Retailers' Guide to Curbing Online Gift Returns
(Bloomberg Gadfly) -- Santa Claus has come and gone, leaving us with a sleigh load of sweaters, toys and electronics -- some of which we didn't ask for, don't want or can't use.
And so now, as legions of people say "no thanks" to some of the gifts they unwrapped on Christmas morning, about $90 billion of those holiday goodies are going back to the store, according to Optoro, a logistics firm that helps retailers manage returns.
Late December and January have long been a busy time for merchandise returns. However, the rise of online shopping appears to be making returns a much bigger headache for the retail industry -- not just during the holiday season, but year-round. Many estimates suggest online return rates are significantly higher than for the industry overall. For certain kinds of items, they might be close to 50 percent.
You can imagine the kind of dent it puts in retailers' profit margins to have those items shipped back to a warehouse and re-stocked. So what should stores do to tackle this mounting problem? Of course, they should work to make their reverse-logistics processes more efficient and more cost-effective. But I am frequently baffled by how little retailers are doing to prevent you from wanting to make a return in the first place. Here are three steps they could take right now to help with that:
Provide better sizing and product information: When people return part of an online purchase, it's often because they bought multiple sizes or colors of the same item with the intention of only keeping the one they like best. Amit Sharma, CEO of Narvar, a company that helps retailers manage returns, calls this practice "bracketing." A survey his company conducted found it is quite common:
Retailers should be doing everything they can to reduce your need to do this. Nordstrom Inc., for example, has started adding details such as "runs large, order one size down" to its product pages. Bloomingdale's has added a "fit predictor" tool where you can input, for example, that you wear a size 6 in Calvin Klein, and then it will recommend a size for you in other brands.
Fix your product photography: It's common for shoppers to return a purchase when the item that shows up on their doorstep isn't quite what they expected. And often those expectations were set by lousy product photography. I almost can't believe I have to spell this out, but a single image or two of a model wearing a skirt -- especially ones that you can only kinda-sorta zoom in on -- isn't good enough. Stores should consistently provide customers with up-close photos of, say, the embroidery on a duvet cover or the crystals on a cocktail dress. With toys, home goods and jewelry, they should provide images that give a sense of scale. No one wants to order earrings they think are the size of a dime, only to discover they are actually the size of a doorknob.
Do more to encourage customer reviews: Amazon.com Inc., of course, has long had a massive catalog of online reviews that help shape purchase decisions. But its rivals need to do more to ensure they have a similarly helpful storehouse of information. Some are certainly trying; I’ve seen Anthropologie, for example, give shoppers a chance to win a gift card if they leave a product review. I’d encourage stores to do more of this kind of experimentation, perhaps offering loyalty program points for reviews. I’d also suggest retailers think more creatively about this. West Elm features customer photos from Instagram and Facebook on its product pages that show how they used an item in their home. This is probably a much more powerful shopper testament than a big block of text.
In the online era, returns undoubtedly will continue to present retailers with tricky logistical conundrums. But there is plenty of low-hanging fruit for them to pluck to prevent return rates from becoming unmanageable.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
Sarah Halzack is a Bloomberg Gadfly columnist covering the consumer and retail industries. She was previously a national retail reporter for the Washington Post.
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