The Cost of the Serial Returner
Returns By Emily Walker, May 10, 2017
2016 was the first year that consumers made more purchases online than offline and this trend is amplified in the fashion industry; not only is spending increasing but we’re seeing continued growth of pureplay retailers, such as Amazon, Net a Porter, Zalando and ASOS. While these e-tailers have seen great success in growing online revenues (ASOS recently posted a 14% increase in profit), they’re often less willing to discuss their growing return rates and the emergence of the ‘serial returners.’
Not all returns are equal.
Clothing return rates are considerably higher than any other industry, and one of the biggest drivers of this is customers not knowing what will fit them and what won’t. Fits Me has found that sizes can drastically vary across different retailers; when comparing sizes across 8 popular brands, the fit model measurements varied by up to 15cm for the (supposedly) same size.
Even within the same retailer, sizes can vary by garment type or cut. A shopper may need different sizes in different styles or garment types, creating unpredictability around what size will fit them best and thus greatly increasing the chance of a return. Even loyal customers suffer with fit; our research shows that 88% of shoppers report a feeling of frustration with regards to sizing inconsistency and problems with fit.
But, there’s another force driving returns.
Nowadays, the speed and convenience with which purchases can be made and returned has led to the emergence of the ‘Serial Returner’ – those who knowingly over-order with no intention of keeping every item. They may buy multiple styles in different colours in various sizes, knowing they can try them on in the comfort of their home, and can be returned with little hassle and no cost. Research found that 30% of shoppers admit to this deliberate over-purchasing, knowing they will return unwanted items and 20% admit to ordering multiple versions of the same item so they can make up their mind at home.
Returning clothes is now almost too easy for the consumer; most of the largest fashion retailers in the UK offer free returns and there has been a recent surge in the different methods of returning, making it more and more convenient. So, this is all excellent news for the customer, but what about the retailers?
Online retailers surveyed admitted that managing returns had an impact on their bottom line as they need to cover the cost of logistics, processing, storing and packaging. The Financial Times estimates that the average returned purchase in the UK passes through seven pairs of hands before it is listed for resale, and ASOS stated that a 1% drop in their returns would add $16M to the company’s bottom line.
There are other costs that are often not considered.
- Time lags & discounting
Fashion is getting faster; Zara claims to be able to get an item of clothing from inception to store in less than 4 weeks. Once it’s been on the shelves for the same amount of time again, it’s already on the sale rack. If we consider a 28 day return policy, then by the time something has been sent back to the warehouse and is ready for resale, it already has to be discounted. And this is on the assumption that it can be resold at all. We all know someone who buys a new dress, keeps the label in, wears it once and hopes the retailer is lenient enough to offer a full refund…
- Opportunity cost of lost sales
Returns result in problems with stock visibility as products go through cycles of being in and out of stock. For a customer, if they want to buy a product but see it is out of stock, then that’s a lost transaction. By the time that item has been returned and is back in stock, that consumer has inevitably lost interest and has forgotten the product altogether.
- Customer loyalty
Research suggests that up to 80% of first time shoppers will never shop at a retailer again if they’ve sent back their first order. This means customer acquisition costs remain high because a dress doesn’t fit how the customer wanted it to. Retailers spend so much time, effort and money acquiring new customers, so why lose them at the final hurdle by promoting clothes that aren’t the right fit?
So, what can retailers do about it?
40% of shoppers who regularly return items said they would send back fewer purchases if sizing was easy to understand across brands, channels and geographies. By combining shopper body shape knowledge with your brand’s garment data, Rakuten Fits Me can help shoppers find get the right size, the first time.
To see first-hand how the Rakuten Fits Me tool can improve your online size and fit strategy and reduce returns, book a demo here.