According to industry experts, unwanted items cost the fashion industry $4.4 Billion each holiday season.
Whether it’s after online shopping or in-store purchases, holiday returns are bad for any fashion business. Holiday purchases typically result in a positive sales surge across the retail sector. But these commerce sales are heavily impacted by refunds from returned merchandise in the weeks that follow. The post-holiday season is already challenging with a drop-off in sales. But add to that the costs of the return process, reverse logistics and shipping costs and the pre-holiday profits of a retailer can be severely impacted.
The global cost of free returns
Reports suggest around 30% of fashion purchases are returned to retailers, with an estimated 2.6 million tonnes of returns from the US going to landfill sites. According to the National Retail Federation that equates to 761 billion dollars of unwanted fashions. Many of these pieces include polyester, acrylic, polyurethane, PVC, elastane, and nylon. Non-biodegradable materials derived from coal and petroleum live on for hundreds of years. This is a vast cost to the industry and the planet.
Of course, consumers in the middle of their December online shopping might not be thinking this far ahead. The attractive low prices of e-commerce sites and free customer returns policies encourage shoppers to buy more and more clothing.
What can retailers do to reduce post-holiday returns and ensure the retail industry is being more environmentally responsible?
Step 1: Remember that your customers care
Too often retailers forget that their customer base cares about brand positioning. Millennials in particular pay close attention to the values, ethics, behaviours, statements, positions and actions of their favourite brands. They may feel more comfortable spending money if they feel the brand is taking climate change seriously or they may hold back if they hear the brand is donating money to causes they disagree with.
How can holiday returns be a factor in their buying confidence?
This starts with fashion retailers recognising that their consumers want to see responsible manufacturing and selling. They want their favourite brands to set a good example. Clothing is now widely regarded as the second biggest polluting industry after gas and oil and the public knows this. So any steps a business takes to mitigate its impact can be welcome news to its consumers.
Already, some of the biggest global retailers have reconsidered their return policies. Boohoo, Next, Uniqlo, and Zara plan to start charging shoppers for returns. In these cases, the news hasn’t harmed the brand’s reputation. Framed as a responsible step to reduce return rates, each company has managed to frame this as responsible retail. It has been widely reported as a positive step that consumers can mostly get behind. Shoppers aren’t stupid and know there’s an environmental toll to post-holiday returns.
Step 2: Use smart tools to prevent returns in the first place
E-Commerce brands don’t have the luxury of fitting rooms or on-site sales teams to guide consumers to a perfect fit. While consumers have grown more confident shopping online, shifting to a new store comes with concerns about the fit. After years of shopping with River Island and knowing their perfect dress size, shoppers can be reluctant to try another retailer. While the brands may offer free returns the returns process can still be inconvenient. Online retailers need to find ways to replicate the confidence of the in-store experience while maintaining the ease of shopping.
Virtual fitting rooms
Once just a fun novelty, the technology behind face filter apps such as Snapchat has now graduated to the commercial space. The same algorithms are now able to project an outfit onto a consumer’s body. Big names are beginning to take note. US brand Walmart holds an 8% share of the American apparel market. To maintain this share and shore up its online sales the company has invested heavily in virtual fitting room technologies to support its products online. Shoppers can now see the items in the virtual shopping basket projected onto their virtual body.
Smart Sizing tools
While virtual fitting rooms deliver a better understanding of style and suitability they don’t deliver on fit. To mitigate the headache of the returns process, brands need to tackle accurate sizing too. For the most accurate fit, mobile body scanning technology perfected by companies like Sizer is becoming a must-have solution for e-commerce retailers.
Shoppers can use their smartphone camera to get precise measurements just as accurately as a specially trained sales assistant in a high-end store. These accurate measurements can then be translated into bespoke size recommendations. Stores and brands making use of this technology can massively improve the consumer shopping experience, and reduce returned merchandise. This is an example of the right technology and the right time in the right place.
Step 3: Incentivize shoppers to keep the items
Yes, you heard me. You know how complicated and costly it is for you to handle the reverse logistics and re-sell those returned items, so why not offer the customers to keep the item, and instead get a coupon for their next purchase? This will not only reduce your returns, but will give your customers a great reason to come back.
You can also use returns AI technology tools such as ReturnGo to help identify which customers would be a good fit for which type of incentive, and avoid the ones likely to abuse this option.
Other steps to reduce post-holiday returns
Retailers can mitigate returns by introducing modest costs to make shoppers think twice. They can introduce smart technologies to allow shoppers to see themselves. And smart sizing tools to connect the shopper with items with a perfect fit.
Other simple steps include providing more thorough and accurate online descriptions. Retailers can mitigate some returns by flagging things that might be a purchasing factor. Clearly state the material, the stretch, and if the item has functioning pockets. Use the description to overcome consumer doubts but also flag the potential reasons they might return a garment. A woman seeking a functional day jacket with pockets will immediately return her purchase if she discovers the pockets are false or two shallow.
Likewise, invest in high-quality images. For advertising, stores will be seeking emotional imagery that signals an aspirational and cool lifestyle. But for shopping website images, stores should focus on clarity. Asos provides clear detailed images from an array of angles and many products include videos to see the pieces moving. While this business approach might not work for every retailer it does help online shoppers feel something closer to an in-store experience.
Fashion retailers looking to lower their return rates and enjoy the benefits of a holiday sale without the fear of refunds or store credit have more power than they realise. Reducing the volume of returned items each January is a matter of taking small intelligent steps to improve the online shopping experience and communicating your commitment to the planet.
Ease the pressure on your supply chain, keep your customers happy and become a fashion retailer that doesn’t have to worry about fashion returns every holiday season.