Return to sender – a troublesome issue in the world of retail

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Returns Return to sender – a troublesome issue in the world of retail

Published on 12.05.2020 by Markus Peter, Organizer of Connecta Bern, Post CH Ltd

Returns are and will remain one of the major challenges of online retail. It is not uncommon for return shipment rates to be as high as 50 percent, and that can cost retailers a considerable amount of money.

Why are return rates so high in online retail?

Are they really that high? In more than 40 percent of the shops surveyed in the Swiss online retailer survey, the return rate is about one percent. Only one percent of respondents stated that their return rate was higher than 50 percent. The answers from shops in the clothing sector would suggest a rate of 10 percent.

The survey also revealed that customers shopping on the go using their smartphone, decline impulse buys far more frequently.

Return rates in Swiss online shops (source: Swiss online retailer survey 2019)

What happens to returns that are no longer first-choice goods?

About 70 percent of returns can still be used after they have been returned. A study conducted by the EHI Retail Institute indicates that 55 percent of retailers destroy or recycle returned goods. Barely half of online retailers make a second use of only slightly damaged products. Sales through an outlet are used by 37 percent of retailers.

If returned goods have suffered wear and tear, retailers often shown no goodwill. Some 13 percent of shops charge their customers for depreciation resulting from wear and tear.

This raises the question of what is the right solution? It is impossible to offer generalized recommendations here as returns are handled differently from one sector to another, in part according to the condition of the goods. Once thing is nevertheless certain: goods should only be destroyed as an absolute last resort. Often, an article is still suitable as a second-choice item or can be used as a donation.

Planned returns vs “fraud returns”

The term planned returns is used when the same article has been ordered in several sizes. Unfortunately, size charts can no longer be relied on and customers simply tend to order several sizes. The customer is sure to find the perfect fit and the remaining products are returned.

In the case of fraud returns, customers purchase a product with the intention of using it before subsequently returning it. This abusive behaviour is becoming increasingly common and is already a major headache for the clothing sector. The best-known form of this practice is called “wardrobing”. Customers order goods with the intention of wearing them to a specific event and then returning them again. It is not uncommon, for example, to find an admission ticket in the pocket of a jacket that has been returned.

Free return shipments naturally encourage returns. Customers incur no costs and are thus “encouraged” to order clothes for Instagram parties (order, wear, photograph, post on Instagram, return).

How damaging are returns for the environment?

According to the Retourenmanagement research group, returning an article purchased online costs an average of EUR 19.50. Some 50 percent of this is generated by transport. The return transport of goods causes huge amounts of CO2 emissions which impact on the climate.

How can online retailers minimize their return rates?

  1. Create detailed product descriptions, pictures and videos:
    The better the photos and descriptions, the fewer the customer misunderstandings.
  2. Analyse customer evaluations and feedback:
    Analysing customer evaluations and feedback can reveal that under certain circumstances, the product description is not sufficiently detailed or clear.
  3. Offer discounts on the article:
    Customers might be willing not to return a product that does not entirely meet their expectations if they are offered a discount.
  4. Better packaging:
    Sturdy packaging prevents ordered goods from damage during transport.
  5. Respect delivery times:
    The quicker parcels are delivered, the less likely customers are to come to the conclusion that they don’t really need the article.
  6. Optimize size charts:
    Notes relating to the size indications can prevent incorrect placing of orders.
  7. Payment options also play a role:
    For all payment options where customers are not required to pay in advance, the risk of goods being returned increases.

Markus Peter, Organizer Connecta, Post CH Ltd

Markus Peter is responsible for organizing Connecta Bern, the annual digital festival held by Swiss Post and PostFinance. He also lectures at a number of universities of applied sciences.

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