By limiting how and when shoppers can send back unwanted items, you’ll alienate customers who might otherwise be happy to give your brand a second chance. Holiday shopping presents a powerful opportunity to convert new customers who’ve been gifted a product from your brand – even if the particular item wasn’t the right fit. To retain those new customers, merchants should offer an extended returns window, with flexible options for exchanging products for any other item or for store credit. Additionally, give shoppers choices for how to return items: some prefer self-service mailers, while others prefer to bring the item to a drop-off location.

In today’s ecommerce landscape, merchants need to look at returns as an opportunity, not a loss. Providing a delightful returns experience is crucial for building customer satisfaction with your brand – and by facilitating streamlined exchanges during the post-purchase process, you’ll be able to retain revenue that would otherwise be lost through transforming refund requests into exchanges, or even upsells. Beyond that, preserving the transaction will help you retain customers who might otherwise churn, helping you boost your customer lifetime value and your customer loyalty metrics.

Customers are concerned with sustainability, and brands that prioritize reducing waste in their returns process will be able to both grow their customer relationships and support environmental conservation. You can reduce landfill waste by routing returns that can’t be resold to secondary merchants, donation centers, or recycling plants – or even encouraging the customer to pass along the unwanted merchandise to a friend, with a “returnless refund.” Your brand might even set up its own “seconds shop” with the support of a partner app that can help you manage shipping and fulfillment on the resale of returned products.

To build a sustainable brand that generates customer loyalty, it’s important to create a generous and flexible returns policy. Great merchants should stand behind customer satisfaction, and encourage shoppers to send back any product that they don’t absolutely love, so that they can find products that they do. A great returns policy serves as a strong marketing strategy, giving new customers the confidence to try out your brand with the assurance that they can send back items they aren’t happy with. Using an automated, self-support platform for managing returns makes it easy to optimize for exchanges, ensuring that customers can find a replacement item they’ll love.

Analyzing returns data across over 2,500 Shopify merchants who use our returns management platform, we found an average return rate of 10.7%, with 28.1% of that revenue retained via exchanges or upsells (with an average upsell value of $1.54). We found the highest return rate by category in swimwear – 22.4% of product is returned, likely due to the practice of bracketing (try out several options with the intention of keeping one). By using our optimized workflows, however, merchants were able to improve their customer retention rate by 30.4% compared to other solutions, and generate repeat business an average of 21 days faster.

The Australian sportswear brand LSKD uses their returns process as a way to incentivize their customers to try out different options from their store to find the products they’ll love. When a shopper initiates a return, they’ll be asked why they’re returning the item: Was it the wrong size, or did they not like the print? The returns portal can then automatically offer new recommendations based on their return reason, such as the same product in a different size or color – or even encourage the customer to browse the brand’s entire real-time inventory to find a product they’ll love. By offering “bonus credit” to apply towards a new purchase, the brand retains revenue on 53% of their returns, with average upsell value of $1.81.

Often, brands don’t want to prioritize returns management, as their goal is to lower the return rate. But returns will always be a part of the ecommerce process, and savvy brands are using automation to deliver a better merchant and customer experience that retains revenue and customer loyalty, and cuts down on customer support tickets. By adopting self-service returns management portals with automated workflows, brands can create a seamless process that encourages customers to exchange eligible items for other products, leading to retained revenue and upsells, while freeing up their customer support teams to focus on more complex customer support issues.