What Shopify's Ecommerce Trends 2023 means for Returns
The team at Swap look at the key takeaways from Shopify’s new Commerce Trends 2023 report and what it means for returns and reverse logistics.
First of all the good news. Ecommerce growth in 2023 is projected to be 5% higher than the year before the pandemic. Then stabilise again moving forward. Second, social media is taking over ecommerce. Gen Z are using social media to research brands even more than search engines, with the rest of the population beginning to follow suit. While this is an exciting development, it will continue to drive up ad spend on social channels, increasing Customer Acquisition Cost (“CAC”).
All of this has implications for returns management. First of all, customers are going to be shopping through more diverse channels. This means brand will need to better understand how to manage their inventory and supply chain needs. Brands will also need to reduce their returns significantly, and as CAC will remain high, customer life time value become seven more important than usual.
Digging into the numbers more deeply, shows just how important shrinking return rates is. Brands are losing on average $29 for every customer they acquire, a 222% increase over the last eight years. Returns take a lot of the blame for this, with customers returning on average nearly 30% of all online orders.
Brands like Target and Walmart are testing out innovative return policies, including letting customers keep returns. However, this isn’t a viable approach for smaller businesses. We do however have a few recommendations that might help:
1. Start off by looking at your return fees. Charging for refunds, but offering free exchanges is a key trend Swap is seeing across the board. While there is some scepticism, offering free returns is unlikely to impact brand loyalty, especially if there is a free in store option as an alternative.
2. Refocus on reducing your logistics costs. Swap has a global network of logistics carriers and also offers consolidation services between the US and UK. Anywhere your business can save money in 2023 is going to be key
3. Take the time to understand your return data, which feeds into how you manage inventory and new product releases. By understanding which items are your most returned you can plan better through the year. Swap provides product level analytics at your fingertips as well on which channels customers are most likely to return through
4. Improve shopper retention. We don’t see returns as a loss making scenario, more an opportunity to retain revenue. Through our instant exchange technology, and gift card features we can encourage your customers to take a replacement or new product instead of just returning the unwanted item. As customer acquisition costs will remain high in 2023, shopper retention will be critical
To understand a little more how Swap can help your brand through the year ahead just reach out at email@example.com