The Inconvenient Challenge of Online Returns

Vogue Business Innovation Editor Maghan McDowell examines the ins and outs of ecommerce returns. This excerpt is from a story published on May 5, 2020. Read the full article here.

While retail analysts are comparing the current level of discounting to Black Friday, and Target’s online sales are outpacing Cyber Monday, some anticipate another holiday-inspired retail phenomenon: bloated returns, which could place added stress on an already-under pressure e-commerce infrastructure.

Shoppers return 10 per cent of what they buy in stores, but as much as 40 per cent of what they buy online, with returns rates on the higher end for fashion and apparel. And online returns are costly for brands, costing as much as $10 per return, says Forrester retail analyst Sucharita Kodali.

It sets up a perfect storm: as companies increase online sales with out-of-character markdowns, free shipping and exorbitant returns windows, they invite an unprecedented volume of returns four to six weeks later. In other words, while more online sales are what brands want, an influx of returns might be an unwelcome byproduct.

Returns have historically been a “painful process for everyone”, says Donny Salazar, founder and CEO of fulfilment tech company MasonHub. “People don’t like to talk about returns, and they are hard to figure out how to support operationally and technically, but they are an important part of the business.”

Other tech companies are stepping in to solve this problem. Retail software provider Detego just expanded its RFID (radio-frequency identification) technology — used by Levi’s and Adidas to track inventory — for use in the returns process. This lets fulfilment centres scan returned items through boxes, or, as is the case with RFIDs embedded into products, mitigate fraudulent returns. And MasonHub, whose clients include 11 Honoré and Carbon 38, introduced a tool that lets brands pick the most affordable return method based on the weight of the item. (Traditionally, brands use one shipment method.)