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Retailers are Facing a Returns Conundrum

Following the recent news story that Zara was beginning to charge customers for returns, I wrote a short post on Linkedin to give my thoughts. This sparked quite a bit of debate amongst the retailer community. My opinion was that it is ultimately a good thing and in this blog, I‘ll unpack the reasons why, as well as some of the other responses which gave me food for thought.

Should delivery and returns be free of charge?

Amazon and the apparel industry, in particular, have created a highly competitive environment for retailers and brands, forcing a situation where every retailer feels compelled to offer free delivery and free returns. This in turn has resulted in some new consumer behaviours and expectations and today we live in a returns culture, which some may describe as lazy – however, it all stems from the idea of convenience. All of this impacts the retailer's margin and has a significant environmental impact. Back in 2019, Forbes stated, “worldwide, approximately 17 billion items are being returned every year. This totals to 4.7 million metric tons of CO2 emitted yearly”. This has undoubtedly increased significantly since the time that it was published.

Free delivery options don’t always build loyalty

Many of the retailer community argued that if anything, retailers should start charging for delivery and offer free shipping and returns in return for loyalty. Recent research identified that 65% of consumers were willing to pay more for faster deliveries, so should retailers only charge for a speedier service? Whether it’s faster or not, it still costs to make the shipment. GlobalData, estimated that the UK returns market will cost businesses £5.6 billion pounds by 2023 from transportation, sorting and disposal alone.

It tends to be more economical and efficient to ship slower, so typically you’ll see a reduction in the cost of delivery from many eCommerce retailers, and this is pretty widely accepted by consumers. On occasion, you might see free delivery for a first-time purchase or used as an incentive, and this is where it can get trickier for brands. If you have the option once for free delivery, the next time it’s likely a buyer will feel less satisfied and this may cause consumers to create new accounts in order to receive the free delivery services again. Alternatively they might search for another option altogether. It can actually do the opposite to building loyalty and give retailers poorer data to act upon.

Returns need to be handled with intelligent solutions

Several people replying to my Zara post also highlighted how charging for returns would unfairly impact certain groups of customers. For example, why should customers be forced to pay for a faulty product to be returned? Or should someone that lives a little farther away be penalised? According to this 2021consumer survey, the top three reasons people gave for returning an item were that it didn’t fit (70%), the item was damaged or defective (65%), or the item didn’t match the description (49%). Placing a blanket charge for returns does not resolve the bigger issue which could be production problems or misrepresentation.

Fortunately, with the innovative technology available today, there are intelligent return solutions that can enable the customer to provide information on why they are returning the goods and this can determine whether it is a paid return or free. A great example of this is Sorted, an automated returns management solution that enables retailers to set rules, returns windows and approve the return. Brands can use on-platform carriers for exclusive shipping rates and automated labels or upload their own. Customers are also able to request refunds or exchanges via a branded portal and keep them updated with customisable communications. This type of solution not only increases loyalty but provides a customer will a 5* returns service which can reward more responsible customers with free and instant refunds.

Consistency is key

Online fashion is a big culprit when it comes to returns, particularly women's fashion. Statista reported clothing (88%) and shoes (44%) as the most returned products in 2021 and this is because there is no standard sizing across all brands. For instance, a size 12 can be a size 14 or size 10 with another brand, which causes a lot of inconvenience for consumers, especially first-time buyers. This results in consumers purchasing multiple sizes at the same time to find the best fit (also known as bracketing).

There is a lot of pioneering technology that can combat the size consistency problem. Solutions like Dressipi, SizeBay, efitter enable retailers to help their customers select the right size upon purchase, with custom measurements, size charts and virtual dressing rooms, therefore avoiding multiple sizes and returns later down the line.

Technology can help you decide

My initial reaction to the Zara returns news, was that it is a good thing as it will make people think twice about over-purchasing with the intent to return, as well as be more positive for the environment. But, after diving a little deeper into the subject and comments from my network, it’s not so straightforward.

Something that is crystal clear, is that there are solutions available to help fix this return’s conundrum. Retailers that invest in cutting-edge technology will be able to make the best decisions for their business that considers consumer insights, key data points and operational efficiencies. If you’re looking for a tech solution to help you provide smarter delivery and return options, sign up to Validify for free here to start discovering, comparing, and selecting the right platforms for you.

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