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The Importance of a Returns Audit

Threecolts
Geri Mileva
Published
September 27, 2023
Modified
September 27, 2023
The importance of a returns audit

Returns will take a big chunk out of your bottom line. It’s like a silent siphon that will take the wind out of your excitement when you look at growing revenue numbers.

Not only do items get sent back, but you’ll still be on the hook for much of the fees even without the revenue (making them even worse than replacements). What’s worse is if the products come back to you in a condition not fit to be resold - you lose money twice. What’s more is that returns will also likely have a knock-on effect on your star ratings, which can have a disastrous impact if it dips below 4 stars.

As an e-commerce seller, you simply can't afford to let returns increase too much. As with any problem, the first step is figuring out the root of the problem: why are people returning their purchases? This is where a returns audit will be important. Once you have an answer to that question, you can get on with fixing it. 

Comfty

One brand that did a returns audit with Onsite is Comfty, a home and furniture seller. They were able to break down more than 60% of the problems that Comfty was having, which included things like having sub-par instructions for the product, missing or damaged parts, too many difficulties in assembly, and poor customer service, among other factors. 

Onsite implemented the “get product support” button on Amazon, which redirected customers to a customized landing page - which OnSite also helped design -  to sort out any after-purchase support issues that they may be having.

Customers were now able to go to the landing page directly from their orders page on Amazon, where they were able to look at videos of the assembly, request missing pieces from the pack, and generally troubleshoot their issues. 

Ultimately, Comfty avoided 603 returns, resulting in more than $75,000 in savings, representing an 18% overall reduction in the company’s return costs. 

GreenLighting

In another case, home and garden brand GreenLightning found that in the third quarter of last year, of the total 6,895 returned items (which together came out to over half a million dollars in value), 1,715 of them - equivalent to over $128,000 - were entirely avoidable. As a result, the brand’s net PPM was cut by 40%,

When it carried out a returns audit with Onsite, the main issue was identified: people needed too many replacement parts. Off the back of that learning, Onsite was able to put a replacement part program in place to alleviate the issue. 

The result was the elimination of $60,000 worth of returns on a quarterly basis, amounting to a 17% reduction in the impact returns had on profits. 

Westinghouse

When you get too many returns on Amazon, it can drive up your order defect rate (ODR) which tracks the proportion of defective products sent to customers in a given time period. If it strays too high, Amazon will make it public knowledge by way of a banner on your product page. You might as well put up a big yellow sign saying, “Buyers Beware!” 

This is the problem that electronics manufacturer Westinghouse was having - it could not figure out why its order defect rate was going up so high for its best-selling heater. Together with Onsite, they discovered a major problem: many customers did not feel that the heater was not heating well enough, and it was accounting for 25% of the brand’s return contribution. 

They came up with solutions including adding details on the product page about the voltage, material, and operating temperature of the product, as well as the space requirements for optimal function. 

This helped Westinghouse cut 25% of their returns for the heater over the course of the season, equal to $75,000 in savings. 

Westinghouse case study amazon returns
Source: Unsplash

Black and Decker

Anyone who has ever done any DIY will know the name Black and Decker. Less known than the power tools, though, is their air conditioners. Even the giants, though can come across trouble when they’re trying to gain market share. 

Black and Decker found itself in an awkward position: it was getting loads of returns for its best-selling product and it could not figure out what was going on. To make matters worse, the returns were making it drop down in the rankings relative to its competition. 

Here’s where Onsite comes in. They were able to identify some of the major issues customers were having - including problems with them seemingly not cooling down the room properly, poor customer service, incomplete assembly instructions, and drainage. It turned out that around 7% of all returns could have been avoided with proper customer support. 

A series of small changes was enacted, including making updates to the product listings and descriptions, as well as improvements to their customer support systems. The aggregate effect of these changes was an 8% decrease in returns. 

Additionally, they have been able to maintain a 4.3-star rating - keeping them above the 4-star threshold. 

If you carry out a returns audit with Onsite, you will get a detailed breakdown of your returns in between 7-10 days, giving you a quick turnaround to start clawing some of the money back. Additionally, with Onsite’s “get product support button”, sellers have a highly effective way to let customers figure out their own problems - crucially diverting them away from leaving a negative review or a low star rating - by providing an easy and convenient way to learn more about the product and hopefully figure out the issue before needing to write a review (which tend to come more from negative experiences than positive ones. 

It provides a seamless route - which can also be accessible through a QR code - to the product support landing pages, which are full of resources like product guides, video tutorials, explainer packs, FAQs, or anything else a buyer may need, including a direct chat function to reach out to you in case the supporting materials are not quite enough.

Get in touch with Onsite today about a returns audit and find out where the leaks in your ships are.