Return Process for Retail

US$761 billion.

According to the National Retail Federation , that is the worth of returned goods in 2021 spent by consumers in the United States alone.

Almost a 100% increase in comparison with 2020.

Customer return behaviour is difficult to predict, and Covid-19 made it even more challenging.

Why Do People Return Items?

Size. Different expectation. Something is just off.

There are a ton of reasons for what might go wrong.

Based on Invesp eCommerce research, there is a 30% return rate compared to only 8.9% for purchases made at brick-and-mortar retail stores.

A high return rate directly affects profit margins. Combine it with the increase in energy, oil, raw materials, and additional supply chain costs, and the final margin becomes either too low or even negative.

Shopify states that the #1 reason(50%+) why people return items is because the size is either too small or too large.

During the global pandemic, people were not able to visit physical stores due to restrictions.

Naturally, new return policies took place, and customers found loopholes.

It introduced unexpected behaviour. Customers could no longer try on the clothes, so they decided to buy 3+ different sizes; just to be sure to get the right size. When the package arrived home, they tried them on and choose one, returning the rest.

No strings attached.

Multiply it by a different number of purchased items, and you have a recipe for disaster.

The problem is that customers do not feel any responsibility.

Once customers realized they can get a refund just as easily as they spend money, they will continue to have the same behaviour.

It needs to change.

Charging the Customers

One of the solutions was introduced by Inditex集团 's Zara.

The fast fashion retailer announced in May that UK customers will now be charged ￡1.95 to return online purchases to third-party drop-off points.

Charging customers is always an option, which may result in customers buying elsewhere.

My personal view on the situation is that it will have a huge impact; either

1. It will decrease customer satisfaction leading to a decrease in online sales due to customers buying from other competitors, or
2. It will create a domino effect across the fashion industry, and other brands and customers will slowly need to adapt.

Eventually, data will show us if this bold move was also a smart one.

Personally, I think with the increased demand in eCommerce, other brands will adapt, and customers will become more careful and strategic about their buying decisions.

EDIT: Boohoo Group PLC is another brand to introduce additional fees for returns.

Return to a Store

Shoppers are more likely to shop online if they can return items to a physical store. The returned goods can then be inspected and, in most cases, put back on the shelf.

Once present in the shop, customers tend to look around more, which helps with cross-selling. Long-term it creates trust with a specific brand for customers' future online and offline purchase decisions.

Another research states that 42% of consumers say a negative "return" experience led them to never shop with that specific retailer again. On the flip side, 97% were more likely to shop with that retailer after a positive "return" experience.

The Smart Way of Returns

The return process is quite complicated when it comes to reverse logistics.

One of the ways how to optimize the whole operation process is to decrease the spending, instead of charging the customers directly as ZARA did.

An alternative way is to use Smart Lockers. They offer automation of the return process, all while decreasing operational costs. Apart from returns at retailers, smart lockers can also be used to enhance and automate the Click & Collect experience. Lockers allow for direct pick up of an online order, and at the same time, can be used for returns. Without adding extensive fees.

Smart Lockers are easy to operate, fast and efficient. This can be confirmed by many players on the market, not just in the Retail ( 塔吉特百货 , MediaMarktSaturn , H&M ...), but for the whole Logistics especially when it comes to Last-Mile delivery ( InPost , DPD , DHL , Easybox , Packeta Group , ...)

To summarize, there are 5 reasons why to consider Smart Lockers:

1. No waiting time in lines/queues
2. Accessible 24/7 - self-service option
3. Easier pick-up/return experience (up to 10 seconds)
4. Adaptable solution for different retailer/customer flow of operations
5. Sustainable solution

Time will tell how to deal with Returns and if the introduction of return fees will become a new necessity.

I would be interested to hear your thoughts on the future of Returns.