tl;dr
3 Ways to reduce return rates:
Improve your product
Offer Exchanges
Prevent Customers that will return your product
Already a slight change in return rates can have a great impact on your EBITDA and whole margin structure (calculation in the video), allowing for new CAC targets and markets
Example calculation shown in video in Excel sheet at the bottom 👇
Return orders are always negative on your P&L. That's why they can have a big impact on your overall profits. And it doesn't help you to get more orders in, if they are more likely to be returned - return rates across all categories on average are >20%.
These are 3 ways to reduce your returns to increase profits:
Improve your product: check your reviews, CS tickets and return reasons to understand why customers are returning your products and make improvements accordingly.
Offer Exchanges: Instead of jsut letting customers return your products, provide them with the option to exchange your products for another immediately to lower friction.
Prevent Customers that will return your product: adjust your messaging in your ads and product page in order to filter out customers that are likely to return (buying for the wrong reasons).
How massively this affects your profitability with an example calculation is explained in this video.
Remember that this can give you a whole new margin structure, being able to set new target CACs and for example be able to acquire customers more aggressively and open up new markets for you.
Example calculation Excel file shown in video: