Retail’s Achilles’ Heel

In this article, we’ll share our key tips on how to reduce returns, maximize margins, and increase customer satisfaction in online retail. But first, let’s dive into the current state of returns in the e-tail industry and the need for a solution to the problem. In 2019, Yotpo (E-commerce marketing platform) produced a report which recorded a staggering 88% of shoppers had returned fashion items they purchased in the past year. In addition, 66% of the shoppers admitted to ordering more items than they planned to keep because of the store’s easy returns process. To cycle returns back through to the sale stage, retailers are burdened with time-consuming tasks which include repackaging, restocking, increasing warehouse space, and establishing separate departments to handle reverse logistics. It’s no surprise that returns are a major pain for retailers.

The Cost of Returns for E-Tailers

When asked by CNBC to compare the difference between in-store and online returns on average, David Sobie (Co-founder and CEO of Happy Returns) estimated that the percentage of brick and mortar items fell by around 5-10%; whilst the number rose to 15-40% for online purchases. Tobin Moore (CEO of reverse logistics technology company Optoro) added that with the global rise of e-commerce purchases, the number of returns would skyrocket to over a trillion dollars a year. Whether a product is bought online or in a store - returns pose financial and logistics stress for retailers. Stores have to deal with operational costs which include ensuring the returned product is inspected, handled, and geared for resale. This is not only costly in terms of money, but it’s time-consuming as well. Once the returned product has gone through the necessary operational steps to be resold, what then? According to Gartner Research, less than half of returns are resold at full-price. One of the reasons for this is customers returning an item at the end of a season. For example, it’s difficult to sell a summer-style dress in fall. This problem poses an extra loss for retailers: the store is left with an unhappy customer.

3 Ways to Reduce Customer Returns

Due to the nature of e-tail, circumstances may lead a shopper to return a product that’s outside a store’s control. However, there are some initiatives online stores can adopt to reduce their returns rate.

Have a Detailed Product Description

When selling apparel online, it’s essential to provide an accurate representation of your products to ensure shoppers convert. Your product description should bring the item to life to encourage your customers to make informed purchase decisions.

This includes providing detailed size specifications, video to show fit and movement, and 360 degree product imagery.

Build Trust with Your Customers

Customer reviews are one of the most powerful ways online retailers can foster trust and confidence amongst their target audience. Research shows that 88% of customers trust user-generated reviews.

Shoppers tend to be interested in knowing what other shoppers think of a product before they buy it. With customer reviews, users can find answers to key product-related questions they have and this is why customer reviews are invaluable. An estimated 30% of customers believe that product reviews from people like them are a good sign that a brand or retailer understands them. This shows that social proof goes a long way when a brand is trying to successfully market its products to its target audience.

Implement a Size Recommendation Tool

Ilovefashionretail.com asserts that “8 out of 10 returns in fashion e-commerce are linked with size and fitting issues.” They go on to estimate that “in Europe alone, the returns due to incorrect size cost retailers more than 8.4 Billion Euros every year.” To combat this costly issue, savvy online retailers have realized that non-engaging size charts are simply not enough for customers to determine what size to purchase a product in.

In a bid to solve the fit conundrum, international stores like Snipes are turning to AI-powered, size advisor tools like Fit Finder with successful results that show a 8% decrease in return rate.

Fit Finder is an easy-to-use e-tail size tool that advises apparel shoppers on their best fit by asking size-related questions (e.g. height and body shape) tailored to ascertain an accurate size recommendation.

Contact us to learn more about how our personalized size recommendations boost conversions and slash returns.