutions? Using AI to power your personalization strategy so customers can have all of the information they need to make a purchase up front.
With a better understanding of exactly what your audience is looking for, you can help nip those pesky returns in the bud. A right-fit product = fewer reasons to make a return. So shoppers get what they really want from the beginning, and your profitability isn’t impacted.
Data, data, data
As an e-commerce retailer, there’s a wealth of customer data at your disposal. But knowing how to use that data is a challenge in itself. Understanding your customers through their data is, arguably, the most important piece of the puzzle. It allows AI-powered personalization to work properly, but it can’t happen without collected customer data and a single customer view to understand it.
With the data collected via online purchases, site activity, offline data, and more, retailers can use AI-powered personalization to predict and lower return rates. And once you know which shoppers are frequent customers (and which are likely to make returns), you can tailor promotions and campaigns to different segments.
Send your most loyal customers all of the promotions and VIP shopper campaigns you’ve got, maintaining their loyalty without worrying about high return rates.
Then, you can keep those serial returners (aka low or negative CLTV shoppers) out of those segments, so you’re getting the most out of your campaign spend.
Mind the bottom line
Speaking of segmenting your shoppers, let’s talk profitability and VIPs.
Cracking down on heavy returners and removing them from your promotions does more than spare you administrative headaches. It helps ensure your most profitable customers aren’t affected, and it turns prospective shoppers into happy, return customers.
You know your most loyal shoppers. And they know you. They’re familiar with your brand, they know what they like, and they rarely make returns. When they do, they usually come back and exchange a product or make another purchase.
This segment of shoppers will come back again and again—so you don’t want to accidentally alienate them with a new, too-restrictive return policy.
Power up
Serial returners don't have to ruin your bottom line. And you don't have to harm your loyal customer base with extreme return policies. With AI-powered personalization (and a little help from your marketing team), both can be true.
If you’re ready to lower your high return rates, power up your personalization strategy with Bloomreach. It brings real-time customer data and product data together, helping retailers discover what shoppers really want.
Its customer data engine is up-to-the-millisecond fast, so retailers can adapt and change with their shoppers. But it doesn’t stop there. With 15 years of anonymized data, Bloomreach's product dataset is among the largest in e-commerce, covering every kind of shopper across every industry.
The cherry on top? Bloomreach’s Loomi AI is specifically designed for e-commerce. It understands customer behavior and knows which metrics to prioritize, so it can create smooth buying journeys across all channels.
The new era of e-commerce is here. Meet your customers where they’re at with a little help from Bloomreach.