Work in Progress
RETURNS IS A COMPLEX AREA IN ECOMMERCE, AND THAT’S REFLECTED
IN THE MANY STRATEGIES COMPANIES ARE ADOPTING OR CONSIDERING
IN ORDER TO MAKE A DIFFERENCE. CHRISTIAN ANNESLEY REPORTS
In the world of ecommerce, returns matter: frustrated customers, reduced profits and logistical headaches are all obvious potential side-effects of that moment when an item turns out to be a ‘fail’ for whatever reason. Thankfully retailers also understand that returns create opportunities: to wow customers with great service; to learn about and refine products and merchan- dising systems; to collect and analyse data more effectively; to expand deliveryand-return options and thereby foster loyalty by taking away some of the pain for customers. Taking an enlightened approached to returns, and the strategy that’s needed to make returns work, probably has its origins in fashion, simply because, when selling fashion online, returns loom large as a fact of life. “The returns phase is a challenge for fashion retailers,” notes Guy Chiswick, managing director of ecommerce marketing specialist Webloyalty. “The growth of online has sharply increased the number of customers returning products remotely, and to some extent the customer’s bedroom has become the changing room for online fashion retail, as customers often order a selection of products with the intention of returning a certain proportion.”
Chiswick’s summary highlights one of the most visible challenges in the world of ecommerce: how to reduce returns in a world where they are a commonplace?
ATTEND TO EVERY DETAIL
“Every retailer will have particular dynamics to attend to with regard to returns, but I think to make a success of returns you need to be prepared to attend to every detail,” says Philip Rooke, chief executive of Spreadshirt, the print-ondemand clothing-commerce business. “The decision about whether to return an item is not only decided when the product is received,” says Rooke. “Also relevant is the customer’s expectations, which are formed during the shopping experience.” What Rooke means by this is that if a retailer gets every aspect of its product mix and merchandising and customer services right then other things will fall into place and a return becomes less likely.
“We pay close attention to product descriptions and illustrations, of course, but next to this we also work on raising awareness of what happens to returned products. This means customers are encouraged to purchase consciously rather than impulsively.” Richness of content is part of the offer, but it’s also about delivering the best choices in the first place, says Rooke. “We work hard to provide the right choices, by working on the marketplace and on search results. For example, if you want a T-shirt with a dragon design on it, this might be something for a child or you might be after a welsh dragon or you might want a gothic sort of a dragon design. Search needs to deal with that kind of nuance easily and offer up the right selection of initial choices to get customers where the want to go as quickly as possible.” Having worked hard at all that, though, Rooke also emphasizes that retailers cannot shirk the return: when it’s needed it should be easily sorted and readily available.
NEED FOR SPEED
Spreadshirt has unusually low returns in the fashion retail – just 2% or so – and Rooke admits that, while the hard work that goes in helps, it also reflects the fact that T-shirts, its mainstay items, are low cost and don’t have the fit issues of many other clothing products. But, when they are needed, the whole ecommerce industry now understands returns should be easy and the refund fast. “Fast refunds are crucial,” says Ian
Sutherland, director at online accessories business Stylistpick. “If you do a return instore you get money back straight away, and the ecommerce experience needs to get as close as it can to matching that to keep the customer happy and keep him or her buying.” Andreas Adamides, ecommerce director at Finlux Direct, agrees with that, even if the dynamic is a bit different in his company’s core market of large TVs. “With a TV sale you don’t get a second chance on that main purchase, so sorting out returns is less about keeping someone buying. But lifetime value for us converts into good word-of-mouth, which is good for sales too.
If there is mostly agreement about what best practice looks like in many aspects of returns, in some areas it’s not always quite so clear-cut. While refunds should be as fast as possible, the thinking does diverge beyond that core belief. There is a school of thought that reimbursement should happen immediately a return is flagged, despite the small risk of fraud, because this will drive sales. Others, though, insist that educating customers to take more responsibility for their part in the returns process should be a priority, and won’t process a refund until a product has been returned in satisfactory condition. The value of the item plays a part in where retailers sit on that spectrum. Those selling high-value items want to look after their customers – but they also need their customers to treat their goods with respect if they are to be resold. Those pushing through cheaper sales at volume, meanwhile, may be more inclined to give an instant refund for the confidence it instils in customers. Desiree Persson, head of online at high-end online fashion retailer Issa London, is firmly in the former camp, saying: “Customers should take more responsibility in the returns process. I think it is down to retailers to try to educate customers about questions like packing and how to go about it – but it is also down to us, the retailers, to provide packaging that can be reused and repurposed to make a return easy too.”
FINDING A FIT
Returning to the question of fit, this is a space where merchandising tools are changing fast because it lies at the heart of returns strategy in fashion. Virtual fitting room services like Fits.me’s robotic mannequins are now well established, having launched with a male mannequin in 2010 and then debuted a female version in 2011, to help men and women more accurately see whether particular garments will fit them despite not being able to try them on.
“There is potential for sites like BrandAlley , which sells several brands, to compare and cross-refer sizing to improve customer confidence in buying from more unfamiliar brands. And I also think a webcam scanner could improve things if it worked well enough.”
If fit is one area where progress is demonstrably being made in relation to the need to cut returns, for many retailers the biggest challenge they have yet to address satisfactorily is how to go international and still manage their returns. Ecommerce fashion giant ASOS is one that has grappled with the issue, with more than 60% of its sales being international, and the firm’s EU delivery solutions manager Robert Muldoon says the length of time it can take to handle an international return is the biggest challenge.
“It can take some time to get items back from international destinations and you can easily miss the window of opportunity to maximise the resale of these items,” he explains. “It can get complicated: for example, simple things such as sizing could be different in each market. It means that right up front you need to understand the dynamics in each market and ensure communication is good to allow you to deliver just what the customer needs.” In a country like Germany, which has its own unique returns culture, ASOS has a dedicated online store. “We present ourselves as a local company and deliver for customers on the terms they are used to,” says Muldoon. “The fact is in Germany returns have to be free under German law, so return rates can be high. Customers also have a long time to return items. It’s just the way things are.” Logistics is also often fragmented from country to country, which means pragmatism is needed. “It’s about coming up with practical, workable solutions,” says Muldoon.
For ASOS , whatever the norm is for returns in a particular market, the retailer will look to meet or exceed that norm and ensure it is competitive.
OUR SURVEY: HOW RETAILERS ARE APPROACHING RETURNS
Internet Retailing conducted an online survey into returns for this supplement, and it generated some useful insights into retailers’ current priorities around returns. Across all our respondents, 40% said returns were very important and a top priority, while a further 43% said they were relatively important. That left less than a fifth of survey respondents – just 17% – for whom returns was not a top priority. We also asked which aspects of a return are most important to retailers, and three elements emerged out of the pack: consistent communications and engagement with customers, fast refunds and no-cost returns were all identified as top-three priorities by more than half of respondents. Among those operating in fashion, the need to support customers with fit was also a clear priority.
In contrast, offering an ultra-local drop-off option was only identified as a top-three priority by about a fifth of all respondents, showing that some of the strategies and options being offered by the leading players in ecommerce are not yet being embraced all that widely.
Returns logistics is still a maturing market space. The theme of room-for-improvement was also there in the fact two-thirds of respondents saw substantial scope to improve the returns process; only a third reckoned their processes were already in good shape. In the area of merchandising, just over half of respondents said improved product descriptions had helped to cut returns, while a similar proportion said that improved images had helped similarly. About a fifth reckoned that offering customer-review func- tionality was helping to cut returns. And overall just under 70% said they have changed customer communications, web interactions, product mix or re-specified products specifically in an effort to cut returns. On the logistics side, a quarter of respondents said that in the past year they had introduced more choice around returns by using options from parcel carriers or other logistics operators, which demonstrates how active a space logistics is in relation to returns.
As cross-channel retailing becomes more sophisticated, more than a fifth of respondents also said they had changed their returns processes in the past year because cross-channel change was driving operational change.