[{"@context":"http:\/\/schema.org","@type":"Article","@id":"https:\/\/www.the-future-of-commerce.com\/2021\/05\/11\/ecommerce-returns-marketing-metrics\/#Article","articleBody":"The more people buy, the more products they return. But why don\u2019t more marketing and advertising teams measure e-commerce returns? What can businesses do to assure their marketing metrics reflect their actual income and expenses?\nTeams often overlook returns in their marketing metrics simply because they\u2019re not exposed to the data, and the tools they use don\u2019t have a model to even work with the data.\nGoogle Analytics, Facebook Ads Manager, Google Ads Manager, Email Service Providers, Retargeting Providers, Mobile App Marketing Partners, and App Store Marketing Partners don\u2019t ask you about returns rate. They don\u2019t ask for the data; they just tell you what they\u2019re taking credit for in terms of sales and performance.\nHow big a problem is this? \u201cShoppers return 5 to 10 percent of what they purchase in store but 15% to 40% of what they buy online,\u201d David Sobie, co-founder and CEO of Happy Returns told CNBC.\nAs global e-commerce continues to grow over the next several years, the amount of e-commerce returns is expected to cost retailers more than a trillion dollars a year.\nLet\u2019s delve into this high rate of online returns and what it means for advertising and marketing metrics.\n \nHow to measure digital activities: Online, mobile, store performance\n   After researching online, 90% of consumers still buy in-store, but most companies only measure activity online. Learn how to measure digital activities and optimize your integrated marketing plan by knowing which activities are driving value and which aren\u2019t.  \nMarketing metrics\u2019 blind spot: The high rate of e-commerce returns\nIn the US, customers buying online return a whopping 30%-40% more of the product they buy.\nIn Germany, many consumers \u201cbuying\u201d online choose to pay cash on delivery, meaning the order isn\u2019t actually a sale until the customer holds the product in their hands and decides whether or not they want to keep it. Yup, they don\u2019t even pay for it until they see it and decide if they want it.\nSince they haven\u2019t paid a cent until they actually have the product in their hands, there\u2019s a high rate of e-commerce returns: 32% and 17% respectively for clothing and shoes. Many small German brick-and-mortar stores are reluctant to open online stores because of this.\nWhy do we care about this in the UK or the US? Buy Now, Pay Later schemes \u2013 which sometimes wind up meaning Buy Now, Return Later, Never Pay for It and Sink your Marketing and Delivery Costs to the Customer \u2013 are growing.\nThey\u2019re expected to account for 10% of all UK\u00a0e-commerce\u00a0sales by 2024, according to data compiled by Worldpay. The UK\u2019s e-commerce market, currently the third largest in the world, is predicted to reach \u00a3264 billion by 2024, a 37% increase from 2020, according to Finextra.\nCash still matters. According to the Global Payments Report, PostPay and Cash on Delivery make up more than 13% of e-commerce payments in Latin America and are expected to remain relevant over the next three years.\n \nHow to create a winning returns policy and keep customers happy\n   A solid, well-planned returns policy is essential for e-commerce success. Find out what to do -- and what not to do -- by comparing how top online sellers handle returns.  \nDigital marketing metrics and the business disconnect\nSo why do we measure the performance of our digital marketing advertising every day, and how often are these costs factored into our approach to modeling customer acquisition costs and customer lifetime value?\nIs the way we\u2019re measuring digital marketing actually helping us drive predictable profitable growth?\nA former CEO always told me that there\u2019s a difference between \u201cmetrics that matter\u201d and \u201cvanity metrics.\u201d Some metrics are designed to make marketers and users feel good about improving, and agencies feel good about achieving, but that business leaders just don\u2019t care about.\n \nPerformance art: Best practices for B2B\u00a0marketing organizations\n   Best practices for B2B marketing leaders: Marketing agility and resilience were desirable before COVID-19, but are now essential.  \nExample: \u201cWe have improved our seven-day view through rate of display ads by 30% by using a more specific set of behavioral criteria to narrow down our audience, refine the targeting and improve the performance.\u201d\nI heard this (or something close to it) at a client\u2019s internal digital conference about six years ago. A very passionate and talented digital marketing manager for a global consumer electronics business was trying to educate the business on how digital marketing can help drive predictable, profitable growth.\nThe managing director of one of their European markets, who was sitting next to me, turned and said, \u201cthis marketing stuff is complicated, isn\u2019t it!\u201d My reply was, \u201cYes, it is for them, it doesn\u2019t need to be for you.\u201d\n \nHow to master omnichannel in retail: 5 steps for CX success\n   Having an omnichannel strategy is essential for retailers today. What are some key steps for success? One UK retailer offers some lessons to live by.  \nWhat this business had done was use their warranty data to better understand who was buying their products indirectly through retail partners and using that to suppress audiences from their display marketing and retargeting campaigns. This meant their ads weren\u2019t being shown to people who had just bought (direct or in-direct), and also that they were getting better returns from their ad and marketing budgets with a 30% uplift in revenue from the channel from the same budget. It\u2019s a massive improvement, but just not framed through metrics that matter to the business.\nSomething else I hear as a point of friction is again around this measurement theme. Many times I see that the reports as to how well marketing is performing come from the insights team or the finance team, not from marketing or marketing tools.\nWhy? Because of the same reasons discussed above \u2013 the world of online and omnichannel sales is way more complex than most marketing and analytics tools. In many cases, they\u2019re simply not invested in solving the problem because it would make their vanity metrics look worse.\n \nModern marketing: The fundamentals have changed \u2013 have you?\n   The definition of marketing is moving goods and services from the source of tools, channels, and mechanics to the consumer, but most marketers haven't adapted for digital - and that's a BIG problem.  \nRose-colored glasses vs. reality: The cost of online returns\nWhat we\u2019ve seen from analyzing billions of orders is that in fashion retail, the rate of return in most major markets sits at around 25%. It varies by market and by category \u2013 footwear is higher than men\u2019s wear, which is lower than women\u2019s wear, which is massively higher than home furnishings, but it\u2019s rare that people return a laptop or mobile phone.\nLet\u2019s say you spend $10 per acquisition in Facebook Ads and Google Ads and you\u2019ve just achieved a new milestone of 100,000 orders at an average order value of $100. Congratulations! You spent $1,000,000 and you made $10,000,000!\nYou log into your dashboards (below is the Facebook Ads and Google Ads data pulled into the Emarsys Customer Engagement Platform) and you see:\nThe revenue\nThe costs\nThe return on advertising spend (does your CEO, managing director, or GM care about ROAS as a metric?)\nOne level deeper, you\u2019ll also see:\nThe cost per impression\nCost per click\nYour conversion rate from ads\nThese are really important metrics to optimize your marketing performance against (that\u2019s why they\u2019re often referred to as marketing performance metrics), but they\u2019re not strategic metrics your executives and leaders can get behind when you\u2019re asking for more budget, people, and tools.\nMore data, better marketing metrics, fewer e-commerce returns\nA few years ago, I spoke with an executive at a well-known fashion brand that sadly has now gone into bankruptcy, closed all their stores, sold all their stock, and sold their brand, assets, and customer database to a successful retail brand. The conversion was as follows:\n\u201cThere\u2019s a massive difference between the revenue you\u2019re reporting in the platform and the revenue we\u2019re seeing in Google Analytics. You\u2019re off by at least 40%. It means that when we show the year-on-year report into revenue from email and CRM activities, then compare what you\u2019re showing to what the previous vendor had last year, it\u2019s down. But Google Analytics says we\u2019re up \u2013 what\u2019s the problem and how do we fix it?\u201d\nThis is a real issue; it had a real business impact into their reporting lines and came from one key difference.\nWhen they switched from a well-respected email service provider to take a new approach to customer engagement across channels and better understand their customers, we started working with their online data, their offline data, and their returns data.\nThere was a gap in the order of \u00a330 MILLION for the quarter from what was reported in Google Analytics \u2013 that\u2019s substantial. The reason? About 40% of their products bought online were returned, with a much higher e-commerce return rate for first-time buyers (who didn\u2019t understand the size and fit) versus their most loyal customers, who bought through their stores and mobile app (and returned at around 15%).\nWhen the differences were explained using the dashboard above, their answer was, \u201cOK, we now understand the issue and we can talk to the merchandising and web teams about it.\u201d\n \nOnline returns: Holiday returns take huge bite out of e-commerce profits\n   Online sales soared during the holidays and so have online returns, driving up costs for retailers and frustration for consumers.  \nMarketing metrics: The time for change is now\nIt seems so obvious when you see it through the data that some people know their size and fit, but others don\u2019t. Certain product lines like jeans and shoes have twice as many e-commerce returns, which will come to absolutely no surprise to anyone who has ever gone jeans AND shoe shopping with their spouse or friend!\nE-commerce returns are one of the biggest problems plaguing CEOs, CIOs, COOs, and store operations directors, but often they\u2019re not even visible to the marketing teams driving digital demand and customer loyalty.\nWe\u2019re not engaging in meaningful cross-departmental discussions around the impact of returns on individual business areas, and as a result those areas aren\u2019t leaning into the problem to drive better business value or better experiences for customers. After all, customers don\u2019t like returns either. They want a product with as little hassle as possible.\nIt\u2019s about time we as a marketing community working with customer data started surfacing up these insights and align to business priorities. We need to hold our internal teams and external providers accountable to help address this very expensive problem for the industry.\nKick-a$$ commerce. \ud83d\udcf2 Innovation.\ud83d\udcf2 \ud83c\udf43Sustainability.\ud83c\udf43 \u23f1 Service + support.\u23f1 Customers expect a lot from brands. Hear the best in the biz talk how to deliver.","author":{"@type":"Person","@id":"https:\/\/www.the-future-of-commerce.com\/2021\/05\/11\/ecommerce-returns-marketing-metrics\/#Article_Person","image":{"@type":"ImageObject","@id":"https:\/\/www.the-future-of-commerce.com\/2021\/05\/11\/ecommerce-returns-marketing-metrics\/#Article_Person_ImageObject","url":"https:\/\/23x6xj3o92m9361dbu2ij362-wpengine.netdna-ssl.com\/wp-content\/uploads\/2021\/05\/Alex-Timlin-150x150.jpeg"},"name":"Alex Timlin","sameAs":"https:\/\/www.linkedin.com\/in\/alextimlin\/","url":"https:\/\/www.the-future-of-commerce.com\/contributor\/alex-timlin\/"},"dateModified":"2022-01-11T06:35:30+00:00","datePublished":"2021-05-11T05:14:13+00:00","description":"Marketing metrics often overlook the costs of e-commerce returns, which are predicted to cost online sellers trillions in upcoming years.","headline":"The high cost of e-commerce returns: A trillion dollar problem","image":{"@type":"ImageObject","@id":"https:\/\/www.the-future-of-commerce.com\/2021\/05\/11\/ecommerce-returns-marketing-metrics\/#Article_ImageObject","height":"630","url":"https:\/\/www.the-future-of-commerce.com\/wp-content\/uploads\/2021\/05\/marketing-metrics-1200x630.jpeg","width":"1200"},"mainEntityOfPage":"https:\/\/www.the-future-of-commerce.com\/2021\/05\/11\/ecommerce-returns-marketing-metrics\/","name":"The high cost of e-commerce returns: A trillion dollar problem","publisher":{"@type":"Organization","@id":"https:\/\/www.the-future-of-commerce.com\/","additionalType":"https:\/\/www.wikidata.org\/wiki\/Q1193236","description":"Relevant, timely information & analysis on commerce trends, both consumer-facing and B2B.","logo":{"@type":"ImageObject","@id":"https:\/\/23x6xj3o92m9361dbu2ij362-wpengine.netdna-ssl.com\/wp-content\/themes\/hybris_foc\/assets\/images\/layout\/logo-new-2x.png?_=1","height":"96","url":"https:\/\/23x6xj3o92m9361dbu2ij362-wpengine.netdna-ssl.com\/wp-content\/themes\/hybris_foc\/assets\/images\/layout\/logo-new-2x.png?_=1","width":"500"},"name":"The Future of Customer Engagement and Experience","sameAs":["https:\/\/podcasts.apple.com\/us\/podcast\/a-call-for-a-better-experience\/id1479742201","https:\/\/twitter.com\/FutureOfCEC","https:\/\/www.linkedin.com\/groups\/4844282","https:\/\/www.the-future-of-commerce.com\/feed\/"],"url":"https:\/\/www.the-future-of-commerce.com\/"},"url":"https:\/\/www.the-future-of-commerce.com\/2021\/05\/11\/ecommerce-returns-marketing-metrics\/#Article"},{"@context":"https:\/\/schema.org\/","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"2021","item":"https:\/\/www.the-future-of-commerce.com\/2021\/#breadcrumbitem"},{"@type":"ListItem","position":2,"name":"05","item":"https:\/\/www.the-future-of-commerce.com\/2021\/\/05\/#breadcrumbitem"},{"@type":"ListItem","position":3,"name":"11","item":"https:\/\/www.the-future-of-commerce.com\/2021\/\/05\/\/11\/#breadcrumbitem"},{"@type":"ListItem","position":4,"name":"The high cost of e-commerce returns: A trillion dollar problem","item":"https:\/\/www.the-future-of-commerce.com\/2021\/05\/11\/ecommerce-returns-marketing-metrics\/#breadcrumbitem"}]}]