Paul Skeldon, mobile editor, InternetRetailing, examines how the ease of m-commerce is leading to issues around serial returners, sustainability and consumer debt – and how to make it right.
You’d think that selling too much wasn’t a problem for retailers. However, the rise of e and particularly m-commerce has seen more shoppers than ever ‘blowing their budget’ while ogling the merch on their phones – and it is leading to a raft of issues for both consumers and retailers.
The rise of the web and mobile has forced retailers selling through these channels to make them as easy to use as possible. Check out processes are now super slick and easy and, where possible, retailers have even tried to make payment a seamless one or two click process.
While this has been driven by making the shopping experience on mobile easier to facilitate – avoiding the need to type in long card numbers and so on – it has also have the effect of making it really easy to see something, look at it and buy it.
Similarly, the growth of social media has also pushed the mobile shopping envelope, giving people the chance to be influenced into seeing and quickly and easily buying things – both online and on mobile.
This partly explains why, according to figures from Salmon on Black Friday 2018, 73% of retail traffic comes via mobile devices and 59% of sales. Sure the proportion of sales for traffic is still low compared to online – 27% of traffic from desktop and 41% of sales – but it is still a marked increase on previous years. Shoppers are buying more frivolously.
A US study by CouponFollow, an online couponing platform, found that about 2 in 5 (42%) of consumers admit blowing their budgets while online and mobile shopping in the past six months.
Together, these two phenomena – ease of checkout and social media – have led to a surge in sales online. But the upshot isn’t necessarily all good. For consumers, there is the every present worry of debt. The CouponFollow survey found, unsurprisingly, that online shopping and credit debt go hand-in-hand, with around 29% reporting that they had gone into debt in the past six months due to online purchases.
In fact, the report highlights how more than a quarter of respondents reported reaching a credit card balance above $1,000 from online shopping in the past, but most shoppers said $100 - $300 was the most online shopping debt they’d ever carried.
It would be easy to think that more sales – despite debt – is a good thing for retail, not least with the peak season heading our way. Of course, everyone wants to sell more, but there are caveats and, drilling deeper into the impact of ease of use and social media influence on shoppers reveals that there is a dark side.
For starters, increasingly mobile-centric shoppers may be buying more, but many of them are becoming much more savvy about hunting out deals. Another US survey, this time by Kelton Global on behalf of RetailMeNot, found that, while an encouraging 85% of US shoppers visit three non-grocery physical retail stores during a typical week – an average that goes up to four stores per week among millennial shoppers and 5.25 among Generation Z – they do it armed with their phones and are hunting for bargains.
Consumers are leveraging their devices to seek out deals, with half (49%) of Americans having an app that collects and provides deals and discounts across retailers on their smartphones. 65% of them say receiving mobile coupons they can redeem in-store is important when shopping in physical stores.
This does mean that marketing needs to be smarter and it does, in theory lead to greater sales, but it is forcing the ever-growing discounting model to sink its claws deeper into retail’s soft underbelly. More sales don’t necessarily mean more money.
Another aspect of growing sales driven by the ease of mobile and social commerce that retailers planning for peak need to be think about is the growing problem of serial returners. Many of the people wildly buying are doing so just because they have issues with impulse control, but many are doing it for far more onerous reasons.
The rise of social media and the social status seemingly conferred by being a ‘social media influencer’ is pushing many a deluded soul to buy stuff online, receive it, wear it so they can take a selfie in it (probably while pouting and throwing a ‘peace’ sign) then sending it back.
This they do on repeat and it’s becoming a £7bn a year problem for retailers, according to Barclaycard. Research carried out by Opinium for the card company quizzed 2,002 UK consumers and 302 retailers and found that 26% of retailers have seen returns rise both in-store and online over the last two years. Fashion retailers are among the worst hit, with almost four in ten (37%) reporting increased levels of returns.
The average British shopper, it found, spends £313 buying clothes every year – and returns almost half (47%), worth £146. A third (33%) of shoppers buy clothes online expecting they will be unsuitable before they’ve tried them on. Two in five (40%) return clothing bought online because they don’t fit as expected, while 9% have started buying several sizes and returning the ones that don’t fit. That’s a trend that 27% of retailers have seen.
But it is the social media-driven returners that are the real issue. According to new research conducted by resource planning platform Brightpearl, which asked more than 200 retailers across the UK about the trouble they face, more than a third of shops have seen an increase in serial returns over the last year.
Famously, Asos is now checking – and blacklisting – the social media accounts of people that it suspects are serial returners driven by the ease of use of mobile and social shopping and the pressure to become influencers.
While Asos denies this – as does Harrods, which has also been accused of refusing refunds after looking at shoppers purchase histories and Twitter and Instagram feeds – not everyone sees serial returns as the problem.
Most retailers now accept that returns are going to be part of the price paid for online and mobile success. Speaking to Brightpearl as part of its research, Hester Grainger, a stylist at Hester Styles, said that retailers should put more trust in their customers. “In my opinion, ‘serial returning’ is now the way of the world,” she says.
Grainger continues: “I think that as consumers, we want, need, expect – and deserve – multiple options. Especially with a garment that involves stepping out of your comfort zone. I think it’s normal to order different colours and sizes – especially when sizes vary so much from retailer to retailer. I think ultimately, that retailers should trust their customers, and that there are many different reasons for consumers to return items, for example, sizes not being standard, wanting to try different colours, not being sure if a style or garment will suit.”
Barclaycard agrees: Konrad Delling, managing director of customer solutions at Barclaycard, says: “It’s clear having an effective and convenient returns policy that satisfies customer needs is a crucial factor of success for retailers. While many have adopted new processes to help manage increasing returns volumes, the real focus should be on measures which help to reduce over-ordering in the first place.
Implementing technology such as virtual fitting rooms which allow shoppers to visualise how products will look when worn, for example, is one way retailers could reduce the number of returns and refunds they contend with and, in turn, the size of the ’phantom economy’.”
Another repercussion of the swell in online and mobile sales lies in sustainability. The endless discounting and volumes needed produces a growing mountain of goods. Many that are bought and returned never get reused and instead go to landfill. There is also the issue with packaging, raw materials, the provenance of the goods and the welfare of the people who made them. The more things that are sold, the more it impacts on the sustainability of retail.
This impacts all retail, but is a growing problem for ‘fast fashion’. Research by Nosto published on 5 June this year, World Environment Day, suggests that more than half (52%) of consumers in the UK and US want the fashion industry to become more sustainable, with calls for reduced packaging and fair pay for workers among their top demands. 29% of these consumers say they will pay more for sustainably-made versions of the same items.
And despite many clothing manufacturers and retailers already taking steps to become more sustainable, 45% of the 2,000 consumers who were polled agree that it is difficult to know which fashion brands are really committed to sustainability.
Further analysis by Drapers among 372 fashion business leaders and professionals found that 92.2% felt there was now a commercial imperative to become more sustainable. Some 91.6% of respondents to the Drapers Sustainability Survey said their customers were showing a growing interest in sustainability, while 59.9% thought they were willing to pay more for that.
Squaring this with increasing and wanton purchasing by consumers armed with phones looks like quite a challenge for the industry – but young shoppers may well be changing it for them.
For instance, the number of UK shoppers using fashion resale apps has increased by 113% in five years, with 18-24 year olds the thriftiest age group when it comes to getting rid of unwanted clothing, shoes and accessories, according to research by the Fashion Retail Academy.
The poll reveals that those aged 18-24 are the most active at selling their unwanted garments with 22.8% selling their clothes via resale apps like Depop and 11.9% selling to their friends. They are also the most active when it comes to making money at car boot sales with 13.2% revealing that’s how they get rid of the unwanted items in their wardrobe.
They are also keen on embracing new ways to consume, such as looking at clothes rental, with apps such as Tulerie offering rental of luxury clothes in the US and Tchibo covering off the lower end of the market in Germany.
Launched in January 2018, the Tchibo Share programme allows customers to rent clothing online in order to cater to customers that only require clothing for short periods. It aims to increase sustainability and move towards a sustainable economy. The retailer now plans to expand the range every six weeks, with new categories of children’s sporting wear set to launch on 21 May.
The company will extend the range of women’s clothes on offer as well as offer holiday products.
Nanda Bergstein, director of corporate responsibility, explains: “We believe that sharing and reusing resources is an important answer to the pressing issue of our time, how we as a company and society can protect the environment and leave a liveable world to the next generation.”
Bergstein concludes: “With Tchibo Share we try to inspire our customers to try out such an offer and ideally integrate it into their daily lives. It is important for us to be an everyday companion for families and to offer them services that are easy to implement in everyday life and protect the environment.”
So, perhaps the process is evening out. Maybe, as these younger shoppers start to adopt new ways of shopping, there will be more sales, only with fewer downsides.