American consumers spent an astounding $1.29 trillion in online retail sales in 2022, yet roughly $212 billion worth of products — more than 16% of sales — were sent back in the form of online returns. Unsurprisingly, every January, brands and retailers see an excessive number of holiday shopping returns as millions of gift recipients and gift-givers took to the mail centre to send back unwanted products. In fact, apparel return rates during the holidays can reach as high as 30%.
Though return rates vary by industry, one trend remains constant: Return rates are on the rise across all verticals, causing profit margins and supply chains to suffer.
Since computers, televisions, smartphones and other electronics are often priced higher than other retail items, the return cycle can be particularly vicious for consumer electronics brands. Unfortunately, electronics rates are not exempt from the increasing return rates — and the return blitz of the 2023 holiday season is just around the corner.
So how can consumer electronics brands reduce the number of holiday returns this year? And why is it so important to reduce ecommerce returns in the first place?
In this article, we will examine the current state of returns among online consumer electronics shoppers. Then we will share how holiday shopping returns impact consumer electronics brands and offer proven solutions to minimise post-holiday returns in 2023.
Consumer Electronics Returns: The Current State of Affairs
The challenge of handling online returns is nothing new, according to Chad Johnson, VP of Consumer Electronics, Digital and Gaming at ESW. Yet as return rates increase, the problem becomes more complicated.
“As online shopping becomes more accessible and convenient, return rates are skyrocketing,” said Johnson. “It is a problem that every brand must deal with if they want to be profitable, while also remaining competitive.”
The current return rate for consumer electronics ranges from 3% to 15%. Return rates are typically higher for online consumer electronics in comparison to those purchased in-store. (This may be because in-store employees offer more hands-on support to help customers through the buying process.)
Here are the average return rates for consumer electronics by category:
- Televisions: 10-15%
- Desktop/laptop computers: 5-10%
- Smartphones: 5-7%
- Modems: 2-3%
- Industry-specific electronics: 1-3%
These rates only increase during the holiday season. From November 2022 to January 2023, overall retail ecommerce return rates were consistently in the range of 10% to 16% each week.
“Online shoppers are in an absolute frenzy during the holidays, so of course, return rates are going to go up,” said Johnson. “But it’s surprising to see how few brands are prepared for this uptick. Brands that don’t have a plan of action in place can take a serious hit.”
Why Do Customers Return Electronics?
A report from Insider Intelligence suggested that ecommerce returns exponentially increased during the 2022 holiday season for several reasons:
- Consumers were seeking deals
- Retailers offered heavy discounts
- An extended holiday shopping season
Still, the reason consumers return electronics is a bit more complicated. A whitepaper from TechSee explained that returns are often the most straightforward way for retailers to handle product issues. After all, it is easier for a company to process a return than to offer extensive technical support or customer troubleshooting.
This factor partially explains the reason for such high return rates in consumer electronics. But customers have an array of other motivations, both technical and non-technical.
Here are some of the top retail return rates by reason:
- Defective/poor quality: 24.9%
- Bought the wrong item: 14.3%
- Buyer’s remorse: 13.6%
- Found a better price: 12.8%
- Gift return: 9.9%
- Item didn’t match description: 9.8%
Another reason for high return rates in consumer electronics is simply because return policies are so lenient. A 2022 consumer report found that 96% of U.S. consumers believe a brand’s return policy is a direct reflection of how much they care about their customers. Naturally, many electronics brands feel they have to meet rising customer expectations for easy, seamless online returns.
The Impact of Holiday Shopping Returns to Consumer Electronics Brands
Customer returns are more than an annoyance for consumer electronics brands — they threaten the bottom line. Brands with high holiday shopping return rates face decreased profit margins, complicated supply chain challenges, reduced cash flow and more.
Decreased Profit Margins
There is more to the returns process than simply bringing the product back to the warehouse. An Accenture study found that manufacturers spend 5-6% of their revenue processing customer returns, which includes the cost of receiving the return, performing a functional test, repackaging and restocking the item, and so much more.
Retailer returns also cut into 2-3% of total sales — highlighting just how serious the issue of returns has become for consumer electronics brands.
Impacted Supply Chains
Managing returns doesn’t just take up time, resources and money. It also has a negative impact on the supply chain, creating complicated reverse logistics that limit cash flow. Consumer electronics brands also have the added step of refurbishing returned items with technical issues. They often incur costs from offering technical support, either in-store or online.
5 Tips for Reducing Holiday Shopping Returns
Brands that reduce holiday shopping returns enjoy benefits like decreased inventory expenses, reduced customer support costs, and increased brand loyalty. But resolving the problem can be difficult for even the most established electronics brands.
“Fortunately, there is a lot that brands can do to minimise returns during the holiday season and beyond,” said Johnson. “When brands are equipped with these strategies, they’ll be able to weather the storm and come out even stronger on the other side.”
Let us explore proven solutions for minimising product returns during the holiday season:
1. Secure Packaging
Nearly 20% of all ecommerce packages arrive damaged. Consumer electronics brands can significantly reduce return rates by employing more secure packaging. Sturdy and protective materials prevent damage during transit, instilling customer confidence. This fosters a positive experience, minimises returns, and enhances brand loyalty, ultimately leading to cost savings and increased customer satisfaction.
2. Clear, Detailed Product Descriptions
An estimated 39% of consumers say they often return products because the online description did not accurately portray the item they received. Providing comprehensive information about features, specifications and compatibility enables customers to make informed decisions. This reduces misunderstandings and ensures products meet expectations, which results in fewer returns and improved brand reputation.
3. Customer Reviews
Consumer electronics brands that showcase their reviews increase buyer intent, boost revenue, and reduce return rates. More than 50% of consumers read at least four reviews before purchasing a product, and brands that have plenty of customer reviews will help consumers make informed purchasing decisions.
4. Product Videos
Informative product videos are another proven way to decrease return rates. The vast majority of businesses (91%) already use video as a marketing tool, and 96% of marketers agree that videos help increase user understanding of a product or service. Product videos can be used to demonstrate product functionalities, share usage tips, troubleshoot visually and help customers better understand the item’s capabilities. This minimises confusion, ensures accurate expectations and fosters satisfied customers who are less likely to return the product.
5. Live Chat Customer Support
In today’s world, 73% of consumers say live chat is the most convenient way to communicate with a business. The instant, personalised assistance found with live chat support enables customers to seek guidance, clarify doubts, and receive real-time solutions, which fosters confidence in their purchases. With quicker issue resolution and enhanced customer experience, returns decrease, brands save money and customers become more brand loyal.
Decrease Consumer Electronics Holiday Shopping Returns with ESW
Reducing holiday shopping returns is crucial for consumer electronics brands to maintain healthy supply chains, overall profitability and customer loyalty. By implementing secure packaging, clear product descriptions, customer reviews, product videos and live chat support, brands can minimise returns and create a positive shopping experience.
ESW has solutions that help brands reduce return rates and maximise global DTC opportunities. To find out how we can help your brand, talk to an expert today.