E-commerce Businesses Aim To Lower Return Rate To Reduce Losses

To reduce their losses, B2C e-commerce companies are seeking for solutions to reduce the high order return rate by customers of general merchandise and lifestyle products purchased on their platforms. Analysts predict that it may be challenging for most of these enterprises to make profits if the high return rate, which is close to 15–16 percent, is not reduced. This is evident from the economics. The typical order is between 200 and 300 rupees. Approximately 14–15% of this is spent on logistics. Add to that product discounts that could be between 20 and 30 percent.

Though there was a slight decline in the return rate in FY22, primarily as a result of companies placing fewer cash-on-delivery orders, it is unlikely that adhering to such a policy would continue to lower the rate consistently, given that the rate in the pre-paid segment did not experience a decrease in FY22.

According to a survey jointly released by Unicommerce and Wazir Advisors, the overall volume of return orders fell to 14.86 percent in FY22 from 16.10 percent a year earlier. They used 500 million orders as a sample. Pre-paid return orders remained stable at 10.4 percent, while CoD return orders dropped to 18.8 percent from 22.1 percent a year earlier. According to Kapil Makhija, CEO of Unicommerce, a supply-chain management portal with customers including Myntra, PharmEasy, boAt, Lenskart, and others, the downward trend will likely continue this year as businesses attempt to deliver goods more quickly.