Best practices for online returns

Ecommerce keeps growing and retailers process more and more online transactions. That also brings potential problems with scale and returns. US retailers expect 15.8% of their total 2025 sales to be returned, worth $849.9 billion, according to the National Retail Federation. For online sales the return rate is even higher: 19.3%. Returns are a challenge every retailer has to deal with.

So how can online stores limit and manage returns? Here are some tips.

1. Make sure your product listings are accurate

Think proactively: you can manage returns more effectively by making sure customers send back as few products as possible in the first place.

That way you can streamline your operations and limit return costs. And it all starts with online product listings that are as accurate as possible.

Put simply, every listed product needs a concise and accurate description, ideally with the practical benefit for the customer next to each key feature.

Also list the product's dimensions, especially height, length and weight, and the materials used and (where relevant) the main ingredients.

High-quality product images help too, especially if you sell items that need to look attractive (such as fashion, accessories or furniture).

Above all, product images must be sharp and clear. Show the item from several angles.

You can also add product videos. These can be product demonstrations or marketing videos, depending on what you sell. What matters is that they add value and give potential customers a better picture of the product, so they can make a better-informed decision.

2. Know the real cost of returns

However well you run your ecommerce business and try to limit returns, it is impossible to prevent them altogether.

You can address this by prioritizing customer satisfaction, for example with a generous return policy. To strike the right commercial balance, however, you have to take the financial cost of returns into account.

At first you might offer free returns to keep customers happy. Depending on how many items are sent back, this creates extra costs that only grow as your business grows.

A large part of those costs is return shipping and tracking, but don't forget labor. How many hours go into managing returns, from handling email or phone requests to restocking and organizing the logistics?

In some cases all of this costs more than buying a new product wholesale. Then it is more cost-effective to issue a refund and let the customer keep the original item.

You can of course cover these costs by charging customers for return shipping, but few people buy from an online store with such a policy.

The best approach is to know exactly what returns cost your business and then draw up a detailed (and preferably clear) policy that works for both your customers and your bottom line.

3. Analyze your returns

Customers send items back for many reasons, from defects or transport damage to simply changing their mind.

Either way, every return teaches you more about your products and how customers see them. Analyzing this data thoroughly can pay off.

You might find recurring defects or problems that point to a consistent design flaw. Or you get consistent feedback that a product simply isn't fit for purpose. Then you can work out improvements to fix it.

Try to break your analysis down into variables, such as the type of product that was returned and its characteristics.

This is a good way to spot common factors and problems, which in turn helps you manage and limit returns in the future. This matters more in some sectors than in others. Online fashion return rates in Europe can reach about 50%, according to Zalando.

Some brands have even used returns to grow sales. Zappos built its brand on free shipping both ways and for years offered a 365-day return window. Today it still gives US customers free shipping, free returns and 60 days to send items back.

This model encourages customers to buy shoes and try them at home without risk. If they aren't happy, they simply send the shoes back for free. That gives them full flexibility to shop online and pick the right product.

It creates a distinctive and attractive customer service that sets the brand apart and encourages customers to spend more over time.

Your return policy is an important way to set your brand apart from the rest, so think it through carefully.