The End of E-Commerce Returns

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The End of E-Commerce Returns | FutureBusiness

E-commerce, also known as online shopping, is an activity that has gained significant momentum and popularity over the past few years. According to the online shopping statistics, in 2021, the number of digital shoppers grew by 4.4% compared to the year before. This translates into 900 million additional people purchasing items online. This growth in popularity can be explained through different aspects of customer expectation, including the desirability of ordering clothing in various colors and sizes knowing that they can return the items they don’t like and receive their money back, rather than queuing up to try on garments in the changing rooms at the store. But online retailers seem to have underestimated shoppers’ willingness to return goods, at the expense of the retailer, so these days of returning items could be coming to an end.

Retailers are learning more about the impact returns have on logistics as well as the environment. As a result, an increasing number of are eliminating free online returns as they seek to clean up the messy business of e-commerce returns – a move that has been met with mixed responses. This comes at a time when The UK’s competition watchdog the Competition and Markets Authority is investigating Asos, Boohoo and Asda over claims about the sustainability of their fashion products.

If the firms are found to have made misleading claims, the CMA said it would not hesitate to take action.

Impact of Returns

For the consumer, returning an item to the retailer may not seem like a big deal – however, it costs retailers billions every year. As an example, recent reports have shown that the “reverse logistics” of returns cost UK retailers £60 billion a year, while in the U.S. for every $1 billion in sales, the average retailer experiences around $166 million in returns. The environmental impacts of the process have also been a huge factor, though the revenue lost has clearly been the biggest factor in helping retailers to make an important decision.

The clothing industry’s impact on the environment is among the most significant of all industries, with the production and transportation of items of clothing accounting for approximately 8-10% of the world’s carbon emission and almost 20% of the world’s waste water.Returns of goods only exacerbate the figures of this already pollution-heavy process.

A large number of returned items find their way into landfill. According to a report from Optoro, an estimated 2.6 million tonnes of returns ended up in landfills each year. This is one of the major reasons why retailers have begun charging for returns, which demand extra warehouse space and employees to sort them. Returns can often only be recycled or resold at marked-down prices. For most retailers, putting returned items in landfill is a significantly cheaper option than re-selling them.

Nevertheless, this is a negative for the environment. It is a waste of the carbon and water it took to produce and ship the items, with statistics showing that the process of shipping returned items led to 16 million metric tonnes of carbon dioxide emissions in 2020.

Additionally, the clothing left in landfill release greenhouse gases as they decompose. As the popularity of e-commerce grows, the issues deepen.

As a result of these issues, retailers have carefully examined the concerns and have decided to step in and take action.

Charging Returns

To stem the growth of returns, many retailers have decided to implement a charge that shoppers will need to pay to return items. One of the latest well-known brands that have announced this policy is fashion firm Boohoo. Shoppers will now need to pay £1.99 to return products, with the cost deducted from their refund.

A spokesperson from Boohoo said: “As the cost of shipping has increased, we’ve had to look at where we can adapt without compromising what our customers love most, the convenience of shopping with us and the great value that our brands offer.

“This has meant that we will be applying a charge of £1.99 to returns so that we can continue to offer great prices and products and do this in a more sustainable way.”

Boohoo joins the likes of other fast-fashion brands in the UK such as Zara, Next, and Uniqlo in charging their customers for returns.

Al Gerrie, founder and chief executive of ZigZag, a UK software company that aids in the process of returns, has labeled the action taken by these retailers as “a brave move to try and change policy”.

It is a similar story in the U.S. which has seen several retailers charging for returns. The likes of Abercrombie & Fitch, Designer Show Warehouse, Footlocker, Journeys, and Urban Outfitters have policies in place.

Timing

For millions of people, the timing of this policy change is not ideal. Countries such as the UK and the U.S. are in the middle of what many label a ‘cost of living’ crisis with several aspects of people’s daily lives rising in cost. However, researchers believe that people may become understanding of the changes and the situation.

Kurt Stuhllemmer from research consultancy Hall & Pertners, said: “If you’re getting something delivered to you, there are several people and lives that process affects, from the courier that is delivering it through to the people at the factory. People are more aware of how society is struggling through this together”.

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Other Methods to Reduce Returns

In addition to adding a price to returns, retailers can also explore other methods to reduce return rates, however minor they are. It is crucial to describe items as best as possible, highlighting key features and accompanying the description with clear images and perhaps a video as well. Precise project measurements and sizing are vital to the buyer’s experience and will lower the rate of returns considerably.

Displaying customer reviews and feedback can also make a big difference. According to Bizrate Insights, 54.7% of shoppers read at least four reviews prior to purchasing an item. Positive comments about an item can lead to growth in the business as well as help other prospective buyers visualize an item in a real-life scenario. Even negative comments are positive as they will offer you a better understanding of what shoppers don’t like.

Something as small as doing one last check-over of the product being sent out is also worth beneficial. According to ReadyCloud, 23% of returns are due to the shoppers receiving the wrong item and 22% of returns are due to the product being damaged. It pays to inspect the items before shipment.

Future

We will likely witness more and more retailers follow in the footsteps of the likes of Boohoo, Next, and Abercrombie & Fitch, charging their shoppers to return items. With issues around growing processing costs and sustainability, as well as the continuing growth in return values, it is evident that the fashion industry needs to take measures. The implementation of charging shoppers has already begun, however, there are other methods retailers should delve into to clean up the messy business of e-commerce returns.

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