Photo: UPS
Will guilting consumers help reduce online’s high return rates?
Gad Allon, a professor at Wharton School of Business, believes raising consumer awareness is key to reducing retail’s massive rate of returns.
“During your holiday shopping, do your part to stem return culture by choosing carefully and aiming to buy for keeps,” lectured Prof. Allon in a syndicated editorial that appeared last month in the Los Angeles Times, Miami Herald and other publications.
The column noted that about 30 percent of online purchases are returned, including half of clothing purchases — and a quarter ends up being discarded. In addition to waste, returns take a heavy toll on the environment as product piles up in landfills in addition to the greenhouse gases emitted as they’re shipped back and forth.
The high rate, he wrote, is partly attributable to the way consumers have been conditioned to return online items after Zappos began offering free returns for up to a year and others followed with their own lenient policies.
Retailers in particular are challenged by the logistic inefficiencies of returning items quickly to selling floors.
“It’s a time-consuming process that has little value,” the professor wrote. “Accepting a product and preparing it to be shipped back is viewed as a nuisance, so not much thought has gone into making the process more efficient. Yet most companies still offer generous return policies to keep their customers coming back.”
The author offered some solutions, including using stores as return centers. For certain products, letting a customer keep the item and get a refund might be a money saver and loyalty booster.
Speaking on Wharton Business Daily on SiriusXM, Prof. Allon expressed optimism that shoppers will realize their role in the process. He said, “Consumers, hopefully, will become more aware of the impact, both financially and in terms of the carbon footprint of this behavior.”
Retailers this holiday season are again offering longer return periods than typical as shoppers are making purchases earlier than normal amid threats of shortages. A recent Narvar survey found 58 percent of consumers admit to “bracketing,” or purchasing multiple versions of the same item online to try at home, knowing some will be returned.
- Op-Ed: We send back 30% of what we buy online. How our return culture alters the supply chain – Los Angeles Times
- How Consumers and Retailers Can Reduce Returns – Knowledge@Wharton
- Inmar Intelligence Survey Reveals that a Good Return Experience is a High Priority for Online Shoppers – Inmar Intelligence/Globe Newswire
- Holiday return policies more lenient, as shoppers start early – NBC 10 News
- goTRG Consumer Survey – Holiday Returns During COVID-19 – goTRG
- Narvar Study Finds 58% of Consumers Intentionally Buy More Goods Than They Intend to Keep – Narvar/PRNewswire
Discussion Questions
DISCUSSION QUESTIONS: Do you see any benefit to retailers in making consumers aware of the likely negative repercussions of their online returns? Is there a way to extend an eco-message around excessive returns while affirming a relaxed return policy?
Poll
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Shep Hyken
Chief Amazement Officer, Shepard Presentations, LLC
Cathy Hotka
Principal, Cathy Hotka & Associates
It doesn’t hurt to point out the harm done by returns but whether it has an impact remains to be seen. Most consumers are not malicious with returns – in apparel, for example, a lot of returns stem from people buying multiple sizes because they are not sure of the fit. I’d suggest that rather than trying to “guilt” customers, retailers would do better to invest in technologies and solutions that help people make the right choice the first time around.
What good is shaming consumers for wanting/needing to return items ordered online? If the retailer wants to do an “educated customer” campaign, fine but shaming customers you courted like crazy to buy isn’t right.
Obviously, shopping online isn’t the same as shopping in-store. You can’t see the product or try it on. Sizing is all over the place so ordering apparel online is a crap shoot. That’s a retailer issue to solve. Making people feel bad about choosing your store when the item doesn’t work out isn’t smart business.
We talk about how convenient online shopping is. You don’t have to leave your home to shop, buy, and pick up. The growth of online has little to do with price and everything to do with convenience.
The little talked about convenience of online shopping is returns. You don’t have to leave your home. You can print out a return label and you can drop it off at your convenience.
If the online retailer puts hesitancy in a shopper’s mind because of the guilt of returning, the result is only that they will sell less overall. How many shoppers order (especially apparel) with the express idea to return part of the order and to keep some?
The solution is not with consumer, it is with the online retailers. If returns are costly (and are most likely already counted in their profit structure), they must find the solutions.
If I were an online retailer, I would talk about how our return process is more eco-friendly than the other guy.
Guilting is not a way to go – that’s only satisfying to the retailer. However raising awareness nicely and framing the reduction of that behavior as a consumer benefit (“You know, returns cost us a lot. Fewer returns means lower prices for you.”) would be viable – keep the message positive.
Will “guilting” consumers reduce returns? Not likely. Education on the impact might help – few consumers really understand what happens once they ship something back. But that’s not a solution. Creating a better returns process is the responsibility of retailers and suppliers.
Sure, there can be some eco-messaging. Can’t hurt. But how about some simple boundaries and limits on returns? The first two or three are free but by then sizing issues should be minimal, so returns now come with some kind of charge. It’s as though some brands and retailers have been telling customers to eat as much as they want and they will never gain any weight. No surprise that the buffet table was swamped. Guilt and responsibility may be powerful motivators, but the wallet ultimately rules a lot of decision making.
If consumers had a full view of what happens when product is returned, they may choose more wisely when buying online. The more we inform the customer on the product journey and the implications of returns on sustainability, the more thoughtful they will be and mindful of their purchase choices.
This is why it’s critical for retailers to close the feedback loop and better understand why customers are returning product.
Sizing is a huge problem in the industry and it’s an uphill battle for brands to get sizing right. An assortment with too many options can also fuel returns so it’s important to get your merchandising strategy in check and not take advantage of an endless aisle to the point where it can be detrimental to the business.
A 30 percent return rate is astronomical and a 50 percent return rate on clothing is obscene. Retailers have been trying to solve the fitting challenge for online clothing purchases for decades.
Calculating the environmental cost of items we buy or return always relies on somebody else doing the math. I heard recently that it takes a gallon of water to produce one single almond. No, I’m not going to stop eating almonds because of this, but at least I have a better appreciation for the resources that go into things I consume.
In-store returns is probably the best way to go. And by that I mean not giving consumers a choice, at least for clothing. The shopper is returning clothes because of poor fit or ordering two or more sizes because they just don’t know, the answer is to get them into the store and into a fitting room. Retailers can get creative about this and offer discounts for those returning clothes, at least as long as they keep one of the sizes.
The consumer who places a priority on sustainability will certainly understand the importance of limiting their carbon footprint, not just on the products shipped directly to them but also on the products that are returned. This will be a retail trend that will continue to increase as customers place their loyalty in brands that have similar values, including how the retailer affects the environment.
As a devoted tree hugger, I fully support informing shoppers as to how their choices impact the environment but, as a marketer, I question the efficacy of shaming them into fewer returns. I’d rather see more investments in better tools to help online shoppers evaluate color and size before they purchase and into better logistics processes when returns are necessary. Perhaps not offering free shipping and free return shipping could incent them to make better choices up front as well, although that’s likely a non-starter, I know.
Retailers shamming their customers would definitely produce results, just not the ones the retailer wanted. I would expect the negative impact on that retailer’s sales would be proportionate the level of shaming employed.
If a retailer wants to point out that there is a cost for returns, OK. But I doubt it will have a major impact on the number of items returned. Retailers have taught their customers what to expect and today the include free and easy returns. They should not expect that any changes to this will be welcomed by customers.
Making customers feel pressured to avoid returns is only going to make them less inclined to purchase in the first place. Understand that liberal return policies for e-commerce purchases were designed to solve the problem of shopper hesitation on purchasing something they couldn’t try on or see in person. How many times have we all ordered something that looked great in the picture, but turned out to not meet our expectations in one way or another? Shoppers don’t enjoy returning items – they feel a let down from disappointment and they have to go to additional trouble to get the item back to the retailer. Worse is when customers end up keeping the item because they don’t want to make the effort of returning, resulting in feeling resentful over the money they wasted – increasing the odds they’ll try a competitor next time. Retailers should use the carrot instead of the stick approach by incentivizing in-store pick-up and returns to defray the cost of shipping, and cancel out the customer’s sense of “purchase failure” with a chance to find a new substitute while they are in the store. This just underscores why physical stores are so integral to making e-commerce more profitable.
It’s a conundrum: Conscious consumerism protects the planet yet limits retailers’ revenues.
Retailers that encourage shoppers to only buy items they love will attract eco-minded consumers and process fewer returns. Yet if sales decline more than retailers save due to fewer returns, investors will lay a guilt trip on retailers.
Flexible return policies are a retail essential. Allowing consumers to keep an item and transparently sharing when an item can’t be resold and will end up in a landfill could help retailers minimize returns and build trust.
Regarding returns, retailers (especially online) have done this to themselves. They use it as a part of their marketing. To make customers feel bad about what they want them to feel good about when they are buying is counterintuitive.
Shaming, guilting and preaching are never good strategies. Retailers can educate customers and invest in better tech/processes to help shoppers make better buying decisions. To really move the needle they’ll need to change their free return policies so that customers incur actual costs.
Retailers design their online stores to maximize conversion. Guilting consumers about online returns is a poor Band-Aid solution to a retailing problem. A better approach would focus on better and more accurate product specifications, genuine customer reviews, how-to videos, and providing helpful sizing tools for your apparel merchandise.
Consumers might be less inclined to make returns on items purchased for $5 or less, however at any higher cost, consumers will continue to return items they don’t want, or don’t like, or don’t fit. Consumers will not feel guilty for retailers. As it is, many naïve consumers wrongfully believe that retailers are making loads of money while paying employees poorly. The strongest deterrent to returns is inconvenience, not guilt.
The absence of any kind of standardization on sizes is to blame here, not thoughtless consumers. This is a serious and margin-slimming problem that the industry needs to tackle, stat.
This has been around in DTC forever. No one’s monitors are calibrated the same way. When I did a returns management system in the Stone Ages, the return rate was 30 percent. And so it shall be.
We expect the returns and reverse logistics elements to remain a critical element of the digital shopping experiences. It’s counterintuitive to think that retailers have any right to “shame” customers about higher return rates. Instead, there are far more predictive and intelligent software solutions that can right-size apparel for all consumers, which may mitigate the higher return rates with a more customized and personalized approach to digital showrooming.
Sustainability is top of mind for all customer segments, and we are all far more conscious of the carbon footprint and environmental impacts of our actions. While returns are unavoidable, it will take a very directive approach by retailers and DTC brands to drive their digital solutions to mitigate the impacts while ensuring an outstanding customer experience.
You don’t think people will shrug and say “Well, that’s the cost of doing business? Sorry.”
No. Some customers may be swayed by such arguments, but won’t be fazed much. Many returns weren’t purchased by the customer at all. The problem is that at the time of purchase customers are typically very much interested in the buy, and even those who are aware of impacts to sustainability, etc. won’t be deterred from their purchase. Having a lax return policy will make it that much harder.
Retailers’ better course of action is to use technology tools in the marketplace to reduce and manage returns. Examples like Newmine, Returnly, and Optoro come to mind.
What if online retailers could re-sell the returns right off the customer’s doorstep to the next buyer? Like a “returns marketplace,” where retailers post the returns and a new local buyer purchases. Retailer wins by not having to move the item back up the logistics line. Customer wins because it’s more convenient to put the item back on their doorstep for the next buyer to pick up, instead of printing return label and going to post office. New buyer wins, because they got a discount on a new item and just had to go pick it off a doorstep.
Is there a world for something like this? Or am I seeing this problem/possible solution wrong?
Great summary Tom. I will just add that I was the one shaming customers. I don’t think I expect the retailers to shame the customers (which is what most people here seem to respond to). I am actually asking the customers to behave more responsibly. More and more customers claim they care about the environment and care about having a viable retail scene, but by ordering carelessly (for example, doing bracketing), they inflict costs and damages, and most of them are unaware. I understand the issues for retailers and thus do not expect them not to offer returns. I expect us, as consumers, to be more careful.
These statistics should not surprise any of us – removing both purchase and return friction is going to drive up returns. Highlighting the environmental impact may help but the reality is, when you cannot see or try on merchandise, returns are going to be high.
I have previously suggested that retailers could collaborate on a returns coefficient that scores customers based on their likelihood to return an item based on prior purchase history – offering discounts to customers with a low return likelihood score.
A more pragmatic approach might be something Amazon has, I believe, tried where discounts are applied based on number of items purchased and removed or reduced for each item returned. Sometimes the wallet is a much stronger incentive than guilt.
Return policies were advocated by brands such as Zappos and Warby Parker to acquire new customers. Generally, customers do not want to risk their money and go through the effort of browning and ordering only to have their items returned later. Now that these strategies have backfired, I think retailers are trying to claim sustainability as an excuse for discouraging returns.
I am completely in favor of retailers supporting sustainability. This, however, should be mirrored in all of your brand’s actions. It will not work if you use it only where it could help you.
The modern buyers are smart enough to recognize that this is only a marketing gimmick. Instead, retailers can:
The sustainability message must be expressed in all aspects of your business. Customers value honesty and transparency above all, not freebies.
Retailers should definitely have flexible return policies. However, they should also make some real efforts to reduce returns, establish customer transparency, and be environmentally responsible in all of their business processes.
Using sustainability to manipulate customers is plain deceit.