eCommerce fashion return rates are ridiculously high. Depending on where you are in the world and how you do your analysis (exchanges/claims/refunds …) the return rate is likely to be 25%-60% and in some edge cases may even be 70%.

So it’s an accepted fact that returns occur, a lot, and are a pain point of selling online. Dealing strategically with returns is an issue which retailers are embracing, which is great news, but given the percentages involved it’s naïve to deal with them as an end product of sales.

I would argue a retailer’s returns strategy should be designed before any sales strategy is considered. Together with a sustainable and agile supply chain, returns planning should be the first item on the list of ‘how we build a profitable business’.

Mitigating the impact of return costs on the business, be they refunds or exchanges, should underpin the operational efficiency and effectiveness of the organisation. True profitability views of products and customers should be an overarching guide for a retailer’s marketing and sales efforts. Consider the true profitability of customer lifetime value where all post purchase costs are individually allocated to the sales value of a customer. Use this analysis to drive marketing based on an accurate view of net worth to the business of customers and avoid a one size fits all approach to offers and discounts. Why would you incentivise a reoccurring loss-making customer to shop more?

Even more radical, but the way retailers should be thinking in 2020, is to factor a circular economy view of products in their roadmap for product sale and design. Consider 2nd life, total environmental cost on manufacture, repurposing of returns and owning the resale marketspace of your products. Retailers should do this before they plan their next seasons stock, not retro fitting their processes and products as an afterthought. If 50% of your sales are coming back you need to plan how to positively action the returns before you sell them in the first place.

Contact easycom to find out how we can help your business rethink returns and become more profitable and more sustainable.