Free returns are becoming a thing of the past. Here’s why…
Whether via Royal Mail, a delivery van, or even a moped courier, sending and receiving parcels has always been a paid-for resource, with same- and next-day delivery attracting premium fees due to their speed and convenience. This has been the case for centuries, but developments in eCommerce have seen several retailers begin to waive delivery fees for purchases over a certain spend threshold, or else offer unlimited deliveries for a nominal annual fee. As a result, the last decade has seen a major attitude shift when it comes to paying for delivery: online shoppers now expect the cost of all postage attributed to deliveries to be shouldered by the retailer, regardless of spend.
Whilst free delivery on low cost items places a minor dent in profit margins, the widespread introduction of free returns is the most problematic trend for retailers: not only have they funded the initial postage; for returned items they must subsequently refund the purchase value and pay for the return postage, making a loss. The pressure to comply with what is becoming industry standard - along with the already troubling concept of ‘no quibble returns’ - is a serious hit for smaller businesses as they make an additional financial loss on each item that gets returned. To make matters worse, the volume of returns is rising with alarming rapidity.
The increasing rate of returned goods from online shopping is now so high that the Royal Mail is investing heavily in converting 1400 existing post boxes into dedicated Parcel Boxes to alleviate the pressure on Post Office counters, with the value of online returns expected to increase by 27% in the next five years. There are several factors contributing to this, with a major reason a change in how we shop online. Consumers are increasingly ordering multiple sizes/colours of the same product, or a handful of different outfits for the same event, with every intention of returning at least part of the order. Beyond this is the trend of “wardrobing”, where social media influencers buy an outfit, wear it for an Instagram post, and return it; all to be seen in as many unique looks as possible.
Ever increasing returns are problematic for the fashion industry and for the planet, causing a financial burden for brands and retailers and generating more emissions than necessary. From a business perspective, the unpredictable nature and growing rate of returns is making it increasingly difficult for retailers and brands to accurately forecast their revenues and profits, leading to difficulties with budgeting, and subsequent issues with staffing and production costs, which can result in surplus stock or failure to meet demand.
In terms of sustainability, ordering five items with the intention of keeping one (or none) creates the transportation emissions and packaging waste associated with shipping at least nine items, rather than the single piece required. Worse still, with wardrobing making delivery and returns an entirely wasted journey, consumers are knowingly creating an unnecessary level of emissions for no reason.
Wherever retailers take on the financial burden of returns, consumers can be excused for not considering their impact; returns have a normalised part of the eCommerce cycle and unless things change, the negative repercussions will continue to grow.
How are returns changing?
eCommerce giant ASOS is leading the charge in changing the face of returns, famously introducing radical changes earlier this year: although they are extending their returns period from 28 to 45 days (albeit for store credit rather than a cash refund in the latter half), they are also cracking down on “serial returners” suspected of wardrobing. The pressures stemming from social media to own a vast wardrobe is immense, and it is easy to see how the temptation of wardrobing would became prevalent, but it is high time that more retailers followed in ASOS’s footprints and applied preventative measures to discourage the practice.
Free returns for lower value spends are also likely to fall by the wayside as retailers attempt to stem the rising tide of returns. The financial implications of free postage and returns is having too large an impact on profit margins with small businesses seeing the most damage on their already tight revenues. The problem facing retailers currently lies in consumer expectations, with many concerned that they will lose custom if they tighten their returns policies, and they may be right: recent surveys show that almost two thirds of shoppers say that paying to return an item has prevented them from shopping online with the same retailer again.
There are certainly changes on the horizon, but they will not always be popular. For retailers looking to remove free returns, whatever their reasons, citing carbon emissions and sustainability rather than profits in their policies is a much smarter route for today’s eco-friendly consumers.