Shoppers are Judging Retailers by their Returns Process
By Daphne Howland | Dec 19, 2018
Dive Brief:
A great majority (88%) of shoppers want to be able to return a purchase to a physical store or through a pre-paid shipping method, and even more (95%) say that how smooth the process is influences whether they'll buy from a retailer again, according to the latest biennial holiday shopping survey from cloud-based supply chain solutions firm Voxware.
The process is not smooth at many retailers, especially for purchases made online, according to other research from post-purchase solutions company Narvar, which found that 77% of consumers want an easier solution to return packages. Nearly three quarters (73%) say that making a return is their least favorite part of shopping online, according to a report from return solutions firm Happy Returns emailed to Retail Dive.
Anxiety, however, isn't depriving shoppers of strong opinions about the process, or from making returns. Some $350 billion of goods was returned last year, and that could reach $550 billion by 2020, according to Happy Returns. It's going to be a busy January: Nearly half of holiday shoppers (48%) make returns the week after, and 46% do so within a month, according to research from returns optimization platform Optoro emailed to Retail Dive. Most of that by far (75%) is apparel and accessories, followed by electronics (27%), shoes (23%), beauty and personal care products (15%) and outdoor and sports gear (7%), according to Optoro's analysis of last year's holiday returns.
Dive Insight:
Much of the research around returns comes from companies that handle the reverse logistics of that process, and the proliferation of such businesses demonstrates what a growing problem it is for retailers.
The rise of returns is clearly a product of the increase in e-commerce sales, which is outpacing overall growth; U.S. e-commerce sales growth made up 46% of 2017's total retail sales growth, an increase of 15 percentage points since 2014, according to FTI Consulting. E-commerce return rates are three to four times higher than rates for brick-and-mortar stores, according to Happy Returns. As legacy merchants stoke their digital channels, they're not immune to increases in returns.
That's especially true in apparel, where e-commerce is outrunning overall retail sales online and off. The online apparel market has grown by a compound annual growth rate of 14% since 2012, soaring above the 1% growth offline, according to Forrester Research. The share of fashion spending transacted over the web (20%) outpaced online spending in retail overall (13%), according to the report.
Many shoppers (41%) often make large online orders with an intention to return at least some, after they've had a chance to try things out, Narvar found once again this year, and once again that's especially true of apparel. They want pre-paid labels to easily return through the mail, which most employ for returns (74% mail their returns back, and of that percentage, 63% use the U.S. Post Office, United Parcel Service or FedEx), although shoppers really want to return to a store, (13% do now and 40% think returning in stores is easier), Narvar also found.
The logistics companies conducting all this research are selling retailers on their platforms and processes, but they do have a point — as the returns process increasingly becomes a normal aspect of shopping for more people, it's an opportunity to gain or lose loyalty. More than half (55%) of consumers surveyed say they've written off future purchases at a given retailer based solely on an inflexible return policy, but 86% have made another purchase during a product return at least once during the past year, according to Optoro.
In fact, the avalanche of returns that's likely coming in January could be a time to promote a new kind of holiday sales event, according to Eddie Yoon, founder of Eddie Would Grow, a think tank and growth strategy advisory firm. "My premise is that we Americans are really bad at buying gifts for each other," he told Retail Dive earlier this month. "You might actually be more inclined to buy something when you're returning your gift to the store."
Write to Daphne Howland at daphne@industrydive.com
Article was originally published here.