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Counting the cost of returns

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Christmas sales may break records – but retailers must factor in returns when working out how good their performance has been. So says Heikki Haldre, co-founder and chief executive of virtual fitting room provider

Haldre says retailers who do not consider their returns rate risk misunderstanding their online sales – even to the extent of reporting rising online sales to shareholders when in fact sales have fallen. “In every sector the returns rate associated with online sales is higher than return rates for offline sales,” he said.

“For clothing, the rate is an average of five times higher – 25% online vs 5%. This means that even an average retailer, now seeing online sales accounting for 22.5% of sales compared with 19.7% last year, will need to sell 0.62% more garments in order to ensure the same net – that is, post-returns – sales.”

Last December, he argues, ONS figures showed that the quantity of goods bought grew by 0.3% in total. In that context, says Haldre, 0.62% of online sales can be significant.

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