CHARMING INSIGHTS

A blog from Charming dedicated to consumer preferences, retail and technology

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WHY RETURNS ARE KILLING YOUR BUSINESS AND WHAT TO DO ABOUT IT

Jan 8, 2021 11:43:00 AM

While 2020 has certainly been a year of unknowns, one thing is certain: online shopping is here to stay. According to a recent study, in 2020, nearly 41% of customers said they were currently shopping online for things they would normally buy in-store. 

And with the growing trend of online purchasing comes an increase in returned merchandise. According to a 2019 Shopify report, 20% of products purchased online are returned versus a 9% return rate of products purchased in store. But that’s not the only stressor. Returns also create a giant carbon footprint and create migraines for all. 

 

Chances are brands who aren’t set up for an omni-channel model to receive items back to their warehouse and/or retail stores will take a hit. 

 

Returning a pair of shoes with an open box with untied laces, needs to be handled differently than a garment that has a hole in it. Many companies still don’t have the technology in place to handle these nuances when it comes to returns. And the sad, yet not-so-dark secret of retail is that it’s often more profitable for items to be sold to discounters via a web of shipping, driving and flying them around the globe, or worse yet, burned.

But it’s not just brands who experience return discontent, it’s shoppers as well. 

importance of purchase decisions

According to a 2020 report by Yotpo, 70% of consumers rating return and refund policy among one of the most important aspects of making an online purchase, Given most aren’t exactly heading into stores in today’s climate, shoppers are taking advantage of free shipping and buying multiple sizes to try on at home. And planning for that can be a migraine and impact product planning and forecasts, and impact AOVs. Add to the mix that consumers expect to be able to return unwanted items conveniently and usually, without an incremental cost. 

If you think this is circumstantial and/or temporary, think again. Amazon Returns are now accepted at all Kohl’s stores -- another smart move on Amazon’s part and an even better move for Kohls who can now leverage Amazon’s consumers to generate in-store traffic. It’s not just Amazon who is ahead of the game here, we only have to look at this list of impressive return policies that sometimes include no receipts or offer year-long, no-questions-asked returns. Some think this is a liability, but if you turn this thinking on its head, you’ll realize flexible return policies often can drive more foot traffic and increase purchase opportunities in the future.

Topics: returns brand RFID
CHARMING STAFF

Written by CHARMING STAFF