Returns are one of the most frustrating processes for retailers. One minute you’re celebrating a sale, the next you’re spending additional costs to refund and process an unwanted item. In this article, we take a look at how retailers can reduce this burden.
It’s a problem which plagues fashion retailers the most, and as free returns become more commonplace, it is not unusual for a customer to buy two or more sizes of the same dress to try on in the comfort of their private dressing room. For the retailer, this story doesn’t end so happily, as the other two sizes are shoved back into the parcel bag, arriving back at the retailer’s DC – miles away from the shop floor and a potential sale – to be refunded and quality checked.
Legally, online customers can keep items for 14 days before choosing to send them back, but two weeks is thought to be a little stingy. Zalando offers free returns within 100 days of purchase – that’s over three months – by which time the maxi dresses and bikinis go straight into sale because customers are now stockpiling woolly jumpers for the winter.
Recognising the problem of returns
Asos changed the industry norm with its free returns policy, and is constantly looking for technology solutions to lower the rate.
Meanwhile, Shop Direct processes up to 50,000 returns per day. The retailer sees return rates of around 30% for clothing and footwear, 6% for electrical products, while homeware is under 10%.
Anthony Baldwin, head of returns at Shop Direct, said at RBTE that customers now see returns as part of the delivery experience. Interestingly, he said retailers need to get their executive boards talking about returns: “If you have returns coming in excess of 20% and returns can be reduced by 1%-2%, why are those conversations not going on to reduce returns as much as maximising sales?”
He continued: "Retailers need to continue improving the customer experience, while also tackling this huge problem. There are two options, either encourage customers to make the correct purchase in the first place, or look into solutions to streamline the returns process."
Preventing returns seems like the first logical step. A Shop Direct customer once bought 18 bikinis online, only to return 17 of them, but is restricting this type of online shopping behaviour the correct route to take? Probably not.
E-tailers need to provide accurate sizing information, as well as detailed product descriptions, while 360-degree product images and catwalk videos can help avoid disappointment once the order is in the hands of the customer. There’s also a wealth of start-up companies offering sizing and intelligence software to reduce return rates: Clear Returns, Dressipi, Fits.me, True Fit, to name only a few.
One very simple thing Shop Direct introduced was the ability to allow customers to cancel orders if they changed their mind. If cancelled before the order is processed, it prevents the item being returned a few days or weeks later, incurring unnecessary costs, while the customer is happy they do not have to bother physically returning an item they did not want.
Streamlining the returns process
But improving the way items move back through the supply chain is the best place to start – because no matter how much you reduce your returns rate, they are still going to occur.
Firstly, is the item worth less than £10? Because it probably isn’t worth the return – Lakeland is one retailer which springs to mind with its generous refund policy, telling customers to donate the item to charity or throw it in the bin, instead of sending it back to the DC. But retailers obviously don’t want customers to cotton on to this strategy and abuse it.
Most retailers don’t know anything about a return until it arrives back in the warehouse with information scrawled on the label. One important way retailers can streamline returns is by encouraging customers to answer a few questions online before popping the parcel back in the post. Digitising the return label means retailers can start the process much earlier. If it is a ‘faulty’ electrical product, perhaps direct the customer to technical support? Or if it is a popular dress, out of stock in one of your busiest stores, can you re-route it straight there instead?
Many of these fixes are not even major investments, but the most important first step is to get talking about this undesirable part of the business and tackle it head on.