New research: Fashion retailers’ perceptions of the return crisis

New research: Fashion retailers’ perceptions of the return crisis

Free returns for online fashion have been a industry standard. It has moved from a point where differentiation was possible to an expectation of minimum quality. The industry is now faced with increasing return rates and a deteriorating environment, and it is having to reconsider its policies to maintain both credibility and profitability.

This article explores why returns pose a greater threat for fashion retailers. We also pre-release new consumer research that will help fashion merchants understand consumers’ perspectives on the topic. And, most importantly, how fashion retailers can prevent them.

Why merchants are more at risk from returns today

Merchants are at risk due to rising costs for transportation, labor and processing.

The actual rate of return is soaring to add to the cost implications. Customers can now buy with the intention of returning a large portion of their order with increased flexibility in payment options (e.g. Buy Now, Pay Latermodels).

Fashion retailers are facing high returns costs that can exceed 21% of the product’s order value. Brands are taking severe financial hits and trying to manage reverse logistics.

Money is not the only issue. Rising returns can have a greater impact on the environment than ever before. As an example, the annual carbon dioxide emissions from returning goods transport in the US is comparable to 3 million additional cars on the road.

Fashion brands have been tightening their returns policies in response to mounting financial vulnerability and social responsibility pressures. ZaraBoohoo are two of the most prominent high-street brands to charge shoppers for returning items. It’s expected that many other companies will follow their lead, though it may be a rational decision.

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The question of how these fashion retailers will tackle the problem of returnable merchandise is still a hot topic. Analysts are examining how Zara and Boohoo’s choices will impact the brand’s metrics, whether the wider market will notice, and what the extent of customers’ environmental and business sympathies will affect these brands, among other important points.

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One thing is certain: fashion retailers must listen to customers if they are considering changing their returns policies, especially if it comes at a price to the customer. Price, especially in light of the current cost of living crisis could prove to be a problem for many.
We’re releasing the relevant results from a survey that we conducted for our forthcoming Sustainability in Fashion report. This report will provide key insights into consumer attitudes and ways to avoid product returns.

NEW RESEARCH – What customers think of the returns crisis

We conducted a survey of over 2,000 consumers in the US and UK on Sustainability in Fashion. The survey included questions about ecommerce returns.

A group of responses revealed one finding that fashion retailers believe can be done to avoid returns. This is the secret sauce fashion retailers are now looking for. With returns estimated at $761B in 2021 and U.S.$761B respectively, Returns rates could rise as high as 30% by 2022, according to some predictions.

It was notable that 61% of respondents believed returns could be decreased if fashion retailers allowed customers to upload photos and videos to their ecommerce shops. This stat, along with earlier research which highlights how happy fashion brands are to use post-purchase photos in their marketing (58% of respondents saying they would allow them to), suggests that user-generated content could be a promising solution to this problem.

These results also revealed that charging customers for returns (or ceasing to offer free returns) was the only suggestion with which less half of respondents agreed. 49% of those polled agreed either strongly or somewhat. It is encouraging to fashion retailers that most respondents agree with the suggestions for what merchants can do to reduce returns. However, this statistic does highlight that customers are not keen to pay additional fees and reminds retailers that they should be careful about charging customers, especially given the current cost of living crisis.

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Another finding confirmed that consumers are aware of the negative environmental impacts that ecommerce returns can have on the environment. Respondents were twice as likely (49% vs 17%) to say that returns are harmful for the environment than to disagree (49% vs 17%), based on the fact that returns can waste fuel, packaging, and other resources.

Respondents were also more likely to agree than to disagree (46% vs 17%) that returns are harmful to the environment because they end up being destroyed, or sent to landfill sites.

You want more insight? Receive our complete report via email

This article only contains a small portion of the results of a larger survey about consumer attitudes towards sustainability in fashion retail. The full report will be available later in 2022. Register for the notification of release to be the first to receive the complete report.


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