The second in our series on business best practice looks at how to minimise the amount of product sent back and why a clear returns policy is a must for retailers.
Dealing with returns was once a relatively low-profile issue. Previously, mail-order firms, which traditionally had much higher volumes of returns than their store-based counterparts, felt the biggest impact. However, online shopping has changed things dramatically and today most fashion retailers run multichannel operations, so now almost every business deals with the inevitable high level of returns that come with selling remotely.
Such is the competition among retailers that the cost of processing returns cannot be offset by charging the customer for returns postage. The reality is that free returns policies are becoming the norm.
This has been easier to accept for the long-established mail-order companies but tougher for the newcomers to the market.
Even pure online operators will have found it challenging to cover the cost of dealing with up to 30% of goods that are returned.
For multichannel players, they also have to contend with customers who expect to be able to return goods bought online to bricks-and-mortar stores. Accommodating this not only requires a change in retailers’ stock-processing systems, but also a change of mindset. Store workers need to be incentivised to accept and process goods ordered online, which has not traditionally been their responsibility.
Furthermore, failure to get the returns process right can be punishing. A YouGov survey in 2011 found that as many as 58% of shoppers would not buy from a retailer again if they had a bad returns experience.
Consumers want a seamless experience when they return goods, and to be given as many returns options as possible is one of the most important battlegrounds in retail today. Fashion retailers have to adapt their returns models accordingly.
Sales and marketing director at courier network Hermes
The best way to discourage returns is to charge for them, but research shows that if businesses do that they’ll drive down first-time order rates. However, some retailers see returns as part of doing business so want to make the process easier.
People will look at a retailer’s website and be far more likely to order if there is a clear, concise and ideally a free mechanism for returns. If the site doesn’t have those things on it, the likelihood is that the consumer will shop elsewhere.
When we do market research asking why people shop online, the top two reasons are value for money and convenience. It suits people’s lifestyles and it is still the home of a bargain, so you’ve got to cover both.
Retailers need to get [the item] to the customer when they want it and give them a range of returns options. We offer two main choices. The cost is similar to retailers, but the objective is to give consumers the choice to return the way they want. The customer can take the product into a ParcelShop, or a courier can be sent to the customer’s home to collect the goods.
Sales director at clothing tag business ProtectaTag
Looking at why products come back is core. Check that sizing is [displayed and detailed] on the website, especially when selling other designers’ labels where they have varying sizes. Armani, for example, are slim-fit products, whereas Hugo Boss is more generous.
Another thing is quality control, so there are less damaged items returned. Put two or more quality control stages in the process, so that after the item [is manufactured] there is a thorough quality control on it, but when it’s packed to be sent out there is a second.
When packing the items, presentation is key. If you send [the product] looking bad, before they’ve even tried it on, they’re thinking this isn’t what I bought and doesn’t look like it did on the website.
Also, customers wearing the product out and hiding the label, then sending it back, can be an issue. Any form of label [which can’t be hidden], like the ProtectaTag, makes this virtually impossible.
These steps help reduce returns to a more acceptable level as the returns that are coming back are more legitimate.
Chief operating officer at home shopping retailer Shop Direct Group
As a traditional mail-order company, our long heritage in this area means we have an understanding of reverse logistics that makes us unique in retail. Over the past decade, as our online sales have grown, we’ve taken that expertise and adapted it to fit our current business model.
Despite the fact that more than 75% of our sales are now online, we still have to compete with bricks-and-mortar retailers.
For an online department store like Shop Direct Group, this means free returns are a necessity rather than a luxury.
In our view, charging for returns is the equivalent of asking customers to pay to try on clothes in a changing room.
Our returns strategy is about ease, convenience, flexibility and speed. This means offering customers a range of ways to return goods quickly. In 2010, we added Collect+ to our returns service. It enables customers across the UK to return goods to a local store, post office or petrol station at a time to suit them.
Pre-advice [giving shoppers a window of time for when to expect the item] has also increased efficiency in returns.
Timed collection slots enable us to work more effectively around their timetables. We also provide a clear returns policy, outlining the time period within which customers can return goods.
Trading director at premium etailer My-Wardrobe.com
Easy shipping and returns is one of the key things a customer wants from a retailer, whether it’s a pure-play or multichannel. Retailers therefore need to offer a range of delivery options.
We offer a courier collect service for a nominal fee. Alternatively, a free Royal Mail postal option is available to allow customers to use post offices to return goods.
Customers expect free returns, and an easy returns process should increase conversion, so it’s a key offering for a retailer. [So] it’s up to the retailer to come up with a cost-efficient way to offer this.
We view shipping and returns costs as a loyalty incentive (offering free nominated day delivery to the most loyal customer tier) and sometimes as a marketing cost for international markets rather than a pure logistic cost. This enables us to use the free shipping and returns message in all our marketing and on the site to drive customer acquisition and conversion.
To reduce the level of returns we give the customer as much information as practical on the product page on the site.
We use brand-related size charts on each product, which is supported by garment measurements, giving customers actual sizing information. Recommendations are based on the fit of the garment and whether it is true to size or not.
We also review customer feedback on a regular basis and amend the site to highlight any issues with the fit, sizing or other factors. We also use product images, including a model photo showing size of handbags and length of dress, for example.
IT director at lifestyle retailer White Stuff
Being multichannel is all about having options [for customers] so you need to do this for returns as well. Online customers can post return goods to our warehouse where there is a system to process their refunds in a seamless way. In some of our shops an item bought online can be returned there. We’ll enable this in all our stores this year.
Handling returns is not just a systems issue. For store staff, online returns are a pain because to them it’s like a negative sale and some stores attract a lot more returns - because they are in an area of high online sales. We have to highlight that this is an opportunity for staff to sell something else to the customer. We need to incentivise them.
Because customers can return to stores we are getting fewer returns to our warehouse, which is good because people in the stores are expert at dealing with customers, whereas in the warehouses it is a more mechanical process. It’s not a great customer interface.
But it is a challenge dealing with returned online goods in store. By and large we’ll sell them in the store [the item has been returned to] but sometimes what’s been returned makes no sense for that outlet. In these cases the area manager will decide what store it goes to. End-of-season items will come back to the warehouse and then get sent out to clearance stores.
The margins are more in clothing, which helps with [covering] the cost of returns. Everything is factored in, including offering free returns, which you have to offer.
Logistics director at home shopping retailer JD Williams, part of N Brown Group
Returns are bread and butter to us and we treat them as part of the business model. The customers’ living room is their changing room. We want them to order multiple sizes and colours and then use our free returns service. This takes margin out but that’s how it works.
Our service strategy is about choice and convenience so how [an item is] delivered or returned is up to the customer.
For returns, the goods can be taken to a post office with a pre-printed label or the customer can request a courier.
Customers can also return to Hermes ParcelShops, a competitor to Collect+. It’s primarily a convenience factor and the cost to the retailer is similar to if the customer had to post it back.
Offering choices means more complexity and more costs, but we’re big so we’ve got economies of scale for returns.
They all come through Royal Mail or Hermes with full trailers delivering [goods] back to our distribution centres, which we reprocess and get back into stock.
To reduce returns from our websites we’ve worked on our size charts. We specialise in size 16 and up and we have knowledge of how shapes change and weight is gained from sizes 10 to 12 and up. We’ve been working with Manchester University on body scanning.