January 03, 2008
Case Study

How Product Return System Lifted Conversions (Surprise) 26%

SUMMARY: Here’s fodder for all you eretailers preparing for an onslaught of product returns after the holidays. They don’t have to drain profits or lower customer satisfaction levels.

A shoe marketer turned this minus into a plus when it started revealing to online shoppers the return rate on products. Clickthroughs saw a big boost, and returns dipped significantly as overall sales increased 26%.
Every eretailer gets product returns. It’s a cost of doing business, especially when you offer free shipping. But one shoe eretailer was disturbed by the high number of returns for certain products. It was costing them money and lowering customer satisfaction and repeat business.

“The whole advantage of shopping via ecommerce becomes negated [when a customer returns a product] because you’ve taken something that’s known for its ultimate convenience and made it extremely inconvenient,” says Frank Malsbenden, VP and General Manager, Shoeline.com.

Because a new brand of shoe was getting a high return rate, Malsbenden started thinking about returns and their impact on the customers’ shopping experience.

Malsbenden and his team wanted a solution that did not involve simply taking the products with high return rates off the virtual shelves. That would limit selection, “which then neutralizes a key weapon that you have in your arsenal in terms of why it’s preferable to shop online versus going to a store.”

Instead of removing the products, they came up with a novel solution: tell consumers about the return history of the shoes in advance on the product pages. The team added a colorful graphic to the individual product pages that Malsbenden dubbed the Return-O-Meter.

Placed adjacent to customer reviews of products, the meter shows a shoe’s return rate as either low, normal or above normal. Because customers cannot physically handle shoes online, giving them as much information as possible is important. It makes their decision-making easier and adds more honesty and transparency to a website.

Here are the seven steps they followed to add the Return-O-Meter graphic to their site:

-> Step #1. Keep the design simple

First, they tackled the look of the Return-O-Meter. They wanted to limit the text and graphics in the design and not slow buyers by confusing them.

The Shoeline.com meter is a dial that changes color. An arrow points to the reading and text displays the rating:
o Green - low
o Yellow - normal
o Red - above normal

“Make it so simple that a customer doesn’t have to study it. They don’t have to read any fine print. It’s just there, easy to read, simple,” says Malsbenden.

-> Step #2. Set benchmarks

To set the meter’s benchmarks, Malsbenden and his team took Shoeline.com’s average return rate and defined that as “normal” and worked from there.

To keep customers from getting too jittery, they’re careful not to allow a return rate for any product to edge into the red portion of the dial. When the highest setting, “above normal,” is assigned to a product, the arrow just breaches the yellow portion.

-> Step #3. Make rate process automated

Every time a consumer returns a shoe, the Return-O-Meter automatically adjusts the ranking. They linked this to the ecommerce database to keep a staff member’s work at a minimum.

-> Step #4. Keep new products separate

Because new products don’t have enough of a sales history to provide an accurate return rate, Melsbenden and his team chose not to include the Return-O-Meter on those pages.

You don’t want to “start out with a return rate for a pair of shoes that’s only sold four pairs so far and one of them has been returned. You’ve got to get some sales under its belt so you can get a statistically accurate representation,” he says.

-> Step #5. Provide reasons for returns

Products that get returned often enough for the same reason show why under the Return-O-Meter. The team added a check mark over one of the four reasons:
o Long
o Short
o Wide
o Narrow

This helps customers plan their orders accordingly. “Return reasons are pretty subjective to the customer,” Malsbenden says. “So, we only post the return reason if there is one reason that stands head and shoulders above the rest.”

-> Step #6. Alert shoe manufacturers

To avoid a backlash from their manufacturers, Malsbenden and his team knew they should give advance warning. “These shoes are their babies, you know? They love these shoes from the minute the start designing them. To see one of their babies, and right next to it, they see a graphic that shows it’s above normal returns, they hate that, they really hate that.”
Creating the Return-O-Meter was more about better customer service than saving on shipping rates.

“You’ve taken something that’s known for its ultimate convenience and made it extremely inconvenient, because now the customer has to go, put the shoes back in the box, tape them back up, put the return label on them, call UPS, put them out on the porch and, hopefully, UPS will see them and come pick them up,” Malsbenden says. “That’s a pain in the neck for the consumer to go through, especially when they’re already too busy as it is.”

Still, compared to last year, they’ve seen:
o 10% drop in their returns
o 18% higher clickthrough rate on product pages
o 26% increase in overall sales

“The product page clickthrough rate has the highest correlation to our overall conversion rate. So anything we can do to increase the product page clickthrough rate, it’s going to have a positive impact,” Malsbenden says.

Not all shoe sales increased, but “nothing dropped in sales to the point where it was catastrophic. And that was more than made up for by the increase in clickthroughs on the product pages. Our overall sales have grown.”

Malsbenden’s attempt to appease their manufacturers and shoe designers also worked, especially when he backed up his statements with evidence. “I showed them instances where … we actually sold more pairs since we put the Return-O-Meter up on some styles since before the Return-O-Meter was up there.”

Malsbenden would also tell them “this is coming straight from the people who are buying your product, and I think it’s worth it for you to see what they’re saying. It might give you an idea for something to do next season.”

Frank Malsbenden of Shoeline.com will speak at the eTail conference in Palm Desert, CA, which runs Feb. 11-14. For details on upcoming conferences, go to http://wbresearch.com/etail/

Useful links related to this article

Creative samples from Shoeline.com's Return-O-Meter:

Past Sherpa article: How Eretailer Doubled Conversions With Better Web Analytics - 5 Real-Life Tactics:

Shoeline.com: Online retailers specializing in selling footwear

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