Psst … Brands: You Don’t Have to Sacrifice Free Returns to Raise Bottom Lines
“Retailers expect more than $761 billion in merchandise sold last year to be returned by consumers.” That's a billion with a "B," and it’s according to the NRF’s Consumer Returns in the Retail Industry 2021 report. Retail returns account for nearly 6 billion pounds of landfill waste and 16 million tons of carbon dioxide emissions annually. It’s a major problem that not enough companies in retail are prioritizing.
Product returns will always exist in some capacity, but let’s face it — it’s gotten out of hand. Return culture emerged and became such a significant contributor in environmental waste because retailers started offering free shipping for purchases and returns to stay competitive. Now customers have come to expect it when making a purchase. Susan Cullinane, a professor at the University of Gothenburg, says "almost no one dares to charge for returned goods." Her report, Substantial Environmental Impact From Returned Goods, explains how return culture began as a result of free return policies coupled with inconsistency in sizing, both harming the environment and customer satisfaction.
With the rise of the return culture over the last decade also came solutions to tackle the problem head on. Monumental advancements in artificial intelligence and machine learning are now putting the perfect fit in the hands of customers everywhere. FitTech solutions are used by the most prominent and globally recognized brands with cult-like followings, including Under Armour, HOKA One One, lululemon, Canada Goose, Bauer, Red Wing Shoes, and many more. These brands deliver on omnichannel shopping experiences; ones that are backed by fully integrated suites of 3D scanning and data tools that optimize fit for their customers.
The NRF report cites retail returns as 16.6 percent of total sales. FitTech enables brands to reduce in-store return rates by an average of 18 percent, and in e-commerce channels brands are seeing return rates slashed nearly in half. This means for every $100 million in sales, taking the conservative 18 percent figure, it’s nearly $3 million in reduced returns and back into bottom lines. By enhancing shoppers’ experiences with accurate size recommendations, brands and retailers free consumers from ordering multiple sizes. Ancillary benefits include added inventory insights, reducing packaging waste, and decreasing vehicle time on the road — not to mention saving the unwanted products from ending their short life in a landfill.
Measurements are a challenging task. Online shopping, inconsistent sizing and free returns have turned homes into private fitting rooms filled with multiple sizes and styles. As a result of this, the average e-commerce return rate is two times to three times higher than in-store. Overordering and free returns are not sustainable solutions for the environment, the customer journey, or a brand's reputation.
With instant gratification serving as an injection of dopamine for consumers, the aforementioned brands still prioritize delivering premium in-store and online experiences with customer service reputations that serve as the industry benchmarks. However, they’re doing it while addressing the growing elephant in the room that comes with return culture: sustainability.
The retailers and brands that are leaders in a customer's in-store and online shopping journey, and are practicing what they preach in sustainability efforts, are also solving the root of the return culture problem: fit.
Alper Aydemir is co-founder and CEO of Volumental, an integrated FitTech platform that helps brands and retailers leverage data, computer vision and AI to create better in-store and online shopping experiences.