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Retailers under pressure from returns revolution

Many online and high street clothing stores will feel the pressure and potentially fail as half of UK shoppers demand stores foot the bill for all returns. Extensive new research by courier price site ParcelHero into retailers’ and consumers’ attitudes to returns reveals many e-commerce and bricks and mortar stores will fail because of the returns revolution. The study reveals that at least 200 e-commerce businesses don’t expect to survive the massive growth in returns, especially as seen over the recent Christmas period.

But the issue of online returns is also having unexpected and serious consequences for high street stores.

“A number of online clothing sites have been left reeling as half of all shoppers demanded they pay for all returns, not just faulty goods. As 8 per cent of shoppers admit to returning several items a month, some retailers say they are losing money on all returned items,’ says head of consumer research at Parcelhero, David Jinks.

“Our new report Retailers Reach the Point of No Returns found a huge gulf between the expectations of shoppers and the reality for e-commerce retailers. Web stores operating on tight margins say they are unable to cover the loss caused by returned items. But shoppers used to the flexible return policies of e-commerce giants such as Amazon and ASOS are 80 per cent more likely to shop at a store with a free returns policy, with more than half of them saying it would ‘make or break the purchase.’

He adds: “Our report features contributions from online, multichannel and pureplay high street stores of all sizes. They are all concerned about the impact of returns, and while many fully recognise the importance of a generous returns policy in attracting customers, a significant number say the 14-day ‘cooling off’ period for online purchases under the Consumer Contracts Regulations is being exploited.

Little wonder, says Jinks, as over 10 per cent of customers surveyed admitted they buy clothes in several sizes and expect stores to pay the return for the ones that don’t fit.

Atom Retro’s Sarah Fenwick fears that even with a returns policy so generous they advertise its terms, returns still cost the business in many ways: “We have to invest in staff resources to process returns. We also get a number of returns that are not resaleable and have to be written off at cost to the company. And overseas returns are significantly costly,” she says.

Rob Silsbury, ecommerce and marketing director of Dune London, the large fashion footwear and accessories specialist, concurs: “High returns tend to follow periods of high sales volume, so 2-3 weeks after a period of strong sales you will typically see a spike in returns volume. Specific types of promotion, such as stepped discounting, can also have an effect on returns volume.”

Most efficient retailers now integrate returns as a key part of their forecast for the year. Silsbury explains: “Modern consumers are not foolish, so if you have a poor product, it will be returned and ultimately that is of course not the result any retailer wants. Managing your returns rate is just as important as other business KPIs that govern the health of your business.”

The online returns problem is ironically impacting on high street stores. Multichannel often let customers return items bought online to a physical store. The return is then often debited from the high street store’s profits – even though the original sale was never attributed to the physical store. This undermines the overall results of the high street store – and could make the difference between keeping that shop open or not.

Some fashion stores even complained made to measure items were being returned as unwanted, despite the fact individual personalised clothing falls outside the scope of the Consumer Contracts Regulations.

You can read the full report on the impact of returns here in ParcelHero’s survey report, ‘Retailers Reach the Point of No Returns’.

 

This story first appeared on wwb-online.

 

 

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