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Online retail returns 3 ways you can reduce them and educate the consumer in the process
By Stephen Sumner, Retail Growth Consultant
As we know online shopping has risen strongly during the pandemic, but this has also meant a big increase in the number of items being sent back because they don’t fit, or aren’t as expected. Across the retail sector, return rates (pre-pandemic) to bricks- and-mortar stores were running at around 8 per cent. Compare that with a hefty 40 per cent returns rate for online purchases.
I
t’s no secret that to build an online fashion business it’s vital that you factor in those high ‘return rates’ into your financial models.
Return rates for many retailers can make or break a company, particularly those in the fast fashion sector. But what about those other sectors that have seen immense growth during this pandemic?
Thanks to the lockdown, UK online sales rose by more than a third in 2020, the highest growth since 2007.
One problem with this for retailers is that customers are far more likely to return items when they buy them online. This is especially the case for items of clothing, which obviously cannot be tried on first. This is one key factor that many new to online retailers get wrong and then suddenly find that the boomerang return rate dilutes not only the bottom line but also pushes up the unforeseen operating cost.
Items get worn, and sent back, are unable to be returned to stock. Presents get bought and then either exchanged, or a refund requested, so the logistics process tends to impact virtually
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every part of the business, along with the additional environmental cost.
Prior to the pandemic The Wall Street Journal reported that Amazon had begun freezing the accounts of shoppers ‘who made too many returns’. Meanwhile in April 2019, Asos announced its own crackdown on ‘serial returners’, deactivating transgressors’ accounts. While research by Brightpearl of 200 retail executives found that two-thirds of respondents were willing to follow Amazon and Asos’ example.
Simply factoring in higher than average return rates is one thing, but factoring those returns during a time of unprecedented change when retailers are looking to keep resource cost down is where we often see most of the pain being felt.
Today there is a plethora of companies developing technology to help reduce returns rates, for many even as much as 1 per cent reduction in return rates can have a meaningful commercial impact along with benefits to the environment.
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