Maximizing Revenue Through Smart Exchange Strategies: Lessons from Top E-commerce Brands

Did you know the rate of eCommerce returns is growing faster than the rate of sales. 

This can impact eCommerce businesses negatively. 

A Forbes article highlights that 16.5% of eCommerce purchases are returned, amounting to $212 billion. 

However, if returns could turn to exchanges, the narrative could become more favorable to eCommerce stores. 

In this blog, we learn the benefits of exchanges and smart strategies to apply to your Shopify store.

Benefits of exchanges vs. returns 

In this section, we discuss a few of the benefits of encouraging exchanges on your eCommerce store as opposed to returns. 

1. Revenue retention

When customers return products, you have to refund their money. However, when they exchange, you do not have to refund the money. On the contrary, the customers choose another product; exchange the earlier product for another one. This ensures you retain the revenue that was already generated.

2. Improved customer satisfaction

An easy exchange policy can lead to enhanced customer satisfaction. When brands make it hard for customers to exchange products, customers may feel stuck with a product that wasn’t to their liking. In fact, customers may also perceive this as a bad or negative experience.

3. Low operational cost

When customers return products, brands incur extra costs, for example, logistics, waste of packaging material, administrative costs, delivery, etc. But when there’s an exchange instead of a return, some of these operational costs can be avoided.

4. Reduced inventory loss

When customers return products, the inventory gets disturbed. On the contrary, when there’s an exchange, eCommerce brands can reduce costs associated with reprocessing products into inventory, markdowns and damages of returned products, etc. Moreover, when there’s an exchange, a product is returned back to the customer, optimizing inventory management. 

5. Increased customer retention

Brands have a higher chance of retaining customers when there’s an exchange as opposed to returns. For instance, with exchanges, customers may be given store credits or a voucher to purchase another item. This means customers will definitely come back to your store, thus improving customer retention rates.

6. Upselling opportunities

Exchange of products provides upselling opportunities to eCommerce brands. When customers return one product, the brand can recommend better and high-value products that enhance customers’ purchases.

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Example:

7. Stronger brand perception

When exchanges are made easy for customers, it enhances your brand perception. Customers have a good experience and engage more with your brand. This leads to a stronger brand perception.

How to encourage exchanges over returns on your Shopify store

For customers, returning products is easier than exchanging them. However, for your Shopify business, exchanges have more benefits, as we read earlier in this blog. In this section, we make it easy for you to encourage exchanges. Try these 10 strategies:

1. Create a customer-centric exchange policy

If you want to keep your customers satisfied at every touch point in their buyer journey, including exchanges, think like a customer. Created a customer-centric exchange policy.

For instance, think about how to make their exchange process easier, faster, and seamless. Should you automate the exchange process so that customers can initiate the exchange themselves? What should be the exchange window?

Consider these and many other factors when you craft your exchange policy. The easier it is for customers, the better the customer experience, brand perception, and ROI. A good return management system can help you set up and manage a custom policy that guides customers towards exchanges more naturally. 

2. Highlight the benefit of exchanges

Exchanging products as opposed to returning them has many benefits for customers. For example, they may not need to pay for the logistics and delivery charges. One way to encourage exchanges is to emphasize its benefits. Here are some you could mention:

• Customers can receive a new product faster than they would receive the refund
• Exchanging saves customers’ time—instead of looking for a new product, they can exchange the one they bought for a variable product
• Mention your exchange policy keeps customers’ convenience at its heart
• Lock in the original price of the product, in case there is a price increase

3. Use incentives for exchanges

When you give something extra to customers for certain actions, they feel more encouraged to take those actions. Let’s look at some incentives you could offer towards exchanges:

• Offer a discount code for their next purchase. This way you not only encourage exchange, you also ensure repeat customers
• Offer points or rewards that can be redeemed for future purchases
• Depending on the product type, you could offer extended warranty on products if exchanged
• Offer COD option if the customer chooses a product of a higher price 
• Offer access to special deals and discounts

4. Promote alternatives to returning

If you simply offer the options of return or exchange, most customers would choose returns, as they may not want to go through the process of making another purchase. However, you could encourage exchanges by promoting alternatives to returns. Here’s how:

• Let customers know they can get store credits plus a bonus 
• Promote a seamless exchange process, easy pick up or location drop off option, pre-paid shipping labels, etc.
• Offer personalized exchange recommendations of variables or new products
• Offer faster processing for exchanges

5. Educate customers through clear communication

Another way to make exchanges easier for customers is to clearly explain the exchange process. At times, customers may assume the process to be tedious and hence opt for returns instead of exchanges. Here’s what you can do:

• Have a dedicated space/ page for exchange policy
• Explain the process in clear points and steps
• Mention benefits of exchanging on this page
• Mention incentives, if any, on this page
• Make customers feel comfortable by offering customer support for exchanges

Example:

6. Simplify and streamline the exchange process

One of the best ways to encourage exchange on your eCommerce site is to simplify and streamline the process. Today’s customers want a hasslefree shopping experience, including exchanges. Here’s how to go about streamlining the exchange process:

• Mention the exchange process on every product page or add a link to your exchange policy page
• Install a user-friendly exchange tool that makes self-service easy for customers
• Enable customers to initiate exchange with features such as auto-fill and minimal details
• Provide pre-paid return labels, etc.
• Automate exchange tracking and notification alerts 
• Offer multiple exchange options, for example, exchange in store or online

A comprehensive return management system like Return Prime can help you set up a self-service return and exchange interface, while streamlining the process for efficiency using automations. 

7. Leverage technology for seamless exchanges

To manage exchanges manually is next to impossible, especially, if your business is scaling. That is why you need a smart technology suite in your Shopify store. Here are a few ways in which you can leverage technology to create an efficient exchange process:

• Automate the exchange process
• Enable customers to initiate exchanges by self with the help of a smart tool
• Automate exchange approvals and rejections to make the process faster
• Enable real-time inventory syncing with exchanges with the help of ReturnPrime
• Easily send notifications via your Shopify exchange tool

8. Emphasize sustainability benefits

As the need for sustainable practices increases in eCommerce, so is the number of conscious and responsible customers increasing. To encourage customers to exchange a product rather than returning it, here’s how you can emphasize sustainability benefits:

• Tell customers how exchanges reduce environmental impact
• Highlight waste reduction caused by product returns due to packaging material
• Explain how exchanging products optimizes resources as opposed to returning products

9. Offer flexible exchange windows

Another way to make customers opt to exchange products is to allow them a flexible exchange window. For instance, if you make it compulsory for customers to choose a new product within 1 to 2 days, they might rather choose to return the product. It is possible that the customers don't find any product to exchange. 

To avoid this situation, ensure you offer a comfortable exchange window. Many brands allow a 3 to 6 months exchange window. And many brands offer store credits that can be used for a year. Return Prime helps you enable and manage flexible exchange windows. 

10. Train customer support teams to promote exchanges

Many customers may need just a little bit of coaxing and encouragement to choose exchange instead of return. And this is where your customer support teams should come in. Here’s what you can do:

• Set up a customer support team trained in exchanges
• Allow customers to reach out to your customer support team easily
• Be proactive and get your customer support team to reach out to your customers
• Incorporate automated customer support, communication, discount offers that help encourage customers to exchange products (Use ReturnPrime for personalized communication)

Set up your Shopify exchange process with ReturnPrime

If you want to engage your customers more, and increase customer retention, you must think about exchange and return strategically.

Exchanges give you the opportunity to increase engagement and improve customer experience. And GoKwik’s ReturnPrime - a Shopify stores exchange tool - helps with this.

The app helps you set up and manage product exchanges and returns. It automates tasks such as return label, refund via store credit, logistics and WMS, etc. The app is easy to migrate to from any other app and can be easily integrated with other apps. 

Explore Return Prime for your Shopify store today!

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