1 in 3 of all Products Bought Online Will Be Returned to the Retailer- Why and What Can Be Done About It?

WAAM
WAAM
Apr 5 · 5 min read

Ever returned a piece of clothing or an accessory you bought online? No surprise there, in fact, at least 30% of all products bought online ended up being returned to the retailers, a rate 2.4 higher than in the “traditional” brick-and-mortar stores.

The e-commerce industry has experienced a rapid surge in growth over the past decade. In the last 4 years between 2014 and 2018, the e-commerce industry’s revenues grew by 113% reaching a market value of $ 2.8 trillion USD[1]. In the United States, roughly 20.4 percent of the total fashion retail revenues were attributed to apparel and accessories sold online[2], evaluated at a total of $102.8 billion USD in revenues[3].

Apparel, footwear, and accessories retail e-commerce revenue in the United States from 2017 to 2022 (in million U.S. dollars)

Image source: https://www.statista.com/statistics/278890/us-apparel-and-accessories-retail-e-commerce-revenue/

This trend is only expected to intensify in the next 3 years, based on Forrester, the American market research company, prediction “the global online fashion market will reach $765 billion by 2022, capturing 36% of total fashion sales”[4]. Forrester further notes that 58% of the global online population purchased an item online in 2018, with roughly half of the items bought being either clothing, accessories or footwear[5].

Image source: https://go.forrester.com/blogs/ecommerce-will-account-for-36-of-global-fashion-retail-sales-by-2022/

Booming as the retail e-commerce industry might be, it’s not without its faults. A high product return rate has been known as the Achilles’ heel of fashion e-commerce, estimated at 30 percent of all fashion related products bought online[6]. This statistic is especially staggering when compared with the average return rate faced by “traditional” brick-and-mortar stores, evaluated at 8.89 percent[7]. Furthermore, according to recent studies 42 percent of online shoppers they ended up regretting a purchase made online, with Millennials being the most likely to experience “buyer’s remorse” (51% compared to 37% in older generations)[8]. This conclusion is further strengthened by UPS’s customer survey, which indicates that 88 percent of online shoppers review a retailer’s return policy, with 66% of dose doing so just before purchasing[9].

The next natural question to follow this conclusion is why. Why do shoppers tend to return items bought online more than items bought in a “regular store”? Studies have shown that there are various reasons for returning products, with the top three being receiving damaged products (20%), receiving wrong items (23%), and the discrepancy between the image online and the product received in reality (22%)[10]. While the first 2 reasons can be attributed to retailers’ mistakes or issues with the carrier, the last reason is the most complex and the hardest to resolve.

Image source: https://www.invespcro.com/blog/ecommerce-product-return-rate-statistics/

To better understand how this issue can be resolved we first need to understand what customers mean by saying that the “product looks different”. One reason can be attributed to the gap between professionally taken pictures, paired with perfect lighting and backboard, and the “plainer” reality we live in. Another reason is how hard it is for the online shopper to estimate a good fit, for one, most brands like to use what you would call a “standard model”. However, we, the majority of society, unfortunately, don’t actually look like models. While we may enjoy looking at their ethereal beauty, they don’t always offer the best representation of how clothing will look on us, the shoppers.

There are a few solutions retailers may choose from. The simplest is for retailers with healthy profit margins to build the cost of returns into the product’s price[11]. However, in a competitive pricing market may retailers may not be able to implement such a solution and still maintain highly competitive pricing. Another solution is something we are all familiar with, social media. Social media created a platform in which users can share their own opinions and images of products. And though social media has proven again and again its effectiveness in generating sales, with 23% of online shoppers confirmed to have been influenced by these platforms when making a purchasing decision, they too have their own limitations. Most social media platforms were first created to facilitate communication between users, whether written or visual base, the core of the platforms was connecting people and not necessarily aimed at businesses, thus resulting in gaps between the businesses’ requirements and the features offered.

That being said, nothing ever stays stagnant for long, least of all in the internet era. With the fast-past changes in technology, social media is bound to evolve as well, and new platforms such as the likes of inFASH are bound to emerge. inFASH, a fashion social network, aims to create a new online shopping experience by connecting fashion lovers, online shoppers, and retailers in a seamless and direct peer-to-peer marketplace. inFASH provides all of its members with an equal opportunity to become an inFASH “model” and rewards them for sharing their style, regardless of how many followers they may have. Utilizing innovative Ai technology all pictures and videos posted are broken into items and auto-tagged with millions of shoppable items from the thousands of retailers and brands. This allows for two things to happen; the one, giving shoppers access to more relatable models. The second is an easy photo-to-purchase shopping experience, as users can click on the item tag on the image and buy it directly without having to go search for it on the retailer’s website.

In addition, inFASH also enables its users to customize their feed based on their body shape. Combined with the “real people” as models’ approach, users are now able to more accurately estimate how merchandise might look on their physiques, providing them with a more true-to-life sizing method. Resulting in a substantial reduction of products returned, and an increase in sales. Both translate to an increase in the retailer’s bottom line.

[1] https://www.statista.com/statistics/379046/worldwide-retail-e-commerce-sales/

[2] https://www.statista.com/topics/3481/fashion-e-commerce-in-the-united-states/

[3] https://www.statista.com/statistics/278890/us-apparel-and-accessories-retail-e-commerce-revenue/

[4] Key countries: China, South Korea, Japan, the US, the UK, India, and France https://go.forrester.com/blogs/ecommerce-will-account-for-36-of-global-fashion-retail-sales-by-2022/

[5] https://www.marketingcharts.com/industries/retail-and-e-commerce-106623

[6] https://www.entrepreneur.com/article/306727

[7] https://www.invespcro.com/blog/ecommerce-product-return-rate-statistics/

[8]https://www.bigcommerce.com/blog/e-commerce-trends/#147-online-shopping-statistics-behind-why-these-e-commerce-trends-matter-most

[9] https://www.ups.com/us/en/services/knowledge-center/article.page?name=return-shoppers-by-rethinking-your-online-returns&kid=aa3b199e

[10] https://www.invespcro.com/blog/ecommerce-product-return-rate-statistics/

[11] https://www.entrepreneur.com/article/306727

WAAM

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WAAM

WAAM functions as a Retail Power Tool (RPT), enabling retailers to expand their reach to new audiences & increase their online sales with minimal item returns.