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Solving Fashion's Return Problem

Solving Fashion's Return Problem
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If technology has so transformed how and where we buy, why does the process of returning something you don’t want dredge up feelings akin to visiting the dentist or going to the DMV?

Think about it -- retailers have made it easier than ever for us to spend money on anything, anywhere, anytime. I can buy something on my phone and pick it up an hour later at a nearby store or wait a few days to receive it in the convenience of my home. The gratification can be nearly instant, yes, but getting my money back when I’ve changed my mind is, well, is still a process largely unchanged. It is inconsistent, cumbersome and costly. You have to either wait weeks for a refund or stand in the dreaded customer service line and hope the person helping you isn’t going to take out their bad day on you. (Don’t even get me started on the national shame that is our post office.) Ironically, an experience that’s crap for me as the consumer is even worse for the retailer, as they suffer the costs of processing and figuring out what to do with merchandise that, in many cases, can no longer be sold at full price.

Ticking Time Bomb

Returns have been called “retail’s ticking time bomb,” and it’s a particularly nagging problem for fashion retailers, as return rates for apparel average nearly 40 percent. What’s worse, less than half of all returned goods can be resold at full price. There’s no time of year where retail is under more return duress than right after the sales highs of the holiday season.

The reality is that returns were always going to be a problem with the rise of e-commerce. Many retailers are trying to reconcile their e-commerce topline growth with its insidious negative impact on profitability. Consider the implications on the bottom line of the ease of making online purchases, many of them sight unseen, with tablestakes offers of free shipping and returns.

But is this unprofitable scenario inevitable? I’d posit that there’s much that can be done to address this problem. Let’s redefine the measures: the number of returns, the cost of processing and the time it takes to manage them should be KPIs that retailers bake into their operations. But as is the case in many of retail’s ongoing digital challenges, it’s not so simple. It involves not just tightening return policies, but also an investment in steps throughout the customer journey and supply chain to reduce the likelihood of returns in the first place. And when when returns inevitably happen, how do we develop systems to make the process more efficient and painless for both parties?

So, with that in mind, let’s take a look at tactics some retailers are using to address the dreaded returns process..

True to Size

Fashion retail carries the double-edged sword of constantly bringing the latest trends and newness to customers, while also dealing with the challenge of individual fit. They entice us to add to cart, but in many cases, when you finally get your hands (and thighs and waist) onto the object of desire, it simply doesn’t fit or suit you. While I could bemoan the fact that fashion has yet to adopt any logical and consistent sizing (even within their own brands), the fact remains that one of the most common reasons for a fashion return is fit.

And here is where early in the purchase consideration process, some retailers are trying to improve the likelihood that you get the right thing the first time around.

secret sauce partners Image courtesy of Revolve

Can you guess what powers the solution? Data. Databases on everything from body measurements and purchase history on who’s purchased which brands, to metrics on how two types of jeans might vary in fit factor with recommendations on which size best fits you. It’s smart in its simplicity: measurement data will predict accurate fit. Fit information is power to both the consumer and the retailer when consumers are informed and confident in their purchase decisions.

Two companies who are leading the way in fit technology are True Fit and Secret Sauce Partners. Retailers that have invested in these technologies speak for themselves: Kate Spade and Asics have seen double-digit improvements in return rates. Plus, there is the added bonus of huge improvements in online, on-page conversion rates. Does this come cheaply? Not necessarily -- but relevant data gives brands insights about their shoppers to help them develop better offerings with consistent products that shoppers not only want, but keep.

Is There Such a Thing as a Happy Return?

Happy Returns is staking not only their name but also their mission around making their namesake a reality. Their Return Bars remove the hassle of repackaging, printing out shipping labels, and the visit to the dreaded post office line. Shoppers simply bring the item to one of their locations and Happy Returns looks up their order, packages it and initiates the refund right then and there. It enables the retailers utilizing their services to guarantee a consistent shopper return experience, free up in-house customer support and lower the likelihood of the receipt of damaged and unsellable goods. Plus it makes perfect sense that digitally-native brands like Everlane and Eloquii have been early adopters of Happy Returns. Since these pioneers have improved and streamlined the shopping experience in every other way, why shouldn’t the returns process get the same refresh?

happy returns Image courtesy of LeanLuxe

Another company that believes that a return doesn’t have to be a stinker is Returnly. Their automated systems are built to optimize return logistics from end-to-end. They ensure that shoppers have a consistent experience and that the retailer is able to salvage the return opportunity. Their automated systems enable shoppers to initiate a return, print out the label, and get the refund process started. What’s more, they take on the liability and offer shoppers an “instant refund voucher” to buy something else immediately, rather than wait for their refund. Their play in reverse logistics is that a better customer experience and means improved brand loyalty. Companies including Fanatics and Supergoop have invested in their automated systems to do just that.

Making Lemons from Lemonade

Well, now you’re stuck with that returned item. What are you as the retailer to do? As we already mentioned, many items end up unfit to be sold at full-price, because they’re damaged or they’ve simply missed their peak selling window. Optoro is an AI-powered return logistics platform working to help retailers and brands get those products off their hands and back into the hands of shoppers. Opturo does this by telling the retailer upon receipt the best price they’ll get for it, as well as where it should be sent so it can get resold quickly. With better insight into how to move these items, retailers are able to salvage two to three times more than traditional return logistics pathways. And Optoro even deals with the stuff that is in less than pristine condition; they offer re-marketing and re-conditioning services that will fix, sell off damaged goods to third-parties and/or list them directly onto their own site, Blinq. They do big business in electronic goods -- but they also work with fashion and accessories brands to alleviate the hassle and cost of processing returns.

So, is return technology a worthy investment for retail brands? For the sake of their bottom lines and already over-taxed people and systems, the answer is a resounding yes!

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