Affiliate Marketing Can Solve Current Retailers’ Returns Dilemma
In 2020 and 2021, as a result of the global COVID-19 pandemic, many consumers turned to online shopping. eMarketer reported global retail e-commerce sales grew 27.6% in 2020, while total retail sales declined by 3%.1 This has, in turn, sparked an increase in purchase return rates. For retailers concerned with how the new increase in returns will impact already tight margins, affiliate marketing might be the answer.
Online Returns Hit 20.8% in 2021
With the massive increase in e-commerce shopping, the National Retail Federation and Appriss Retail reported retailers are expecting to get back about 16.6% of total merchandise that customers purchased in 2021, which is a major jump from the average return rate of 10.6% in 2020.2 This equates to an astonishing $761 billion of merchandise in the United States alone, and with online retail sale returns even higher at 20.8% (up from 18.1% in 2020).
Many e-commerce retailers are re-evaluating their processes and experiences for consumers due to these shopping behavior changes.3 While dealing with high return rates, e-commerce retailers are also making significant marketing investments to drive online sales.
Thanks to the current returns dilemma, retailers are not only losing the sale, but also all the money associated with the sale from promoting the product with different marketing channels, paying for the traffic, email or conversion, paying for shipping to the consumer, and then not having the item in-stock to sell to the next consumer.
Affiliate Marketing Gives Money Back on Returns
What if I told you there is a way to recoup some of those lost marketing costs?
Affiliate marketing is the only marketing channel that gives the marketing dollars back to the retailer if a return is made (if the return is made in the specified window, for example, within 60 days).
Sounds too good to be true, right?
In 2021, Acceleration Partners processed millions in returns for our clients globally, resulting in approximately $24 million in commissions returned to our clients. Even with returns, our clients saw a 21% increase in revenue YoY.
This is one of the many reasons affiliate marketing is one of the most profitable marketing channels. Why not invest in a guaranteed performance that will give you money back if the consumer decides to return their item?
If you are currently reviewing your marketing budgets for 2022—specifically, if you’re looking to improve your profit margins—affiliate marketing is an amazing tool to help improve your overall profitability and drive accelerated growth.