The rise of both global and Indian ecommerce markets is quite prominent these days. The Indian ecommerce industry is expected to increase by 21.5% to reach the milestone of $74.8 billion in 2022, says IBEF and then have the next mark of US$350 billion by 2030. This incredible growth has made India the second fastest growing economy in APAC just behind the Philippines (Source).
However, the ecommerce market condition is plagued by ecommerce returns that tend to aggressively attack business profit margins and guts conversion rates, ultimately threatening business profitability.
In 2020, consumers collectively returned products worth $428 billion – a staggering amount that can make an ecommerce business owner sweat in fear. If you have also started selling online, this may paint a bleak canvas.
Indeed, returns and refunds have become a part of the new normal and central to ecommerce operations. In scenarios where ecommerce profit margins are already stretched thin, refunds could have a negative financial impact. In fact, how you deal with them can differentiate your brand, raise your profits, and even give you a competitive advantage.
Before we move toward the positive side of refunds, let’s unravel some related numbers.
Statistics around ecommerce returns that call for customer refunds
- Ecommerce returns happen across different industries, with a quarter of all consumers returning around 15% of items that they buy online (Hubspot).
- Buyers using a credit card are most likely to return what they buy online (NRF).
- Customer preference-based returns drive a majority of all returns (size, style, fit, etc.).
- In the post-Covid period, it takes around 8.17 days for brands to process returns (Hubspot).
As you can see here, there can be endless reasons why a customer would like to return the purchases. Whether it is a gift that a peer does not like or trying to get some money spent during a festive season-inspired splurge, you cannot avoid ecommerce returns. When they do place the return request, how swiftly you deal with them does help in retaining them in the long run.
At its core, when customers know that they can get the amount refunded as easily as they spend on your online store, they are more likely to shop with more confidence ahead. If you think refunding the purchase amount is time-consuming and also makes you lose some customers, you need to switch to the antidote of ecommerce return disease – which is instant refunds.
Why do instant refunds matter?
A majority of shoppers (80%) will reconsider their shopping decision if an online retailer does not offer convenient and simple returns.
This is why setting up a well-defined return and refund system is critical to succeeding in the ecommerce space. Your online store’s refund policy simply means allowing your customers to get instant refunds and free product pickup. In case, a customer wants to return the product for a different selection, you also need the provision to allow the same.
A study shows that 77% of users are less likely to recommend a retailer that has a long refund process. Another bias that many customers complain about is that ecommerce companies claim to offer instant refunds that anyway take between three to ten days to be processed.
To beat the odds and stay relevant in your niche, it is important that you make way for instant refunds that can be processed within 24 hours.
Recommended Read: Why Online Refunds Take Time: The Process and Challenges
Finding the refund solution within the problem itself
During the online purchase process, four parties are involved:
- Your customer who sends the payment
- You on the receiving end
- Issuing bank from where the amount will be debited
- Acquiring bank where the amount gets credited
In almost every ecommerce transaction, there exists a payment gateway that acts as a link between the issuer and acquirer. For refunds to be processed instantly, the reverse payment request needs to be passed to the banking partners via the payment gateway. Since not every banking process is automated and may require manual approval, it may take a long time to settle the refunds. In addition, there can be system failures that tend to suspend the refund transfer process in the middle.
How to avoid refund delays for maximum customer satisfaction and retention
As an online business owner, you do need to think about the profit loss and reverse logistics costs before processing any refund. Still, you cannot undermine the fact that you need loyal, satisfied customers continuing to buy from you to sustain your business. If the underlying payment technology is unable to serve your customers, it’s time you switch to a better payment gateway that is capable of processing instant refunds.
Technically, it’s the payment gateway’s role to pass refund request information to different parties involved. The faster this can be done, the better the customer refund process will be.
Paytm Instant Refunds simply mean more loyal customers
Paytm Payment Gateway comes with an instant refund facility using which you can issue refunds within minutes. This way, your customers need not wait for a long time before they receive refunds for purchases back into their accounts/cards. Whether the payment is received via net banking, UPI, Paytm Wallet, or credit/debit cards, Paytm Instant refunds can make things simpler for you.
Other features of Instant Refunds processed by Paytm Payment Gateway include:
- Allows you and your customers to initiate the refund request
- Large payment refund supported
- Reduced operational costs
- No additional charge levied for refund transactions from you or your customer
- Easy to track refunds via merchant dashboard
To get started with Instant Refunds, click here.
Steps involved with Paytm Instant Refunds
- Either you (the merchant) can request a refund
- For transactions made via Paytm Wallet or Paytm Postpaid, the refunds will be processed instantly
- As per payment method eligibility, the customer may also be given the option to enter bank details or select a saved account
- Once the bank account is validated, refunds will be activated via the API, transferring the corresponding amount to the customer’s account.
Also Read: Refund Challenge: Common Issues E-Commerce Merchants Face with Refunds
Why analyzing the Returns/Refunds Landscape is quite important?
Managing customer refunds and returns can be tricky to deal with. Irrespective of what you sell online in India, you need to find and implement a solution that works for both you and your customers to avoid significant burdens that refunds may bring.
A crucial part of handling refunds or returns is knowing why customers would raise a refund/return request in the first place. Some of the common reasons why this happens are:
- Damaged product(s) delivered
- Product is not as described
- Poor product quality
- Ordered more than the required number of items by mistake
- Delivery issues, and more
Realizing why customers ask for refunds or returns of what you sell and correcting things in order can significantly improve how your business functions.
The bottom line
Customer refunds are nearly inevitable in the ecommerce business world. To deal with them, you need an efficient refund policy and the best-in-class payment gateway that can help you process/automate refunds for the better.
Switch to Paytm Payment Gateway
