RetailX Returns Report: Key takeaways
Samir Kamnani
·October 2, 2024
How are top UK ecommerce retailers handling returns?
The average ecommerce return rate is between 20% and 30%, and most retailers have accepted that returns are a “necessary evil.” That said, they are dedicated to finding ways to lower their return rate and the associated expenses, as well as identifying opportunities to enhance the customer experience around returns.
To learn more about current trends in reverse logistics, Loop partnered with DeliveryX, a leading trade publication focused on multichannel retail. DeliveryX conducted a survey to gain insights on expectations and preferences around return practices from both retailers and consumers, as well as trends in return performance.
The report confirms that a best-in-class returns process is key to driving customer loyalty. A strong returns solution can also help brands to streamline operations and increase their profit margin, while enhancing their commitment to sustainability.
Here’s a look at some of the key takeaways from the report.
How retailers are handling delivery and returns
With UK shoppers posting back more than £4.1bn worth of online apparel in the last year, retailers are struggling to navigate the challenges of delivering a great customer experience without letting the cost of reverse logistics cut into their bottom line.
Fewer retailers are offering free shipping
Retailers are moving away from offering free delivery on all purchases, helping to mitigate the impact of returns abuse, including bracketing (buying multiple items with the intent of only keeping one) and wardrobing (buying clothing for one-time use with the intention of returning it). While the majority (59%) of the top 100 UK retailers offer free delivery on all orders, 25% only offer free delivery with a minimum spend, Out of the top 500 retailers, just 17% offer free shipping on all orders, with 51% requiring a minimum spend.
Charges for mailing back returns
We’re also seeing more retailers charge for ecommerce returns: Asos began charging £1.99 per return last year, and brands including Zara, Boohoo, New Look, and H&M have all implemented similar charges for returns sent by mail, though some merchants offer free returns for customers taking products back to an in-store location, or for customers who are members of their loyalty programme.
Virtual fitting rooms
Some retailers are working to minimise return rates by implementing augmented and virtual reality technology to build “virtual fitting rooms,” which provide sizing recommendations to customers based on a photo upload. By ensuring that shoppers can get the right fit the first time around, they’ll be able to reduce the likelihood of returns that come in due to a poor fit.
Consumer return behaviours
On the consumers’ side, returns are a frequent part of the shopping experience. In the last 12 months, 65.6% of shoppers have sent back online purchases. In the report, RetailX explored the motivations behind product returns, and what consumers expect from their retailers when it comes to returns.
Common reasons for returns
In the fashion industry, 70% of these returns take place due to a poor fit. However, some returns occur because shoppers realise they can’t justify the expense, with 35% of customers returning products due to a cost-of-living crisis.
What customers are looking for in a return policy
When it comes to deciding where to shop, many customers pay close attention to a brand’s returns policy, with 67% of shoppers admitting that their returns policy influences how much they trust the brand. Customers heavily prefer free return shipping, with only 24% being willing to pay return fees in all cases, and 37% open to paying for returns in certain circumstances.
Peak return periods
Peak return periods tend to come directly after peak shopping events, when retailers promote significant discounts in order to sell more merchandise. While the Black Friday-Cyber Monday period is always a peak sales and return period, RetailX identified other peak periods, including:
- The start of each new year
- Valentine’s Day
- Mother’s Day
- Summer peaks tied to Amazon Prime Days
Customers also expect free delivery (56%) and a flexible returns policy (44%) during these sales events. To reduce their return rate, 40% of retailers are considering shortening their returns windows during peak periods.
The cost of returns
The process of returning a product can cost up to twice as much as the cost to deliver it. The current average cost of returning an online order is £11.50, with a median fee around £6. The global reverse logistics market is expected to hit $737.28bn this year, and grow to $954.5bn by 2029.
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Book a DemoReturns fraud and abuse
Returns fraud and abuse is a common problem that escalates the cost of reverse logistics. Forty-six percent of UK shoppers admitted to purchasing multiple products with the intention of returning most of them, known as bracketing. Brands have also seen a notable increase in “item-not-received” false claims, with 32% of UK shoppers admitting to filing false damage claims in order to receive a refund while keeping the item.
Retailers are concerned about the impact of such abuse, with 41% reporting that lost revenue due to customer abuse was their biggest challenge.
Sustainability in returns
The environmental impact of returns is high, with over 750,000tn of CO2 emissions attributable to returns each year. And in 2022 alone, more than 9.5bn pounds of returned products ended up as landfill waste. Both retailers and consumers are looking for opportunities to minimise waste in returns, with a focus on improving sustainability.
Retailer sustainability initiatives
To reduce the amount of landfill waste from returns that can’t be resold as new, some retailers are utilising recommerce platforms, where items can be resold for discounted rates as “gently used” apparel. Out of the UK Top500 retailers, 58% of the top 100 offer resale platforms, while 23% of the overall Top500 do.
Consumer behaviour
For shoppers, purchasing secondhand items is increasing in popularity. Worldwide, 31% of shoppers say they’ve purchased secondhand clothing in the past year, although 34.2% of consumers say they never purchase secondhand. Trust is an important element in convincing shoppers to give secondhand items a shot: For clothing, hygiene is a high priority; for technology products, it’s important that the item has been thoroughly tested, with guarantees and safety measures in place to verify quality.
The future of returns
Going forward, retailers are increasingly taking a more analytical approach to returns, using data insights to discover why customers are returning items. By taking their feedback into account, retailers can improve operations to reduce return rates and improve customer loyalty. And by using the right returns management system, brands can optimise their returns processes to retain revenue whilst delivering a superior customer experience.
Want to get more data insights from the report, plus interviews and case studies featuring top ecommerce brands and experts? Download the RetailX Returns Report.
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