eCommerce gets saddled with the burden of returns
Kristina Nicolas will proudly tell you that she’s been doing practically all her shopping online for years now. She will also tell you, in a more exasperated voice, that this has not remotely abbreviated the amount of time she spends going to stores.
“It has become a huge errand and a huge part of my life having to get all this stuff back to where it came from,” said Nicolas, a stay-athome mother and former fashion buyer. She receives about 10 to 15 boxes per week of merchandise at her home in Chicago, and returns (or tries to return) about 30 per cent. The ease of the task varies. “Sometimes it can be returned to the store, but sometimes it cannot,” said Nicolas, growing louder. “Sometimes it’s UPS, or DHL, or FedEx, or however they shipped it, then you have to print up a label, and I never seem to have the right tape.”
And who has a working printer at home anyway? “I don’t really need one except for this,” said Beth Paholak, a TV producer who has sacrificed a corner of her small apartment in Manhattan to boxes awaiting return. “And I’m not buying a printer just for returns.”
The paradox of e-commerce now is that while acquiring items has gotten easier than ever before, exchanging or returning the unwanted ones remains an epic, tyrannical time suck.
It wasn’t supposed to be like this. Online shopping would save us time, we were told. It would free us from the torment of malls, angry clerks and wasted Saturdays.
But as the fantasy becomes real — e-commerce accounts for $2.3 trillion, or one-tenth of all retail sales, in 2017, according to eMarketer — some shoppers are surprised to discover they are devoting as much time to returns as they once did to in-person shopping, with less fun.
“I’ve ended up keeping stuff because the return process was such a pain,” said Rob Cromer, an entrepreneur in New York City, using profanity.
Likewise, Nicolas is making peace with the fact that the three wooden cutting boards she bought for Thanksgiving, total cost $100, are hers to keep at this point.
Trend
Between December 26 and January 31, 45 per cent of Americans will try to return at least one gift, according to Optoro, an e-commerce software company. Today, that gift is more likely than ever to have been purchased online: 2017 is the first year that a majority of Americans planned to do their holiday shopping on the web, according to Deloitte.
But while a handful of retailers receive nearly unanimous praise from shoppers for open-ended, friction-free returns of purchases made online (Amazon, Nordstrom, L.L. Bean, Madewell, among others), and many offer more generous policies during the holiday season, plenty still impose tight limitations and draconian requirements that seem designed to either discourage returns or drive traffic into their physical locations.
Forever 21 and Shopbop require customers to return items bought online within 30 days, and like Victoria’s Secret, Kohl’s and Rue La La, don’t always pay for shipping (Shopbop offers refunds for items returned within 15 days). Returns to Net-a-Porter must be made within 28 days, and within 14 days for Apple and Barnes & Noble — a narrow window if you factor in packing and shipping.
Many retailers will send multiple items from a single order in separate boxes, each of which could require its own label (and box) in case of return.
And while Amazon refunds your money the moment UPS scans your box for return, others make customers wait weeks to see the refund on their credit card — a period of uncertainty too agonising for some.
“If I can’t go the store to return something, I won’t make the purchase,” said Lauren Nolte, a marketing executive in Los Angeles. “It’s like you have to make up your mind the second you get the item, then run to the post office or you’re out of luck.”
And good luck finding a post office open before or after work.
One can also feel sorry for the stores. Returns cost retailers $260 billion in 2015, according to the National Retail Federation. And about 30 per cent of items bought online end up being returned, versus 9 per cent of items bought in stores.
Retailers can ease the expense if they can convince customers to return web-purchased items to stores in person. On average, returns to stores cost companies half as much as returns to distribution centres, and allow retailers to get the items back on shelves faster, according to new research from AlixPartners, a consulting firm. And driving shoppers into stores has the added benefit of possibly resulting in more purchases. (The good news for retailers: 62 per cent of consumers prefer in-store returns.)
In November, Walmart raised some of its prices online to encourage in-store foot traffic and cut down on shipping costs. Whether its attempts to discourage online returns will save money or simply drive away customers remains to be seen.
“This is principally a reason why many retailers aren’t making any money,” said Mark A. Cohen, director of retail studies at Columbia Business School and a former chief executive of Sears Canada.
E-commerce start-ups have the extra challenge of needing to build loyalty. “These are new businesses that are just learning what they’re in for,” Cohen said. The unavoidable shortcomings of online shopping may make a high return rate a necessary part of the process. Trying on clothes isn’t an option, and colours often appear different in person, leading many shoppers to buy an item in multiple sizes or colours with the intention of sending back the misfits. But there is also the growing problem of so-called wardrobing: buying an item to use once knowing it can be returned afterward.
The classic example is a prom dress, but generous return policies are luring more people to try bringing back, say, the camcorder they bought to record the prom, too.
Some third-party vendors are eager to cash in on the inconvenience of returns. In 2015, two former Nordstrom employees started Happy Returns, a company that operates physical “return bars” in malls where customers can give back items brought from e-commerce retailers including Everlane, Chubbies and Tradesy for immediate refunds.
Happy Returns has 50 locations and expects to open 150 more by the end of 2018. And in October, Amazon paid a reported $50 million to $70 million to acquire Body Labs, a start-up specialising in technology that allows shoppers to create 3-D avatars for trying on clothes online.
While you wait for a better system to come along, there are steps you can take to cut down on online returns, said Eric Himel, a stylist. “Shopping is something you have to be in the right frame of mind for, and you have to dig in and do a little work,” he said.
That means no more clicking and buying at midnight, or after a second cocktail, and always taking the time to read reviews, check the fabrication and make yourself aware of return policies. Most important, Himel advised, remember that clothes modelled by professionals online may not look the same in your mirror.
“It’s like I tell women, ‘Don’t go shopping with your girlfriend, because they’re always going to say something looks cute on you.’” If you miss the cut-off dates, you can sell mistakes through second-hand marketplaces like Letgo, Vestiaire Collective or the TheRealReal. You’re not likely to get full price, but getting anything can feel like a triumph (though of course, you still have to pack it up and ship it).”