12 May 2022
5 min read
Online Returns: The New Normal
With 39% of online consumers doing more online shopping since the pandemic, the ways how consumers interact with retailers and make purchasing decisions have changed and, consequently, new trends, behaviors and expectations have emerged. Today’s online shoppers often treat purchases more as risk-free discoveries for size and style than as end-of-shopping journeys. Therefore, understanding that these new purchasing habits demand a brand new approach towards returns is key for online retailers. A survey carried out by Klarna shows that:
“83% of online shoppers admit to getting frustrated by retailers who have an inefficient returns process, whilst 82% agree that retailers in general need to improve their returns capabilities”
Collectively, in 2020, consumers returned $428billion in merchandise just in the US (US National Retail Federation, 2021), which represents about +10% of total retail sales. The National Retail Federation estimates the cost of returns amounts at $101 billion (US National Retail Federation, 2021). For purchases made on online channels, return rates reach up to 20% overall, noting +25% for apparel, and with the sector’s e-commerce growing about 35% p.a. since the pandemic, its returns are at an all-time high.
Assessing why customers return purchased goods, data shows that around 75% of all returns are driven by preference-based factors (e.g., size, fit, style, etc.) in fashion product categories. Adversely, non-preference-based reasons (e.g., defective) and “not as described” account for 10% in total.
For many retailers, getting returns right will be a make or break and, going forward, the continued popularity of e-commerce means that the future brings continued challenges and opportunities. The rise in consumers’ expectations (and their frustration) has turned “free and easy returns” from a nice-to-have to a non-negotiable part of the shopping experience, which brings along a complex set of operational challenges, including customer service, reverse logistics, process ownership, and data analysis.
Surprisingly enough, managing those returns, however, continues to be a relatively neglected issue. Many retailers don’t see it as a priority and tend to think more about shipping and logistics costs than about optimizing the operational flow and user experience of returns. Tackling these challenges require retailers to rethink the operational model behind returns and start key initiatives to control and limit the impact of returns. At the end of the day, the name of the game is, how can retailers control the impact of returns in a consumer-friendly way?
At REVER, we think it’s about time we talked about returns, and we are thrilled to announce that our world-leading solution for handling ecommerce returns is now live. We are delighted to welcome our first retailers to the REVER family; think about fashionable eyewear, timeless style and fab footwear.