It is fair to say that e-commerce has changed the way we buy products for good. Web shops have become the mighty players in the retail landscape, leaving brick-and-mortar in the cold. However multiple challenges are starting to arise for web shops around the world and I’ll be discussing one those challenges today: the return policy.
As you’ll all know shopping online has one big disadvantage: it is impossible to fit that sweater you’ve been wanting for a couple of months now. Only once delivered you’ll be able to find out if it fits. Oftentimes your new sweater was not what you expected after all. You return it. Did you know that over 40% of fashion items bought online are being returned?
Other than that is a big inconvenience for you, it is even more so for a web shop. E-fashion retailers are bleeding money over their return policies and are in desperate need for a more sustainable solution. The solution counter intuitively is: free returns. Research shows that lowering the threshold for returns (by making it free) does not only increase returns, as you would expect, but it also disproportionately increases sales. Did you know that 67% of e-customers check the return page before making a purchase? And did you know that 92% of e-customers would make a purchase at that same store again if the return process was perceived as easy? Many smaller e-fashion retailers don’t dare to introduce free returns and are still hiding away their return policies. Five years ago this could have worked, but in today’s transparent e-commerce market and ever more experienced customers, that just won’t cut it. That’s why just offering free returns is not the entire solution. Web shops should inform their customers as much as possible about how their products look, feel and fit. Secondly, it would save web shops tons if gate keeping (i.e. checking whether the returned product is still sellable) could be done closer to the customer instead of at the distribution centres. There are still a lot of elements in the e-commerce chain for us BIM-students to improve!
A webshop’s dilemma explained
11
October
2016
Hey Oliver, thanks for this insight in webshop returns. I was unaware of the big percentage of articels being send back to a webshop and you got me curious to find out why people are returning their orders so much, but quite frankly: I couldn’t find many articels on that (although this is a nice one: http://www.whiteboardmag.com/e-commerce-why-and-how-often-customers-sent-stuff-back-survey/).
It got me thinking about a solution, and I am wondering what if you give people a discount or coupon on their next sale if they do not send back their orders. What would you think of this solution? As a webshop you get less orders back and more returning customers!
Dear Olivier, thank you for your blog. I agree with you that a clear return policy is very important, and is something I always check before ordering online. However, not all (big) companies offer free returns. Did you know that if you return an item to H&M, you pay €1,-? In my opinion, this is very little, so I was willing to take the risk. However, imagine if more people think like me. Then, instead of offering free returns, H&M can actually recover some of its costs by just asking for €1,- for returns. But, of course, I do not know which effect this has on the amount of sales (next time, I am probably more likely to go to a store to try on an item, as there are many H&M’s out there). However, maybe for smaller stores, the €1,- policy could be a good option, as it is an almost free return. Of course, the best option still is to limit returns as much as possible, and to provide as much information about a product as possible.
Hi Olivier, nice blogpost! Well timed actually, recently I read that the ACM (Autoriteit Consument en Markt, Dutch Authority) will monitor stricter whether return rules are followed. They already fined a webshop for 500.000 euro. https://webwinkelrecht.nl/algemeen/acm-beboet-webwinkels-wegens-overtreden-retourregels/. Since this is serious money enough reason for every webshop to evaluate their own return policy. Of couse webshops must meet the given returning rules, I understand this is a big challenge especially for online fashion retailers. Still, I think the amount of returns can be reduced by using innovative technologies such as virtual reality. Especially for fashion retailers this could be a solution. I read an interesting article about that: http://www.emerce.nl/achtergrond/virtueel-passen-oplossing-retouren-efashion/.