The lucrative holiday season is already over. But many online retailers still have a hangover from it, not just due to the stress of the shopping craziness, but also because weaknesses are becoming visible. But an increase in returns rates is far from a problem that online retailers face only once a year.
It’s a well-known problem that can severely threaten the profitability of a business. How do companies deal with returns and why do customers increasingly return goods?
Customers’ shopping carts are getting smaller
Order, try on, keep, or just send back. According to the latest Bitkom survey, every eighth order online will be returned. One out of every four customers returns 10 to 25 per cent of all their online purchases. For certain categories of goods such as clothing or footwear, the number of returns is even more severe and is increasing year over year. There, the return rate (according to EHI) is between 60 and 40 per cent.
The more returns there are the higher the costs for (clothing) online retailers and the lower their profits. This is made even worse by ever-changing consumer behaviour.
The value of average purchases has been falling for some time. After all, customers are ultimately buying fewer items per order than before. This leads to even more deliveries and thus more last mile costs, as well as more of a burden on the environment.
In addition, the activity of younger people shopping more and more via their smartphone is growing exponentially. They don’t have that big of a budget, so they buy individual items like a pair of sneakers, a jacket, or a dress, but not a whole outfit, step by step. And that further aggravates the problem. The numbers speak for themselves. That’s how 14 to 29-year-old online shoppers get the most returns on the way. In this group, 18 per cent of all online orders ared returned to the sender.
Therefore, the question arises: How do you get consumers to send less back?
Use cases: Prevent returns in the fashion industry
As each return causes higher than anticipated costs, companies strive to avoid returns. This can only succeed if customers are fully informed in order to make optimal purchasing decisions.
In the online world, it’s not easy to show off textures, smells, or shapes. The combination of high-quality, purchasable content is becoming increasingly relevant and transforming users into buyers. Remember content commerce. Additional information and detailed test reports help the customer with their decision. And a satisfied customer not only increases conversion and sales but also returns less.
Any other digital opportunity that serves as a bridge between offline and online, such as live chat and messaging services, also works for them. Product and how-to videos, as well as 360-degree images, can better convey a product to the consumer. This is how Bitkom expert Julia Miosga explained it:
» Many retailers are also actively asking for customer feedback or rewarding honest item reviews with benefits on the next purchase. «
Algorithms can also be helpful. As German newspaper DIE ZEIT reports, Zalando has launched a pilot project in which employees try on the same pair of shoes and note how it turns out. After, this data will be merged with previous customer purchases. This should result in personalised size recommendations. Soon, this approach will be implemented for clothing.
In addition, Zalando aims to simplify the purchase of cool and perfect outfits with the help of influencers, fashion consultants, and multimedia content, reversing the current trend.
On the other hand, the German Institute for Textile and Fiber Research (DBU), in collaboration with the startups Assyst and Avaluation, wants to reduce the number of returns in the fashion industry through virtual dress rehearsals. How should that work?
Customers get a digital copy of their body (avatar) through body scans so they can try on the clothes online and finally see if it’s the right size and if the garment fits well. This is how Michael Stöhr, Managing Director of Avalution, explains it:
» We have the world’s largest database of human body scans. Based on this information, we use this database to create avatars that the customer can easily customise. «
In addition, the project will develop an approach that will make the customer aware of the impact of various environmental purchasing decisions. In this way, project managers want to achieve environmental and economic goals by avoiding returns.
The challenge is simply to change the deep-rooted habit of customers to return products and in return deliver content clearly and completely online to avoid misunderstandings.