- Six in ten retailers negatively impacted by consumers’ propensity to return unwanted items
- Online-only businesses hardest hit as three in ten say managing returns is affecting profit margins
- One in five businesses have increased price of items to cover the cost of managing and processing customer returns
- Four in ten shoppers say standardising clothing and shoe sizes could help retailers reduce their level of returns
New research from Barclaycard reveals that consumer demand for free and easy returns when shopping online is placing increased pressure on retailers and impacting their bottom line.
The findings indicate that over the last 12 months, the increasing rate of returns has presented a number of challenges for online retailers, with three in ten (31 per cent) claiming that managing the returns process has an impact on their profit margin. This comes as online shopping continues to grow in popularity, with spending in digital channels rising 14.1 per cent year-on-year in 2015, compared to just 1.1 per cent in-store.
The speed and convenience with which purchases can be made and returned has led to the emergence of the ‘serial returner’, someone who regularly orders more than they need with no intention of keeping every item. Three in ten shoppers (30 per cent) deliberately over-purchase and subsequently return unwanted items, with one in five (19 per cent) admitting to ordering multiple versions of the same item to make up their mind at home – safe in the knowledge they can choose from the ever-growing number of ways to quickly and easily send items back, such as hourly courier services and local drop-off points.
Shoppers have also come to expect good value regardless of whether they’re making a purchase or a return. Six in ten (58 per cent) say a retailer’s returns policy impacts their decision to make a purchase online, and almost half (47 per cent) of these would not order an item if they had to fund the cost of sending it back from their own pocket.
The Returns Economy Dilemma
Because almost six in ten (58 per cent) consumers say a retailer’s returns policy impacts their purchase decision when shopping online, web-based retailers are caught between trying to attract customers and remaining competitive while also ensuring they protect their bottom line.
A significant proportion (57 per cent) of retailers say that dealing with returns has a negative impact on the day-to-day running of their business, leaving many with no choice but to find another way to recover the cost incurred. A third (33 per cent) of online retailers offer free returns but offset the balance by charging for delivery, while one in five (20 per cent) increase the price of items to cover the cost of returns.
All too aware of the challenges facing online businesses, more than a fifth (22 per cent) of bricks and mortar retailers choose not to sell online because they are concerned about being able to afford the costs of managing the delivery and returns process.
Serial returners said they would send back fewer purchases if businesses were to standardise clothing and shoe sizes (chosen by 38 per cent of shoppers), which can vary between and even within retailers.
One in five (18 per cent) said a better in-store experience, such as shortened queues for clothing store fitting rooms so they can try on sizes without the wait, would also reduce the number of returns they make. The same proportion would like retailers to introduce technology to help them better visualise an item when shopping online, such as the ability to ‘try on’ clothing after uploading an image of themselves.
Sharon Manikon, Director of Customer Solutions at Barclaycard Global Payment Acceptance, said:
“Today’s time-pressed shopper expects the process to be fast, easy and free – and that applies to both buying goods as well as returning them. Faced with more choice than ever before, alongside a range of different clothing and shoe sizes, it’s hardly surprising that this new breed of online shopper – the serial returner – is starting to emerge.
“Online spending will continue to rise and the need to keep pace with customer demands presents a dilemma for businesses needing to protect their bottom line. Fortunately there is light at the end of the tunnel with many ways retailers can streamline the returns process. From developing universal sizing to offering virtual dressing rooms, the key for today’s businesses is to determine which innovations work best for them – while ensuring they don’t lose out to their more savvy competition.”