Returns have always been a part of retail, but for those brands selling online the sending back of unwanted or damaged items creates a number of operational and environmental problems, the DeliveryX Europe Top1000 2023 report has stressed.
Firstly, there is getting the items back. While retailers, and their carrier partners, have full visibility of the delivery process, this is not the same for the return journey. Left in the hands of the consumer, the returns process comes in many different forms and over a drawn out time period.
According to research by RetailX, most of the Top1000 retailers in Europe (74%) offer returns through the post, despite an 8pp decline since last year. Retailers selling fashion (79%) and cosmetics (77%) are the most likely to take this approach, as are those selling to Belgium (87%), Slovenia (85%) and the Netherlands (85%). However there have been significant declines since last year, both in the UK (down 16pp to 67%) and Sweden (down 10pp to 75%).
Returns by post may be the most favoured type of returns for European retailers, but it comes at a cost.
Limiting free returns
For some time, the reverse logistics fee has not been passed onto consumers, with retailers promoting ‘free returns’ to its shoppers, but in May 2022 that all changed.
Spanish fashion retailer Zara set the precedent when it announced it would start charging for returns. The price of the reverse logistics would now be taken from the customer’s refund. Soon other fashion retailers followed suit with Boohoo, New Look, Mountain Warehouse and Moss Bros all deducting the cost of a return from refunds.
When retailers charge a returns fee, RetailX found there is an average of a €10 charge, while the median retailer charges €5. Fees are higher in categories selling larger objects, such as consumer electronics (€14.10/€13.30) and homewares (€13.8/€9.70). They are lowest among those selling fashion products (€5.07/€3.32), which by their nature tend to deal in smaller-sized items.
Some retailers have not gone down this route because of the perceived impact on customer loyalty. A recent study by UserTesting, a provider of videobased human insight, discovered that over 60% of ecommerce shoppers would reconsider purchasing from a retailer if it was to introduce fees to return online orders.
Why does something need to be done?
Retailers will of course want to protect customer loyalty, but offering free returns was not only impacting their bottom line, with warehouses full of potentially unsellable stock it also placed an immense strain on their operations. This in turn subsequently hurts any sustainability claims with returned items sent to landfill.
A study published in March 2023 by the British Fashion Council’s Institute of Positive Fashion (IPF) found that a staggering 23mn returned garments were sent to landfill in 2022. While a study by the University of Bamberg in Germany, revealed that 20mn returned items are incinerated every year.
Whether retailers choose to charge for returns in a bid to minimise them, or turn to technology, businesses have really put a focus on limiting returns this year.
This feature appears in the DeliveryX Top1000 Europe 2023 report, it is followed by case studies on how New Look and Zalando are taking different approach to the returns problem.
Download the full report to discover how leading retailers, brands and marketplaces are prioritising their supply chain operations, logistics, and the delivery experience.