{"id":1275,"date":"2025-02-17T20:10:00","date_gmt":"2025-02-17T19:10:00","guid":{"rendered":"https:\/\/nilsrooijmans.com\/daily\/?p=1275"},"modified":"2025-04-26T11:26:08","modified_gmt":"2025-04-26T09:26:08","slug":"e-commerce-do-you-want-to-decrease-return-rates-and-increase-profits","status":"publish","type":"post","link":"https:\/\/nilsrooijmans.com\/daily\/e-commerce-do-you-want-to-decrease-return-rates-and-increase-profits","title":{"rendered":"[e-commerce] Do you want to decrease return rates and increase profits?"},"content":{"rendered":"\n

Recognize this?<\/p>\n\n\n\n

\n

“Nils, our biggest orders have the highest return rates.”<\/em><\/p>\n<\/blockquote>\n\n\n\n

Ouch! <\/p>\n\n\n\n

Yeah, I recognize that.<\/p>\n\n\n\n

For fashion retailers, this is the<\/em> single biggest pain when it comes to scaling their business.<\/p>\n\n\n\n

Orders grow big not so much because people want to\u00a0buy\u00a0<\/em>a lot of stuff. Orders grow big because people want to\u00a0try\u00a0<\/em>a lot of stuff.<\/p>\n\n\n\n

A lot of people order\u00a0<\/em>multiple variants of the same product (think: different sizes, different colors), with the intention to only\u00a0buy\u00a0<\/em>one variant. The other variants simply get returned.<\/p>\n\n\n\n

Now,\u00a0here’s the thing:<\/strong> if you are tracking the total order value inside Google Ads and you are running Smart Bidding, then Smart Bidding will optimize towards the bigger orders with multiple variants of the same item, simply because they show higher order value.<\/p>\n\n\n\n

Thus,\u00a0here’s your problem:<\/strong> if you track the total order value (and don’t adjust conversion value based on returns), Google’s Smart Bidding will optimize for high return rate orders, thus increasing your cost of returns, and LOWERING your profits!

Here’s your solution:<\/strong> instead of tracking the total value of an order, try re-adjusting that value at the time of purchase by subtracting the expected\/predicted cost of returns.

How?<\/p>\n\n\n\n

A first simple way to do so is by implementing this little trick:<\/p>\n\n\n\n

    \n
  1. Use the ‘item_group_id’ in your product feed to group all the variants (sizes, colors, materials) of the same product. (See details:\u00a0https:\/\/support.google.com\/merchants\/answer\/6324507<\/a>)<\/li>\n\n\n\n
  2. At the time of purchase, check to see if the order contains multiple items with the same item_group_id (e.g., the same jacket in size XS and S).<\/li>\n\n\n\n
  3. If the order holds multiple items with the same item_group_id, only count one when you compute the conversion value that you send to Google Ads conversion tracking<\/li>\n<\/ol>\n\n\n\n

    Gone are these inflated conversion values for orders that are guaranteed to increase your cost of returns.\u00a0And gone is the incentive for Google’s Smart Bidding to go after these types of cost-inflating clicks.

    Fewer returns, and more profit!

    – Nils<\/p>\n\n\n\n

    <\/p>\n","protected":false},"excerpt":{"rendered":"

    Recognize this? “Nils, our biggest orders have the highest return rates.” Ouch!  Yeah, I recognize that. For fashion retailers, this is the single biggest pain when it comes to scaling their business. Orders grow big not so much because people want to\u00a0buy\u00a0a lot of stuff. Orders grow big because people want to\u00a0try\u00a0a lot of stuff. … Continue reading “[e-commerce] Do you want to decrease return rates and increase profits?”<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-1275","post","type-post","status-publish","format-standard","hentry","category-google-ads"],"yoast_head":"\n[e-commerce] Do you want to decrease return rates and increase profits? - Nils Rooijmans<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/nilsrooijmans.com\/daily\/e-commerce-do-you-want-to-decrease-return-rates-and-increase-profits\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"[e-commerce] Do you want to decrease return rates and increase profits? - Nils Rooijmans\" \/>\n<meta property=\"og:description\" content=\"Recognize this? “Nils, our biggest orders have the highest return rates.” Ouch!  Yeah, I recognize that. 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