The Expensive Truth of ‘Free’ Returns
Online shopping has grown massively and shows no signs of slowing down. Whether for Christmas, birthdays or to treat yourself, there's no denying that the way we shop has changed. The convenience of browsing hundreds of jeans or sneakers online, the ability to buy something instantly, and the added bonus of free delivery and returns has transformed retail in the last 10 years to 15 years.
However, with free exchanges and generous return policies becoming the industry norm, costs for retailers are mounting quickly. According to Statista, free returns are predicted to cost $550 billion by 2020 in the U.S. alone. Retailers aren't equipped to handle the influx of returns that online shopping generates.
How Did We Get Here?
With e-commerce sales growing on average by 20 percent since 2014, many online shops have started offering free returns as part of their strategy to boost sales. As a consequence of this, some customers order several items in different sizes to try on at home, knowing they can send anything unwanted back for a full refund. Fast-forward to today, and even though offering free returns to shoppers is becoming more and more expensive and complicated for retailers, the practice is considered part of doing business online. Charge for returns and a company risks losing sales. This was confirmed in a recent study by Navar, where 69 percent of shoppers said they were deterred from buying online by having to pay for return shipping.
Is Reducing Your Return Rate Even Possible?
Eliminating online returns altogether is impossible, especially since returns aren't always due to size error. However, retailers can reduce returns dramatically and impact their bottom line significantly by implementing an online sizing solution. In addition, both the environment and your customers will be happier with reduced waste and time saved. Consider the following tips:
- Personalize the size selection experience of online shopping. There are many reasons for online returns, including change in opinion, wrong item shipped, product doesn’t match description, etc. However, the top reason for product returns is incorrect size and/or fit. Mostly, it comes down to the customer's inability to choose the right size online as well as the retailer's failure to recommend the exact size. Investing in sizing technology that's easy to integrate is a total game changer for a lot of companies.
- Correct human error in customer reviews on size with machine learning. E-commerce companies often rely on customer reviews to provide sizing information to other shoppers. However, these individual opinions allow for human error and aren't backed by the accuracy generated by big data. Machine learning technology can deliver an exact size recommendation through data collected and validated from millions of customers.
- Manage stock and predict future needs with analytics that anticipate the sizes customers will order. Retailers struggle to anticipate the number of sizes they will need for each product because they don't have an organized system of data analytics that can point to sizing trends for specific products, sizing of top buyer profiles, and products with the highest rate of returns due to size error. The absence of effective inventory management leads to productivity and profit loss.
E-commerce technology offering personalization, machine learning, and stock prediction capabilities are imperative in today’s landscape. An online sizing solution is required to compete in the fashion industry as a retailer selling apparel and/or footwear. The days are numbered for size guides and customer reviews as consumers abandon impersonal shopping experiences that lead to troublesome product returns.
Iñaki García is co-founder and CEO of uSizy, a size recommendation tool for apparel and footwear.
