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How UK Retailers Are Navigating High Return Rates

August 12, 2019

Returns are affecting retailers and brands across the globe. As this issue expands across the entire industry, different markets must figure out how to optimise the shopping experience to reduce the likelihood their shoppers will have to return products. One region focusing on reducing the frequency of returns is the UK retail market.
 
Online returns are projected to grow by 27.3% over the next 5 years, costing UK retailers £5.6 billion a year by 2023. This is a significant cost that sets back the potential profits for retailers and it’s estimated that 40% of all online purchases are returned.

Online shoppers may order more and return more because the luxury of free returns allows them to do so. This has become increasingly common across ecommerce retail, since consumers are likely to purchase more due to the ability to easily return some, or all, of the products. 

Grappling with high returns is complex because retailers want to recover the cost of returns so it doesn't affect profit margins, but also want to delight their customers with a positive shopping experience that will cultivate loyalty.

With 70% of consumers shopping online from retailers across the world, further complexities around managing the returns process, navigating local taxes, duties, market regulations and border controls emerge. There is also a growing concern around the environmental impact returns have in contributing to pollution and global warming as well. 

Why Consumers Return So Much

The number one reason for online apparel and footwear returns is improper fit. GlobalData suggests that retailers “improve product information” and implement “fit technologies that recommend customers an optimum size based on factors including height, weight, age and size at another retailer.”
 
Consumers also return so much because of the convenience of online shopping and the abundance of finance options making it easy to pay in installments, interest free. Shoppers can order products from anywhere, have them shipped directly to their house, try them on at home, and easily return items, only paying for items they keep. 

On average, 86% of consumers want the returns policy to be “hassle-free.” An additional 68% stated they want brands to include “free shipping” and 50% added that the necessary “returns packaging” needed to be provided by the retailer. In fact, 72.9% of online shoppers agree that they wouldn’t order from a retailer if they had to pay to return an item.  All of these expectations simplify the online shopping experience for consumers.
 
Another reason for frequent returns is the consumer trends called “wardrobing” where shoppers purchase an item with the intent of returning it after wearing it once. A Rebound study found 1 in 10 women surveyed admitted to partaking in this trend. Perhaps it is this worrying trend that has seen the rise and success of fashion rental services over the last decade?
 
A more common trend, size sampling, occurs when a consumer is unsure of the best size or fit for their preference so they purchase multiple sizes in one style or different styles with the intent of ultimately returning some or all of the pieces. Whilst not as frustrating as “wardrobing,” size sampling still erodes retailers’ margin unnecessarily. 

Retailers are Tightening the Rules

Many retailers are tracking consumers who return often, known as “serial-returners.” These consumers send back many, or all, items purchased on a regular basis, which may increase the costs retailers have to cover to support multiple returns.
 
UK-based ecommerce giant, ASOS, is one of many brands pushing back on these “serial returners.” In some instances, the retailer’s refuse to accept orders from shoppers who often send back too many items. ASOS keeps track of unusual patterns of returns and is tightening the rules for shoppers who may wear items before requesting a refund.
 
Amazon notoriously set back against serial returners by banning consumers it feels are taking advantage of its return policies. A survey by Barclaycard found that 19% of online retailers planned to tighten their tolerance for returns over the next 12 months. 

“The impact of ‘serial returners’ is not all bad — since many of these ‘serial returns’ are by far the most profitable customers with net sales [after returns] of 3.6 times higher than that of the average shopper.” - True Fit’s Co-Founder and Chief Customer Officer, Jessica Murphy.

The decision of whether or not to ban consumers is complex because while they tend to return more products, they may also be a brand’s most loyal shoppers in many cases.
 
Not all consumers are “serial returners” or shopping with the intent to return multiple, or all, of the items they purchase. Sometimes, the style, size, and fit of a product is inaccurately portrayed, or the consumer decides the item is not for them. In fact, the most common reason why consumers return products is related to the item’s fit or it just doesn’t suit them (77%).

According to True Fit’s Co-Founder and Chief Customer Officer, Jessica Murphy, “The impact of ‘serial returners’ is not all bad — since many of these ‘serial returns’ are by far the most profitable customers with net sales [after returns] of 3.6 times higher than that of the average shopper.”

While returns are one of the ecommerce industry’s largest hurdles, retailers are overcoming many of the challenges around minimizing returns through data optimisation and relevant personalisation strategies. 

How are leading retailers improving the customer’s overall shopping experience to reduce the likelihood a consumer will have to make a return?

  1. Optimising Data Collection: Leading retailers are optimising customer data and artificial intelligence solutions to highlight trends and forecast consumer behaviour with accuracy. Identifying products that consumers are more likely to buy, and less likely to return, allows retailers create curated catalogues and offer personalised marketing to populate the best styles for that individual shopper.
     
  2. Using Data Strategically: Consumer preferences are essential to the design and merchandising processes. Using consumer’s data helps personalise products from the design stage, reduces overstock, and decreases customer returns. Additionally, preference helps drive the right product, in the right context, to the right consumer, at the right time. 
     
  3. Promoting Products Fully and Accurately: In order to delight shoppers and decrease the risk of returns, retailers must include accurate, detailed product descriptions, photos and videos when possible to ensure there are no surprises when a consumer receives their order. 
     
  4. Increasing Shoppers’ Confidence and Minimising Size Sampling: Personalisation tools help increase shoppers’ confidence and reduce the likelihood a consumer will purchase the same product in multiple sizes and ultimately return one, or many. 


To learn more about the importance of personalisation in reducing returns, reach out to a member of our team here.