Retail’s Next Crisis: An Avalanche Of Returns Test Brands’ Sustainability Creds

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Retailers seem to have booked a strong 2021 holiday season, except that the new year brings with it an old problem that has gotten worse-

How to deal with the annual avalanche of returns permanently?

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Consumers love generous return policies. They are paying more attention than ever to how brands are dealing with issues like returns and waste in general. Amazon earned one of its many black eyes last year when an undercover investigation by UK-based ITV News revealed that the company was destroying millions of perfectly good, unsold stock items in the UK every year.

The good news is, a . According to mastercard report, shoppers spent 8.5% more in 2021 than a year ago, and about 11% more than two years ago. However, enthusiasm is muted by the government’s shock jump of 6.8% in the Consumer Price Index for 2021.

The bad news is that experts predict buyers will set a new high in post-holiday returns.

When the count is finalized, the tally could surpass the half-trillion dollar value, roughly 10% of the estimated $5 trillion for the year’s total US retail sales. Estimates for this season This includes a 13% year-on-year growth and a 45% increase over the last five-year average. Shopify
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Online Merchants, an e-commerce platform, reported in August that online merchants take the biggest hit with return rates of between 20% and 30%.

There is little attention paid to return statistics outside the industry, but the logistics and high cost of handling unpacked, tampered goods is a significant pressure on profits in a business that lives on low margins. In a year when the industry is focusing on sustainability, transparency and ethical behavior, no retailer can tolerate the kind of bad press that Amazon has gotten, or more recently luxury fashion houses (for example). for, Buberries, Cartier). Years to destroy millions of dollars worth of new, unsold clothing.

There is no easy solution to the return issue. Not only are consumers accustomed to generous return rules, An analysis done a few years ago Granify by Ecommerce Data Cruncher found that online consumers rank returnability as the most important factor in deciding to make a purchase before customer testimonials and price.

A seamless return experience is one aspect of the customer experience that has been demonstrated to increase sales.

Retailers have some tweaks that help reduce the rate of return. turned into one of the amazing people A 2016 study at the University of Texas It looked at 21 research papers on consumer behavior from fields including economics, marketing, decision science, consumer psychology and operations research. The authors found that long return periods of up to 90 days discourage returns, and estimated that “the longer consumers have had a product, the more attached they are to it and the less likely they are to return it.” “

The authors concluded that not all return policies are equal, suggesting a fertile area for retailers to invest research dollars.

In a future column, we’ll discuss the other side of the return issue: What’s up with everyone who is sending back non-restockable merchandise consumers? What are brands getting right and what are they still doing that could tarnish their sustainability credentials?

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