InternetRetailing researcher Fernando Santos shines the spotlight on what the latest InternetRetailing research says about returns
Returns have taken centre stage in recent months. Walter Blackwood previously led several carrier businesses, is a former director of logistics at Mothercare [IRDX RMOC] and is now a consultant to the industry at WMB Consulting. Speaking at this year’s InternetRetailing Conference (IRC 2017), he said that the changing economics of returns make it a subject that’s set to remain on logistics professionals’ agendas for months to come.
Blackwood also noted that while once online returns were a small part of the ecommerce business, the increasing popularity of shopping online means that returns are now the normal way of doing business. “As you buy normal stuff, especially clothing, you’re going to get returns,” he said. “Not everything fits. People want choices and will order more than one size and colour. They’re doing what they would do in a store, only online. In mail order, the returns stream was the key element of profitability. If they didn’t get it right, it wasn’t an effective proposition. Managing it drives profitability and if you don’t do that effectively, you don’t have a business. Retailers have to think about returns from the perspective of service and profitability.”
In the light of those comments, we took a closer look at what IRUK Top500 research says about returns.
The Top500 approach to returns
As a group, IRUK Top500 retailers are making progress in offering flexible returns. Almost half (44.5%) now fully refund the cost of the item, while 14.7% refund the cost of the return.
Most give the option of making a return by post, a service offered by 75% of retailers. The option to return an item ordered online to the store is now offered by 39% of Top500 retailers, while 25% enable shoppers to drop an unwanted order off at a third-party location and 23% offer to pick up the item from the house, using a courier. Top500 retailers take a median of ten days to process a return.
Footwear retailers offer customers 28 days to send an unwanted item back and 40% fully refund the returned item. This group of retailers is the most likely to offer a return via drop-off at a third-party site, with 48% giving this option. The stand-out service currently offered by this group may reflect the relative difficulty of ordering shoes online. Since shoe sizes vary, shoppers may well find that the ordered item does not fit. That means the service must be more convenient if shoppers are to take that chance.
InternetRetailing research found that more than two-thirds of department stores (68%) fully refund the cost of returned products, that 27% also offer pre-paid returns and 28% refund the costs, such as postage, involved in returning a product. They offer an average of 42 days to return an item, and 52% accept online returns
in the store.
Grocery retailers are less likely than that to offer full refunds (42%) and returns via post (46%) but they are the ones most likely to offer nominated day delivery, with 44% offering the service – followed by department stores (28%). In our research, health and cosmetics retailers took the longest to process a return at 14 days, the same as home, garden and DIY retailers. This latter sector are most likely (41%) to offer pick-up from a house or address, and are among the most likely to fully refund an item, with 61% of retailers in this category doing so. Business goods retailers are also likely to offer to pick up a return (33%)yet the least likely to fully refund items: just over a third (38%) of sellers in this category do so.
How leading retailers perform
Asos [IRDX RASO] offers more choices in returns and are one of the minority to take things back via a pick-up from the house, as well as via pre-paid returns. Screwfix [IRDX RSCR] also offers pick-up from the house, while the option of pre-paid returns is given by both Amazon [IRDX RAMZ] and Sainsbury’s [IRDX RSBR], which stand out in this Dimension for their delivery performance.
Marks & Spencer [IRDX RMAS] gains a high place in this Dimension primarily for its flexibility around returns. It offers pre-paid returns as part of a policy of refunding the cost of returns. It also enables shoppers to return an item via drop-off at a third-party location or to the store.