Returns are costly – not only do retailers need to get the product back to their warehouse, they also have to either refurbish it, repack it or write it off completely and it goes to landfill, which has also environmental repercussions. If this process is not automated, retailers are keeping staff from tending to other customer queries.
According to a report by the National Retail Federation , online return rates declined by 4.3 percent from 2021 to 2022. However, this number still stands at 16.5 percent and are a real drain on profitability for retailers.
To help offset some of the costs associated with returns, retailers like Zara, H&M, Abercrombie & Fitch among others have reportedly started charging fees for online returns to make up for some of the costs of shipping it back to the warehouse.
From a consumer point of view and putting us in our own shoes, retailers should aim to make this process as easy and fast as possible. If the process is costly or a lot of effort for the consumer – as Natalie describes in her interview – they are unlikely to be satisfied with their experience, putting retailers at risk of losing valuable customers.
The good news is that, while the need for returns will never go away, with the help of modern technology solutions, the process can become as seamless as possible for both the business and the consumer. In this short interview, Natalie Walkley discusses the current state of retail and look at how technology can optimize the return process.
What challenges are brands facing with regard to returns?
Here’s an example from my personal experience: I recently bought a pair of sheets. But I ordered a color that when I saw it with my bedding, I realized it wasn’t quite the right color. So, I went on the website, clicked exchange and received an automated email. I then spoke with a customer service agent.
In a nutshell, I had to cancel my order and then go back online to reorder. I’m a regular customer with their organization, so I get VIP vouchers. To get the discount I had previously, I did get a new VIP code. All in all, it was probably 15 to 20 minutes of work for me to change the color probably 30 minutes for the customer service agent.
What was funny to me was that it was not an exchange. Instead, it was an order cancelation, a return and a new order. As we think about optimization, I think those are the types of things where ultimately the reason a customer-initiated return was impossible was due to some technology on the back-end missing the capabilities to facilitate this. Instead, manual intervention was needed.
So, in terms of the challenges at hand, if you don’t have the software to effectively manage a return, your organization will spend a lot of time doing “work arounds” that are ultimately more complex than the original issue at hand.
What trends are we seeing regarding returns in the retail industry?
Something that has come up a lot more in fashion is consumers “stacking the order”. Essentially people will buy different sizes of the same product to see what fits, try them on and return what doesn’t. That of course increases the volume of returned products in online fashion retail quite significantly. There’s then the question why people are returning things other than sizing – is it the product description?
And is there anything the retailers are changing in the way they deal with returns?
I’ve recently seen some retailers just refunding you and telling you to keep the item because it costs too much to ship it back. When the item returns to a warehouse, a retailer needs to pay the labor to resort it, to clean it, to refurb it, to prepare it for sale again or to dispose of it. It’s almost the iceberg effect. You see a little bit of the cost of returns, but there's actually a lot underneath the surface. It then gets trickier when we’re talking about heavy items such as furniture – big and bulky items get damaged during transport. I once ordered a vanity and it arrived damaged. The company told me to leave it on my porch and they’d come and get it in two weeks - it was never collected.
Are there any new approaches we’re seeing to mitigate the pain of returns?
I do think there are some creative ways that some retailers are tackling this problem. I know one retailer was talking about granting customers that are on their subscription list free shipping. I think it’s a matter if thinking about how you could tailor and personalize the experience of returns to my customers, just like you do on the front-end of the customer experience. Because if I'm a customer who spends $500 a year with a brand or a retailer, I kind of expect to be able to ship things back because I'm a valuable customer to them. I could see retail adding something almost like an airline status —how you fly a certain amount and you get a certain status.