Spring is finally here and it’s inspiring many people to go shopping. Online orders are increasing. At the same time, retailers are facing a flood of clothing returns and the need to get items back on sale as quickly as possible.
In 2023, retailers not only had to deal with inflation and rising energy costs but also poor clothing sales due to a hot autumn or gloomy summer. To remedy this situation, many clothing stores organized sales and promotions at the beginning of the year. This allows you to sell more but it also increases returns. According to Statista, a German online statistics portal, clothing was the most returned item in the UK in 2023, accounting for 30% of returns, compared to 15% for shoes. In the report Navigating the Returns Challenge (Meeting the Returns Challenge) from IMRG, fashion retailers reported that up to 45% of items sold are returned, with an average return rate of 25% in 2022.
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Reduce returns
Retailers want to reduce the number of returns as much as possible. Zalando already offers a body scan in other countries to reduce the number of returns of unsuitable clothing. H&M has announced at the end of 2023 that it will end free returns, something many small online stores have been doing for some time because they have no other choice. This strategy apparently paid off. Once Dutch company Wehkamp imposed return fees last year, it saw up to 5,000 fewer returns per day.
For retailers, the question of returns logistics can be confusing. Consumers like to try on clothes at home and order more if they know there are no return costs. As a result, many businesses are looking for a quick way to process millions of returns and get items back into stock, both online and in-store, to avoid losses. This is only possible if you have an organized system behind the huge stocks of online stores.
After all, charging consumers fees for returns is one thing. Better streamlining the returns process as a business is another. As the number of returns continues to increase, retailers must process returned items without delay and return them to their salable inventory. This is especially important in the fashion industry because the seasons are very short. Clothing goes out of fashion faster than any other type of product, and previous collections, which are often only a few weeks old, are quickly discounted with a loss of margin and revenue. That’s why so many omnichannel brands offer free in-store returns for online purchases. This encourages customers to look at products online and in-store and potentially purchase other items, while store staff can quickly put the clothes back on the shelf as soon as they return from a fitting.
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This is not the case for purely online fashion retailers, who sell hundreds of thousands of items between 10 and 25 euros with low margins. The high rate of return in the sector fast fashion costs retailers a lot of money if they are unable to have items promptly checked, cleaned and repackaged before they are relisted. It is therefore not surprising that many have decided to impose a return fee because, even so, the process is still expensive and needs to be managed efficiently.
Importance of Reverse Logistics
Online retailers must therefore ensure that their ordering processes are as smooth as possible in order to improve their profitability. It is essential to give as much importance to reverse logistics as to other processes. Many retailer warehouses still manually pick e-commerce orders, requiring three to five times more labor than high-performance automated robotic systems. Productivity is even lower when returned items are stored in a non-automated warehouse and then repackaged.
Warehouse robots or order picking robots can speed up the process by immediately scanning returned items into a bin with other items. This eliminates the need to run from one corner of the warehouse to the other to find each item or place them in a separate returns area, shortening lead times and requiring less labor. . When a new order arrives, the returned item is always the first to be presented to the order picking station.
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In summary, to maximize returns and preserve profits, online retailers need to urgently re-examine old manual fulfillment processes and automate them as much as possible. Instead of having to throw away a returned item, they will be able to resell it in store or online at full price. At a time when profit margins are under pressure and consumers are accustomed to trying on at home and then returning their purchases, I cannot stress enough the importance of smooth and efficient reverse logistics.
