Are your online returns ballooning? Can your business sustain the cost of returns?
For the first time since the dawn of online shopping, consumers are over-ordering with the intention of returning the majority of their purchase. These common shopping habits are wreaking havoc on retailers’ bottom lines, as it doesn’t make financial sense to sanitize and resell the garments that have been returned — or does it?
Learn more about the simple new way to disinfect returns and cut your losses with advanced sanitizing systems.
Why are returns so costly?
In order to keep up with customer expectations and compete with brick and mortar locations, many online stores have long issued free shipping and free return policies. In the earliest days of online shopping, return rates were fairly low, as customers would go in-person to try on an item but then order online for the best deal or for more variation in colors and patterns.
Now, most retailers expect a return rate between 20% and 40% — a staggering jump in lost profit. The cost to ship an item to and from a consumer is frequently more than the retail value of the item itself. To then sanitize the product and prepare it for resale is a cost that many apparel retailers aren’t able to meet.
There’s an expectation that you’ll ship items for free and pay for return shipping if an item doesn’t work for a customer — but these promises were made when return rates were much lower. The shipping costs alone make it difficult to recoup profit losses, but you also can’t just put a product back on the shelves as if it’s brand new. The labor costs to inspect returns, carefully dry clean and deodorize worn items, and repackage them result in net losses on restocking returns.
The Rise of Apparel Returns
Why are return rates skyrocketing? Changing consumer behaviors and increased reliance on online shopping have completely changed the landscape for retailers in the past few years.
We all know that the pandemic changed a lot about our society — shopping included. When it wasn’t safe for shoppers to go to the mall or take a stroll through their favorite department store, consumers didn’t quit their shopping addictions cold turkey.
Instead, online shopping switched from a popular alternative to the only way for customers to make new purchases. And, of course, without the ability to try on apparel in person, more purchases didn’t work out for the consumers, resulting in increased returns.
But the pandemic isn’t the only culprit. A new consumer behavior has emerged that industry leaders are calling “bracketing.” This is the phenomenon where customers order multiple items with the understanding that they’ll pick their favorites out of the lot and send back the rest.
For example, a woman attending a formal wedding may order up to ten different styles before settling on the dress that she likes best. She may even order the same dress in multiple sizes to ensure the perfect fit. But that means the majority of her pricey order will end up returned and the revenue lost. This practice seems to have supplanted the traditional in-store try-on as a result of brick and mortar store closures.
What happens to returned items?
Over ten years ago, customers were horrified to hear about unsanitary return practices, with “new” clothing testing positive for shocking germs and substances. In the wake of this discovery, brands had to rethink how to handle returns.
Unfortunately, some brands chose not to deal with the issue at all. With the cost of returned items ballooning, many retailers chose to incinerate items or send them off to the landfill, citing that it simply doesn’t make fiscal sense to repackage “used” items for resale.
Most consumers don’t realize that their return habits are contributing to waste and growing landfills, and they likely wouldn’t approve either. Today’s consumer often aligns their buying habits with their social concerns and morals — and most people wouldn’t like to know that their favorite store is dumping usable clothing into the ocean and landfills.
Rather than changing return protocol, retailers often attempt to obscure the fact that basically-new items are going in the trash, knowing that this practice could permanently damage the brand’s image. But people are catching on.
As younger, more environmentally-conscious shoppers become the target demographic, retailers need to change the narrative around returns while still minding the bottom line and keeping high standards for disinfection.
Making Resale Financially Feasible
The concern has been that it costs too much to pay for free shipping, return shipping, refund the customer, and then pay for the labor to assess and disinfect returned items. But losses due to returns are expected to reach new heights of over $200 billion annually — and the costs are rising too high for most retailers to bear.
What if you had a fast way to disinfect everything that’s guaranteed to remove any concerning germs or odors? Innovative sanitizing solutions are now available at scale for large retailers to better manage returns and save money on restocking.
Global Ozone provides safe, cost-effective solutions for apparel retailers seeking a better way to manage returned inventory. We’ve been helping large-scale retailers in the industry revolutionize their returns process for over 10 years.
Using the power of ozone, our enterprise clients can efficiently treat hundreds of thousands of apparel returns without the need for dry cleaning or laundering. Our systems solve the issue of managing high return volume without compromising your brand reputation, finally tipping the scales to make restocking returns a fiscally responsible choice.
Want to know more about our problem-solving products and experience in the apparel industry? Reach out to us today.
