As we approach Q4 of 2020, we decided to do a Newmine Rewind series and republish some of our most visionary content. We’re calling it “Product Returns Reduction: The Time is Now.”
In 2019, retailers still considered returns as a “cost of doing business,” but Newmine spearheaded thought leadership around Returns Reduction, knowing that simply mitigating the costs of returns is insufficient and unsustainable. With the sharp rise of eCommerce due to coronavirus, product returns have risen to an even greater drain on retailers’ bottom lines and are threatening their very survival. This series is a great place to start if you’re looking to familiarize yourself with product returns as well as understand the financial and operational rewards of a persistent returns strategy.
The New Rules of the Apparel Industry
Before the pandemic, there was no question that online retail was already thriving market—And coronavirus has only accelerated the growth. As customers adjusted their buying behavior to lockdown orders, total online spending reached $82.5 Billion in May—up 77% YOY. According to Adobe’s Insights, “it would’ve taken between 4 and 6 years to get to the levels that we saw in May if the growth continued at the same levels it was at for the past few years.” And as we’ve seen time and time again, higher online sales equate to higher returns.
Returns have always been a given in retail, especially apparel. By offering no-cost, hassle-free returns as part of their growth strategies, retailers have created what Coresight Research calls “retail’s most expensive problem.” And coronavirus has only made the problem worse: According to IHL, even the apparel retailers who have opened amid lifted restrictions will find that closed dressing rooms will push in-store return rates closer to rates close to what they see typically online, and 44% of apparel retailers began offering free returns during COVID-19.
Customers have become accustom to lack of return restrictions—as well as paid return shipping and instant refunds. And with online apparel return rates climbing to anywhere between 25-45% (depending on product category), retailers are left to wonder: Can returns ever be profitable?
We’ve known for a while that the answer is a decisive NO—Don’t believe us? Here’s the math.
A review of the entire apparel life-cycle sheds a light on why the time is now to take product returns seriously or ignore them at your own peril.
Zeroing-in on Supply Chain Vulnerabilities
The challenge in returns management is that everyone is responsible for returns, but no one owns the entire process, from concept to consumer. This blog details areas of vulnerability across the entire process, to help shine a light on areas that have a significant impact on online apparel return rates. Consistent monitoring of those vulnerabilities is the first step in discovering how to reduce customer returns.
Consider how many teams work together within a retail organization to develop a continually flowing product assortment to the ideal customer. From the initial design concept to merchandising and sourcing, there are multiple departments whose contributions influence customer satisfaction. Product development calendars are strategically set to meet aggressive deadlines. There is plenty room for error, and even minute errors that occur when pushing an item to market can become expensive returns.
Actualizing the vision of the designer, including Fabric, Trim, and Styling details, is an iterative process, with multiple reviews and approvals. Raw material qualities, colors, and prints are selected to set production standards. Every checkpoint counts. These become an expectation for the customer. If shortcuts are made during development, the customer will notice.
Negotiating competitive product costs, while improving quality and timelines, is an ongoing challenge for import sourcing teams. Pressure on vendors to meet increased demands means more temptation to cut corners to protect their own margins. Monitoring performance and keeping good relationships with your vendors is of utmost importance but paying for your vendor errors doesn’t need to be part of the deal.
It is easy to understand why Size & Fit is a leading cause of product returns for many apparel brands and retailers. eCommerce and Fast Fashion emerged almost simultaneously, leading to a perfect storm for technical design teams, with less time in the calendar for typical fit cycles.
According to Andrea Kennedy of Fashiondex, companies are fitting two samples per style, whereas 20 years ago, companies would fit as many as four: “We’ve halved our fit samples and doubled our returns,” Kennedy said.
So, how retailers digitally communicate Size & Fit is an increasingly important factor, leading to our next point…
As eCommerce customer journeys become more complex, precise communication across all digital touchpoints becomes more critical. Taking the time to accurately display and describe an apparel item can save millions and countless hours that your team puts in when accepting returns. Is the color portrayed, and named, reliably? Are customers able to zoom-in and view patterns? Will a less-savvy shopper be able to tell the difference in feel and give between rayon and polyester? When you say “true to size” is it? Really? Having pre-defined editorial standards for copy and photography across all silos is a must.
Across the many touchpoints in the apparel life cycle, there is an inherent focus on product quality and customer satisfaction. However, the pressure from increasing speed-to-market introduces opportunities for error across all those touchpoints, resulting in rising returns. With the added pressure of operating during a pandemic, retailers simply can’t allow product returns to go unchecked, but may also be lacking resources due to recent furloughs. So you may be wondering—Is returns reduction possible?
Reducing Product Returns Is Not Only Possible, It’s A Necessity
Newmine’s SaaS returns reduction platform, Chief Returns Officer, holds the key to reducing returns with comprehensive returns analytics and intelligence, as well as empowering your team to take action and reduce returns in season when it matters most.
- Integrated-AI components continuously monitor your data and then transform your team into a Legion of Returns Reduction Experts
- Chief Returns Officer targets and helps you address the 65%+ of returns that boomerang for reasons that are within your control.
- Improved product and customer intelligence results in smarter selling—Your customer wants to keep your products as much as you want them to. Returns intelligence helps you achieve that.
Ready to Reduce Returns? Get Started Here.
This blog was originally published as The Hidden Millions You’re Losing In Your Supply Chain.
- Product Returns Reduction: The Time Is Now - August 3, 2020
- The Hidden Millions You’re Losing in Your Supply Chain - September 26, 2018