Major fashion brands are charging for returns or banning customers who frequently return products. The podcast explores the challenges and costs of handling returns in the retail industry, including the impact on profitability. It also discusses what happens to returned items, the issue of wardrobeing and returns fraud, and advocates for a fundamental change in return handling to address negative impacts on the environment and economy.
Returns pose significant challenges and costs for retailers, particularly due to fraud and the need for complex processing of electronic items.
To reduce returns and promote sustainability, retailers should accurately represent products, charge for returns, and shift the industry's perspective on clothing as disposable goods.
Deep dives
The Complex Business of Handling Returns
Returns have become a significant part of the online shopping experience, particularly in the fashion industry. As more people purchase items without seeing them up close, the likelihood of returning them increases. However, charging for returns and even banning excessive returners poses challenges for retailers. Ryan Koolovic, the COO of an online clothing site, Everything 5 Pounds, shares how they source clothing from major retailers and the struggles of maintaining low prices. He also discusses their return policy, stating that they accept returns for any reason, but the costs associated with processing returns are high. Andy Ruff, CEO of ACS Clothing, sheds light on their role in cleaning and repairing returned clothing items for fashion brands and online platforms. He emphasizes the environmental and financial costs of returns and the need for a shift in the fashion industry's approach to clothing utilization. Regina Fry, an associate professor of Digital Economy, highlights the high return rates in the online fashion industry, especially for women's dresses, and the differences between countries. She also stresses the need for more sustainable solutions and the negative consequences of returns for retailers and the environment.
The Impact of Returns on Retailers
Returns pose significant challenges and costs for retailers. Research suggests that serial returners, who make up a small percentage of customers, contribute to a large portion of returns. These customers often engage in world-robing, where they purchase items, use them once, and return them. This behavior is considered fraud and has detrimental effects on retailers' profitability and environmental sustainability. Handling returns for electronic items is particularly complex due to the need to ensure the products' condition and data security. Additionally, retailers face increased costs for processing returns, impacting their margins. The discussion also addresses the need for retailers to carefully consider their returns policies and adapt them based on individual customer behavior.
Reducing Returns and Fostering Sustainability
To reduce returns and promote sustainability, retailers need to take proactive measures. These include accurately representing products through detailed photographs and descriptions, providing sizing information, and managing customer reviews to set realistic expectations. Charging customers for returns is another approach that discourages excessive returns. However, implementing such fees requires transparency and effective communication with customers. The importance of legislation and recycling practices is emphasized, with the UK lagging behind other countries in these areas. A fundamental shift is needed in the fashion industry to view clothing items as assets with multiple users over their lifetime, rather than disposable goods.
The Need for a Balanced Approach
The conversation acknowledges that both retailers and consumers share responsibility for the high rates of returns. Retailers have contributed to the culture of returns by promoting lenient policies and failing to address the issue effectively. However, consumers need to be mindful of their buying habits and the impact of returns on businesses and the environment. The discussion concludes by highlighting the necessity for collaboration between consumers, retailers, and policymakers to introduce sustainable solutions, legislation, and changes in consumer behavior.
Some major fashion brands have started charging for online returns, or even banning customers who routinely send products back. The companies say that growing levels of returns are hitting their profits, so just how costly is it to process an unwanted dress, and what really happens when we pop it back in the post?
Evan Davis and guests take us behind the scenes into the hidden world of returns and the mini-industry that has sprung up to deal with the billions of pounds of items rejected by customers.
It's a growing problem, according to many retailers, with a small number of customers causing particular damage, so what's the best way to tackle it and does the responsibility lie with brands, shoppers, or governments?
Evan is joined by:
Robert Kulawik, chief operating officer, Everything5pounds.com;
Andy Rough, CEO, ACS Clothing;
Dr Regina Frei, associate professor of digital economy, University of Surrey.
PRODUCTION TEAM:
Producer: Simon Tulett
Researcher: Paige Neal-Holder
Editor: Matt Willis
Sound: Rod Farquhar and Neil Churchill
Production co-ordinator: Rosie Strawbridge
The Bottom Line is produced in partnership with The Open University.
(Picture: A woman putting folded clothes into a cardboard box. Credit: Getty Images)
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