Nov 25, 2020

Retail therapy is great, but returns can take the fun out of it

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Some shoppers have to pay shipping and restocking fees. And it's a lot of work for retailers, too.

In this pandemic, we are shopping online way, way more than we ever have. And sometimes we want to return the things we buy, which can be a hassle — with shipping and restocking fees and printing out return labels with printers we may or may not have at home.

This holiday season, some retailers are trying to make returns easier. For example, employees at Simon malls will process returns for brands like Levi’s and Gap, so all you have to do is go to a mall kiosk with your item and a QR code. But as annoying as online returns can be for us, they might be worse for the retailers.

I spoke with Sucharita Kodali, a retail analyst at Forrester. She said that when you return something you bought online, it usually goes back to a warehouse. Then the retailer has to decide what to do with it. The following is an edited transcript of our conversation.

A headshot of Sucharita Kodali, a retailer analyst with Forrester.
Sucharita Kodali (Photo courtesy of Forrester)

Sucharita Kodali: Either it will go to, potentially, what we call jobbers, who buy the merchandise for cents on the dollar, or it could get destroyed if it’s not in resalable condition. The other scenario is that if it actually is in resalable condition, they need to think about whether they’re going to mark it down or whether they’re going to sell it, put it back on the shelf at full price.

Marielle Segarra: It sounds like a lot of decisions to make.

Kodali: A lot of decisions, and that’s why, over the years, there’s been a lot of return software that’s been created to try to keep track of all this stuff and try to create some consistency around the process.

Segarra: And does that software work? Can software make these kinds of decisions about should we accept this sweater back, and should we resell it or destroy it, or whatever?

Kodali: To some degree. I mean, there’s some information that software can provide. It can let you know how much of the inventory is actually still being sold. It can tell you, is it a really hot item, and it’s highly likely that there’s a good chance that it could sell again at full price if you were to put it on the shelf. But there’s still a level of human interaction that’s necessary. I mean, somebody has to inspect the merchandise and assess whether it’s been worn, is there a stain on it, or is the tag missing? Because all of that can impact things like the resalability and the salvageability of that merchandise.

Segarra: Accepting online returns that are mailed back to you, as a retailer, is a pretty expensive process.

Kodali: Oh, yeah. I mean, it’s expensive to ship, and then it’s kind of equally expensive to return because not only do you have to pay for the shipping back, which many retailers often do, but then you could be losing the salvageability if it’s not in resalable condition. That’s why some of the, I would say, the stingiest retailers often don’t pay for return shipping, because they are trying to dissuade you from returning altogether. And others may even charge like a restocking fee, in addition to making you pay for return shipping to really, really discourage you from returning that merchandise.

Segarra: I mean, it sounds like retailers are really trying to figure this out, to hack this process and make returns easier for them and for us, and also cheaper for them. Are there any other ways they’re doing that, or ways they’re using technology to do it?

Kodali: Well, I mean, the cheapest return is the return that never happens. Having more accurate sizing charts, having more accurate photography. The closer that you can be to what the actual product is and simulate the lighting and the color airing so that it actually looks like what’s shipped, that’s the ideal, and that can reduce returns, too. One of the number one reasons that people return either clothing or home goods, anything kind of aesthetic, is typically because the item was not pictured as what was ultimately sent.

Segarra: The things that you mentioned that retailers are doing on their websites to try to give customers a better sense of a product before they buy, do you think that that’ll work this year? That it’ll at least help keep the number of returns down?

Kodali: Well, one, the type of merchandise has changed. It’s much more casualwear, to start with. So that kind of merchandise is easier to fit than work wear or dress shoes. So that’s something that is in the favor of apparel merchants, in particular, to start with. And then, on top of that, if you do put in more photographs, more accurate photography, you focus on your sizing charts and the accuracy of your sizing charts, you’re collecting ratings and reviews from customers that are giving their comments on the size and fit of the merchandise. All of that is good and it doesn’t hurt sales and it doesn’t hurt the accuracy of the information that you’re providing. So I do think that it should help managing returns even though e-commerce has grown.

Segarra: Have you been buying a lot of stuff this year online and returning it?

Kodali: I’ve actually bought so little online this year. I mean, a lot of what I would normally buy is probably work wear because I used to travel a lot and go to a lot of meetings, and all of that is gone. I mean, I don’t need 50 pairs of leggings. I already have a dozen.

A sign announces a price markdown for Black Friday on the display window of a shop in Madrid on November 23, 2020.
This year, many retail stores and e-commerce platforms started their Black Friday online shopping deals at the start of November. (Gabriel Bouys/AFP via Getty Images)

Related links: More insight from Marielle Segarra

Sucharita and I talked about how the kinds of clothing people are wearing these days — sweatpants and leggings — are a bit more forgiving and thus less likely to lead to returns. Turns out, that even goes for jeans. According to the retail analytics firm Edited, the number of styles of denim featuring elastic waistbands jumped by 35% between September and October.

Try as they might, retailers may not be able to keep returns down this year because, well, a lot of us can’t or don’t want to go to stores right now, and certain things you really do need to try on, like a winter coat or a pair of boots. In fact, in a recent survey from Narvar, a company that processes online returns, 62% of people admit to “bracketing” this year. (Yes, there’s a word for that thing where you preemptively buy multiple sizes of the same item, just in case, with the intention of returning most of them. Guilty as charged.) That’s a 50% increase from just a few years ago. Narvar, by the way, is partnering with Simon Property Group to process all those returns at its mall kiosks. There are several companies that say they can help retailers deal with this whole returns mess, because online returns are so expensive and so important that a whole industry has cropped up around them.

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