eCommerce Returns: Consumer Trends and the Impact on Retailers

The trend of UK eCommerce returns:

Returns on the rise  Reasons customers are returning  Consumer barriers to returning Consumers want a better returns policy  Eco-friendly return options are growing

Impact of returns on retailers:

How much can it cost an online retailer?  The negative impact on retailers  Returns strategies The importance of a returns strategy  Successful returns strategies

The trend of UK eCommerce returns

Returns on the rise

• Retail returns jumped to an average of 16.6% in 2021 versus 10.6% in 2020
• Fashion retailers have been particularly affected, with almost four in ten (37%) reporting that returns have risen over the last two years 

“Buy, Try, Return” has increased since the pandemic:

The rise of online shopping has resulted in a rise in items being returned. Reasons for this include items not meeting expectations once received by consumers, and in the case of clothing, not being the right fit. The ‘Buy, Try, Return’ has become a more frequent habit amongst shoppers:

• Younger shoppers were comfortable to "buy, try, return", but since the pandemic this has also become learned behaviour for older customers
• 38% of all UK online shoppers said they now feel more confident in returning online purchases
• 49% of UK online shoppers have returned goods back in the past year, rising to 60% for 16-34 year olds.

Reasons customers are returning

Sizing of items is the main reason consumers return apparel items. Many online retailers have tried to minimise this by having clearer sizing charts and even allow you to upload your size details to find your 'recommended size’.

Though the late delivery of items was amongst the lowest reasons for returns, this could be minimised further with retailers giving choices for delivery dates at the checkout.

Consumer barriers to returning

Retailers must also be aware of the challenges consumers face when returning items which include high returns costs, lengthy refund times and customs issues. A bad returns experience can result in a retailer losing customers so it’s important to get it right, be clear and make it simple for consumers to make returns.

Consumers want a better returns policy

A survey carried out in May 2021 found: 

• 84% would turn their back on a retailer after a bad returns experience
• 82% of UK online shoppers agree that retailers need to improve their returns capabilities.

Eco-friendly return options are growing:

Consumers are more eco-conscious than ever, and this attitude is reflected in returns.

• 45% of UK consumers are concerned about the environmental impact of over ordering and returning items
• 71% of customers would be willing to pay more to return with a sustainable option.

Impact of returns on retailers

How much can it cost an online retailer?

• Online returns alone cost UK retailers an estimated £5.2bn a year
• Almost half of the amount consumers spend on clothes shopping online ends up being refunded by retailers
• The process of returning an item can cost up to twice as much as it does to deliver it.

The negative impact on retailers

• 57% of retailers said dealing with returns has a negative impact on the day-to-day running of their business
• At least 30% of all ecommerce orders are returned, compared to only 8.89% in brick-and-mortar stores.

Returns strategies

To cope with the increase in returns, retailers are having to take action through changes in the service they offer, by providing clearer product and returns information.

• 18% introduced a ‘try before you buy’ service, encouraging customers to purchase more, therefore return more.
• 25% choose to regulate buying through ‘quality purchases’, which limits returns.

Retailers have also reviewed their returns policies:

• 23% choosing to provide their customers more time,
• 23% have chosen to reduce this and gain more control of their stock inventory.

The latter is a risky move as customers have grown to expect a comfortable period of time to contemplate their purchasing decisions.

Businesses have also prioritised their returns logistics with additional workforce and increasing warehouse space. Returns, however, can be long and complicated so it's not surprising that over a quarter of retailers work with a third party logistics party to handle the process.

The importance of a returns strategy

Retain customers

• Get the returns experience right and 92% of consumers will return to buy again.
• Make future purchase decisions easier.

Attract new customers

• 90% are more likely to order from a store that makes returns easy
• 52% of European consumers always check the return policy before deciding to buy from an online store

Create brand loyalty

• For those retailers who get returns right, this can create competitive advantage and boost the image of a brand.
• A quarter of shoppers think a delay in processing their return contributes towards a negative experience, and 92% of shoppers say the range of return options is important when deciding where to shop.

Strategies to minimise costs and maximise profitability from order returns

1. Understanding reasons for returns analytics

Understanding your returns will give you the chance to become better moving forward. Learning from your returns enables you to understand why customers may be returning products and make better decisions in the future. Reasons for ‘common returns’ will reduce with a review of your supply chain:

• Broken/faulty product
• Wrong Size sent
• Arrived late
• Item does not match description

2. Review supply chain inefficiencies

There may be inefficiencies in your supply chain, which could improve your returns process. A few of the areas of your returns supply chain, that could be reviewed, include:

Inventory Management

• Re-saleable items added back as ‘in stock’ within your inventory management system in real-time.
• Items needing refurbishment are passed to the fulfilment refurbishment team for the necessary cleaning/repairs and added to ‘in stock’ on completion.
• Customer refunds should be processed swiftly, giving them the service they expect, allowing for future purchases from your store.

Pick and pack

Pick and pack, product selection from correctly referenced pick locations and relevant packaging will minimise damages in transit and customers receiving the wrong item.

• Regular packing and item inspections
• Use protective packing material where needed
• Add Fragile labels for breakable items to parcels
• Use outer parcels that ensure a ‘correct fit’ without unnecessary movement

Despatch

Work with fulfilment specialists or third-party logistics specialist focused on eCommerce, to minimise damages in transit. Specialist fulfilment and delivery management companies, like Whistl will offer:

• Complete account management of all processes
• A choice of delivery partners/carriers
• Cost-efficient rates through consolidated volume and buying power
• Late cut-off times for carrier collections

Customer Service

The customer is at the centre of your revenue opportunity, therefore relevant customer service support is vital.

• Customers are more likely to stay loyal, if they are informed at each point of the transaction.
• If customers request an update, this must be dealt with promptly.

In-house or third-party contact centre specialists should have access to relevant information to advise the customer of the order or return status

3. Ways to manage returns

Returns management:

Returns management can be added as part of your fulfilment process. The appointed fulfilment partner ensures:

• Items are logged for the reason for return
• Inspected for damages
• Necessary items are refurbished or repaired
• Saleable items are added as ‘in stock’ to inventory and placed back in their pick location for resale
• Customer refunds processed

Reverse logistics:

Incorporating reverse logistics into your deliveries can speed up the process of returning items to the warehouse. The appointed shipping company, responsible for the original delivery, is also responsible for the return journey of the products.

Return to store:

If you have a physical store, this can be a popular choice allowing customers to browse store stock while returning items. Maybe even enticing other purchases while in-store.

4. Ensuring items can be resold

Having a return policy that brings your items back in sellable condition is important to avoid lost profits. This can be key for electronic, apparel and home furnishing items, as inspections can take longer to process. Some fulfilment companies offer refurbishment services to rework and repair items to maximise saleable inventory. Examples include:

• Quality control checks
• Cleaning
• Re-wrapping or re-packing
• Re-labelling
• Repairing
• Replacing missing parts

5. Return instructions

Providing accurate and easy to follow information is a key component to improving returning experiences. Include the following to improve your customer experience:

• The return time limit
• How and when refunds will be received •e.g. credit for future purchases or refund by the payment method
• Who pays for the shipping cost for returned items
• How to package item/s
• Where or how to return goods

Your return instructions could also be an opportunity to cross-sell or upsell items, offering free exchanges for incorrect items or a discounted rate for a similar item.

Whistl is the UK's leading end-to-end eCommerse logistics specialist.

Whistl's Retail Return Support Sevices Include: