March 22, 2019 Dave Desmarais

The State of Online Returns

Online returns are here to stay.

Yes, unfortunately this is a fact. Retailers will never completely eradicate returns for one simple reason. Returns are a result of the human element. We humans are indecisive, picky, unsatisfied, deceitful and many times incompetent. But most of all we’re individuals, and one product does not fit all. Return rates are talked about often, but the idea this trend started because of the internet is just plain false; does anyone remember the mail-away catalog?

Much like the way newspapers initially offered their online content for free and are now trying to charge for that same content, retailers are finding online returns are a plague on their business and are looking to make changes. I was recently made aware of a scary statistic, the cost to a retailer of processing a return is near 30% of its purchase price. With margins in the apparel industry usually around 10%, this means a retailer needs to sell 3 items to cover the cost of the single return. With online return rates in the apparel sector hovering between 30-50%, there is a lot of loss and much room for improvement. So what can retailers do to reduce the numbers?

Consumer Confidence

The reasons people return the clothing they buy online are many, but research shows 75% are returned because of preference based reasons (style, fit, etc…). Increasing consumer confidence is key to a better online experience and reducing returns. The online experience will always lack the touch and feel of an in-store experience, but it doesn’t mean there aren’t steps that can be taken.

In-store customers can match their preference to a garment before they buy, but this is harder for online shoppers. Hence online retailers must understand a customers visual preference by using online fitting rooms and augmented reality to show what a garment might look like on. They must also understand a shoppers fit preference using fit-tools such as Tailored. Combining the two will help retailers not only reduce returns, but increase conversions.