E-commerce spurs e-returns
Retailers hope to improve customers’ satisfaction with items bought online
For retailers in the midst of the holiday rush, it’s all about ringing up the goods.
But in a matter of weeks, a record number of purchases are expected to boomerang at the end of a season marked by rising ecommerce sales. In an effort to stem the onslaught of rejects, retailers are doubling down on efforts to improve shopper satisfaction with items they might have viewed only online.
“It’s a huge challenge,” said Tony Sciarrotta, executive director of the Reverse Logistics Association. “Returns are driven by failure to meet consumer expectations, and that’s a hard thing to fix.”
The post-holiday period has always brought a spike in returns, but surging online sales and perks like free shipping have complicated the process for retailers. Return rates for e-commerce items can exceed 30 percent, a 2015
Shorr Packaging study found, more than three times the rate for goods purchased in stores.
“As e-commerce has grown, return rates have exploded,” said Bill Angrick, founder and CEO of Liquidity Services, a company that helps retailers manage returns.
For retailers, more returns mean less profit. Goods that have been opened, worn or otherwise tested often can’t be resold at full price, if at all, and processing items for redistribution can be a lengthy and expensive process.
The National Retail Federation estimated that returns cost retailers more than $260 billion last year, or about 8 percent of total sales. Many of those goods wound up in landfills.
“In many cases, (retailers) will let things be discarded as waste because they don’t know how to recover value,” Angrick said.
Website improvements
Retailers are expected to take extra steps to cut down on e-commerce returns this season, even as they make it easier for customers to relieve buyers’ remorse, research by commercial real estate firm CBRE shows. Some companies have invested in virtual sizing technologies such as True Fit, used by Nordstrom, Macy’s and other major retailers.
Others have made efforts to improve the quality of product information online.
For example, Target, which overhauled its desktop and mobile sites this year in preparation for the holiday rush, is constantly working to enhance its digital platforms, spokesman Eddie Baeb said in an email.
“Like other retailers, we’ve been ramping up efforts to provide better product recommendations and enhance how our website shows colors and other product details,” he said.
Electronics, which have relatively high rates of return, pose a greater challenge for retailers. The more complicated the device, the more likely it is to get sent back.
Sciarrotta said that’s especially common with items such as Fitbits that are expected to communicate with mobile phones, computers and other devices. He expects that trend to ramp up as consumers purchase more connected home products and other smart technology.
“It’s going to drive a tsunami wave of returns,” he said. “Consumers can’t deal with things that don’t talk to each other very easily.”
That means business for companies like Liquidity Services that process and refurbish returned electronics.
Those items, resold at a discount, help retailers like Best Buy and Sony reduce their losses on returns.
17% growth expected
For items that can’t return to shelves, Liquidity Services works to sell them in bulk or in parts to other businesses. Angrick said his company is working to develop a multilanguage, multicurrency returns-processing platform as online sales rise worldwide.
“Global e-commerce is here to stay, and reverse logistics is not just a U.S. problem,” he said. “We’ve made a big bet that this is where the market is going.”
Indeed, returns again are expected to swell this season as more shoppers click and order. Research firm eMarketer expects online holiday sales to grow 17 percent to $94.7 billion.
Already, Adobe Digital Insights reported about $52.2 billion spent online between Nov. 1 and Dec. 5, nearly 8 percent more than consumers spent during the same period last year.
On top of that, traditional retailers are loosening their delivery and return policies, particularly for goods purchased online.
In an effort to compete against Amazon.com and other e-commerce giants, many offer free or low-cost shipping in both directions, as well as the option to hand off e-commerce purchases at brick-andmortar locations.
“If you made it easier for me to buy three” items, said Joe Dunlap, head of supply chain services for CBRE, “you’re going to increase the returns.”