When ASOS launched as an online-only retailer at the turn of the millennium, it revolutionised the fashion industry. Customers quickly saw the appeal as the online brand made buying and returning items so easy.
However, a pattern has emerged whereby some consumers have been abusing these generous policies. Consequently, the company recently took the drastic decision to update its returns policy earlier this year to defend against “serial returners” – those who wear clothes with the intention of sending them back afterwards or bulk buying and returning items.
With these recent changes, ASOS is hoping to hold its customers to account, and now, many other competitors are following suit to deter this malpractice. Moreover, as a fifth of stores admit to amending their returns policies to safeguard against those who abuse them, new research has found that returns policies would make three quarters (73%) of consumers think twice before buying.
Clearly, there is a delicate balance to be struck here – how can retailers protect themselves without deterring shoppers?
Understanding the returns habit
A particular challenge for retailers is to cost effectively manage customer product expectations – online shopping has driven a rise in product returns. This suggests there is a consumer disconnect – a gap between their product expectations and the reality of the product – often caused by misleading or incomplete product information or specifications. This can be achieved by providing comprehensive, reliable and visually pleasing product information across all e-commerce channels.
Large volumes of returns have a substantial impact on retailers’ revenues. For some of the UK’s largest retailers, the cost of servicing returns has spiralled to almost £60bn a year. This figure does not account for the revenue lost when goods are damaged or go missing during the returns process.
ASOS has perhaps fuelled this problem and even incentivised customers to sign up to unlimited free delivery in exchange for a small monthly fee. However, after years of this flux of shipping out items and the time and cost of processing returns, the bottom line has ultimately suffered.
Reducing the volume of returns needs to be a top priority for all online retailers and understanding the reasons consumers send products back in the first place is key to improving this. Shoppers want to know exactly what they are purchasing and it’s up to retailers to deliver a product that meets their expectations in order to defend profit margins.
Retailers taking back control
In 2018, online returns from clothing cost UK retailers £70bn. With ‘buy now, pay later’ services, such as Klarna, retailers could be accused of encouraging shoppers’ non-committal attitude.
The social media trend #OOTD (outfit of the day), where shoppers may purchase clothing with the sole intention of posting pictures wearing their new garments, is one factor likely to have spurred a rise in returns.
Retailers need to do more to take back control of the shopping experience by instilling a sense of commitment. For example, product content which allows customers to ‘shop the look’ and find outfit pairings is a great way to spark imagination and demonstrate how the item could be a wardrobe staple, rather than a quick fix.
Product information that makes use of video and contextual information is the most influential in driving a purchase. Our recent report, Turning Browsers into Buyers, found that one third (33%) of consumers find videos demonstrating products in different contexts are the most helpful in informing purchasing decisions.
More importantly, we know that one fifth of buyers will move away from an online marketplace if there are no pictures of the product they’re looking for. This informative content gives shoppers an idea of what the item might look like when they wear it, building a sense of connection to the products.
Improving the online customer experience
When considering why a consumer returns an item, it’s usually because it does not fulfil a need. It could be that the size isn’t right, or it looks different from the images online. Put simply, if the item doesn’t fit into a customers’ expectations, likely is they will return it.
The online shop is not the only channel which should be considered when looking to improve the consumer experience. Consumers are increasingly turning to new sources of media for inspiration and shopping advice and brands also need to seed their product content in these destinations. Instagram found that 87% of respondents have taken action after seeing product information on the social media platform.
What’s more, younger shoppers and ‘digital natives’ are in pursuit of immersive product experiences, across a range of platforms, channels and formats. Retailers that speak to this and capitalise on the needs of this demographic will be more likely to secure committed purchases.
Drive profit and customer loyalty
Ultimately, the growth in ecommerce is a driver of topline revenue and returns can be reduced when customer expectations are managed effectively. This will help retailers and brands in driving sales and also long-term customer loyalty, whilst reducing cost.
Investment in seamless and attractive experiences which take consumers from product discovery to purchase will be key – protecting retailers from problematic serial returners and any shocks to the balance sheet.
Johan Boström is co-founder of inRiver