Retail

A lot of people shop online these days, especially for clothes. The Market Monitor released by Becom, the Belgian federation for e-commerce, reveals that Belgians spent some 3.930 million euros at physical fashion stores in 2023, while 2.474 million euros went into online fashion purchases. So, the online share of the fashion sector is still smaller than the offline share, but it did increase by about 2% in 2023 compared to the previous year.

Online shopping is easy for customers, of course, but does come with a high risk of returns. In their 2024 report “Volumes and destruction of returned and unsold textiles in Europe’s circular economy”, Tom Duhoux, Dina Bekkevold Lingås and Lars Fogh Mortensen say that one in five fashion items bought online in Europe is returned.

Sometimes logistical problems are to blame, for instance when items get damaged or arrive at the wrong doorstep. But in “Return to Sender?” (2022), Heleen Buldeo Rai, a researcher at the Vrije Universiteit Brussel, argues that returns are mainly due to “quality uncertainty” and “fit uncertainty”. Online shoppers cannot properly assess whether, first of all, an item will meet their quality standards, and second, whether it will be a match in terms of style, fit and size. Many consumers try to tackle these issues by “wardrobing”. They order the same item in different colors and sizes, and they return what they don’t like.

Online shopping is not necessarily worse for the environment. Quite the contrary. Home deliveries actually have a smaller carbon footprint than physical shopping trips by car. But when we factor in the many returns, the benefits of e-commerce are heavily reduced. Processing returns causes waste and CO2 emissions, not to mention the increase in transport kilometers and the chance of items getting damaged on their way back to the store or warehouse.

Jasper Vloedgraven, Chief Revenue Officer at the Dutch company Returnista, calculated what a no-returns scenario would mean for Belgium. He arrived at a staggering 50 million fewer shipments per year; 4.3 billion fewer transport kilometers, and a reduction of € 450 million in e-commerce costs. Naturally, the logistics costs would go down too, you’d have fewer customer queries, no refunds, and more profit, happier customers and more growth. Vloedgraven says that a 1% return rate reduction already results in a 1.5% increase in EBIT or earnings before interest and tax.

Moreover, customers don’t like returns. They don’t necessarily have the health of the planet in mind; often, they’re just put off by the hassle. So everyone benefits from fewer returns. We therefore want to share Buldeo Rai’s key prevention strategies, taken from “Return to Sender?” and from her talk at “Return to Zero”, a workshop organized by Flanders DC and Becom on March 28, 2024. There are three main areas you can focus on to reduce returns: customer-based, monetary and procedural.

CONSUMER-BASED INSTRUMENTS TO MITIGATE RETURNS

The essence of a consumer-oriented prevention strategy is to provide accurate and clear product information, with or without the help of technology. This strategy addresses the root causes of the problem, namely “quality uncertainty” and “fit uncertainty”, which together account for 70% of all returns.

1. Charts, descriptions and recommendations
By adding recommendations, descriptions and charts to your webshop, you can reduce returns by up to 5%, Buldeo Rai found.

For starters, size charts are a must. This very simple addition can already cause a 2 to 5% drop in returns. Whether including model size information also helps has not yet been conclusively proven.

Secondly, additional product advice is helpful. Consider a tool that recommends the right size, for example based on previous purchases. Buldeo Rai refers to a study in the US where, thanks to such a tool, 0.5% fewer shoes were returned.

Furthermore, you can alert customers that sizes run large or small, as Zalando did in a 2021 European study with SizeFlags. These ‘flags’ reduced returns by 3.8% and proved most effective for items that are slightly larger than normal.

Shavatar and SCIMM are Belgian tools that provide sizing advice on webshops, using customer preference data and body shapes, and in the case of Contour Lab, the advice also includes color consulting. Other solutions include Wair, True Fit, Fit Analytics and Fit:match.

2. Reviews
Reviews offer useful, subjective information about quality and fit to other online shoppers. They can reduce returns by an impressive 49%. Buldeo Rai does mention two caveats. First, the reviews should not be more positive than the long-term average. Overly high expectations just lead to more returns. And second, reviews are not effective when written by a “top reviewer” selected by the retailer.

A few more tips to maximize the effect on your returns:
The more other customers rate a review as “helpful”, the more it leads to a decrease in returns. 
The more reviews are available, the better the system works.
Reviews have the best result when they contain both “evaluation” and “reference” information. An evaluation is a reflection on the item and what consumers like or dislike about it (e.g., “It doesn’t fit”). A reference means that the reviewer shares something about themselves (e.g., “I’m tall”).

Reviews reduce returns and save you money, but of course it also takes time and money to set up and maintain a review system (and perhaps deal with fake reviews). Moreover, reviews are especially interesting if you sell the same items for a longer period of time, or work with large volumes or marketplaces. A possible solution for those who have short seasons and/or produce small batches is to have customers review a particular model. If you stick to the same name for a certain model, you make it clear that the item is actually the same, even if you changed something small or used a different fabric.

3. High-quality visualization
The more realistic your product visualization, the less likely customers are to return the product. When uploading photos, make sure they convey factual information. If they provide subjective information or, in other words, only set an atmosphere (e.g., showing the item in an inspiring setting, surrounded by attractive people), they create unrealistic expectations about what the customer will look like, and you’ll end up with a higher return rate.

Above all, the photos you publish should say something about the quality of the item – a criterion that 67% of consumers understandably considers “very important”, according to research by US agency MDG. You can capitalize on this with the option to rotate pictures or view them from various angles. Zoom technology is also crucial. It allows your customer to carefully inspect all the details, from the print to the seams, and from the fabric to the buttons.

A 2013 American study cited by Heleen Buldeo Rai in “Return to Sender?” links every one-unit increase in zoom usage to a 7% decrease in the odds for returning. Close-ups are a great alternative to zoom technology. Most consumers use their smartphones to shop online, and it’s hard to zoom in on such a small screen. Moreover, your webshop might become too heavy if all your images are in super-hi-res.

Experts also recommend user-generated content. To get authentic and realistic product representation, it’s a good idea to have other shoppers share their images on your website.

A purchase-risk notice is another strategy that belongs here. Adding such a warning is a smart move when the product pictures don’t perfectly match the reality. Experiments show that a message like “the actual item may differ from the picture” has no negative effect on purchase intention (meaning it doesn’t deter customers), but it does decrease return intentions. (We can’t talk about return rates because the study was conducted with respondents, not real consumers.)

Finally, you can discourage returns through infotainment or by sharing the story of your product. When customers learn more about the design, the material, who made the item and why, they make a more conscious decision and are less likely to be unpleasantly surprised when their parcel gets delivered. And that, in turn, results in fewer returns.

Color swatching, or the ability to see an item in different colors, has no significant impact on returns, according to Buldeo Rai. Experiments with 3D visualization yield conflicting results, and the effect of videos has not yet been studied.

4. Virtual reality
VR works with “fit assistants”. Consumers upload images of themselves or scan themselves, then virtually try on shoes or clothes. A digital fitting room could result in 56.8% fewer returns. We should note that this percentage comes from a study conducted in China, where shoppers tend to be a bit more tech savvy.

The best results are achieved with personalized avatars (based on a scan or picture). The use of such an “alter ego” led to 54.1% fewer returns in the Chinese study, compared to 29.4% with non-personalized avatars. In the latter scenario, customers could choose a model with the same body type to try on different item(s).

Implementing VR on your webshop is often a significant investment, but new companies are continuously entering the market with VR software solutions. Well-known players include Fit:match, Zeekit, Fit Analytics, True Fit, WAIR, Shavatar and triMirror.

5. Hotlines and chatbots
You can also set alerts for wardrobing and call customers who display this behavior. For example, if you see that someone is about to buy the same item in both M and L, you can phone them to help them find the right size.

Chatbots are a more sophisticated, automated version of such a hotline. They can make recommendations based on purchase history. Hotlines and chatbots seem like good tools in the fight against wardrobing, but Buldeo Rai stresses that their effectiveness has not yet been conclusively proven.

6. Awareness
Reducing returns is a team effort. Everyone needs to be on board – and that includes your customers. Most consumers will probably want to be part of your sustainability story, but they might not be (sufficiently) aware of the impact of their returns. Communicating about this can be detrimental to your sales (ideally, such transparency curbs impulse buying), but it does make your customers more engaged with, and more loyal to, your brand.

Another way to use customer contact is by politely reminding serial returners of the negative effects of their shopping behavior. Artificial intelligence can help you identify those customers.

MONETARY INSTRUMENTS TO PREVENT RETURNS

There are several financial measures you can take to prevent consumers from mindlessly returning purchases.

Are you providing full or partial refunds? In the former scenario, you refund the total amount a customer paid for an item, including taxes and surcharges. In the latter, you make customers think twice about their purchase because they will not get the full amount back.

It might be smart to charge a restocking fee or a return fee: a fee that covers the costs associated with processing returns and getting the returned items ready to be sold again. This measure is common in the US, but less easy to implement in a European context, where consumers have the right to return online purchases within 14 days of receipt. You can of course also turn the system around, offering a discount or a gift to customers who do not return anything. Shoppers are more likely to hold on to their purchase if they get a “keep reward”, such as free shipping on the next purchase.

Return rates typically increase when you implement a free shipping policy. A study by Siham El Kihal and Edlira Shehu (2022), cited by Buldeo Rai at Flanders DC and Becom’s “Return to Zero” workshop, even reported an 18% increase. Therefore, it could be a good idea to charge shipping costs. Setting a minimum purchase threshold for free shipping can yield mixed results. Your returns could go up because of customers adding random items to their shopping cart just to reach the threshold. But then again, you can avoid this problem by recommending a gift card to them (which has the added advantage of making them come back to your shop).

In addition, you can prevent wardrobing by limiting the number of items a customer can buy. Finally, it helps to make customers pay for their purchase before it arrives. Post-purchase payment options typically result in higher return rates.

PROCEDURAL INSTRUMENTS TO REDUCE RETURN RATES

Finally, it’s worthwhile to take a closer look at your processes.

1. Review your logistics process
How you organize your logistics has an impact on the number of items customers return.

You could for instance experiment with cycle-time optimization. The faster consumers get their parcels, the less inclined they are to return anything. When deciding whether to ship items together or separately, a one-week delivery time is a reasonable threshold. It’s fine to make your customer wait a few days to consolidate items that are stored in different locations. But if delivery consolidation means your customer has to wait for their order for over a week, then you’re better off shipping the items separately.

Think carefully about your drop-off point, too. Having customers return items to your store not only boosts sales and saves you money; it also creates the perfect opportunity to help shoppers find the right size, for example.

Want to analyze your logistical process to mitigate returns? You can rely on an external partner like Returnista or Returnless, or get started yourself, using this roadmap.

• Step 1:
  Find the customers who are abusing your business, meaning that they cost you more than they bring in. On average, they amount to 1% of a business’ clientele.
  • You can identify these profiles by filtering out customers who purchased 3 or more items in the past year, and then comparing their purchase and return data. You are actually only losing money to customers who return more than 75%.
  • Possible next steps vary widely. You can notify “problem customers”, exclude them from your newsletter, or even consider blocking them on your payment platform. Always consult with a lawyer before taking the more drastic final step.
• Step 2:
  Identify high-risk products. Start with your bestsellers (your top 10) and work your way down:
  • calculate the number of returns
  • analyze the return reason(s)
  • depending on the reason, you can adjust the product description, discuss quality and/or fit with your supplier, remove the item from your webshop, ...
  • monitor the impact of the changes
  • repeat the process for the next 10 products

2. Don’t be too flexible in your returns policy
Are you applying “effort leniency” or, in other words, are you making it easy for your customers to return items? Hassle-free returns seem to be the industry standard, yet considering the financial and environmental impact, it might be better to introduce deterrents.

For example, you could consider omitting (prepaid) return envelopes, or asking customers to fill out a form explaining their reasons for returning an item.

3. Discourage returns with labels and packaging
It may sound surprising, but labels and packaging have an effect on the number of returns, too.

• Anti-wardrobing labels.
  Attach large, highly visible labels to clothes that are frequently returned, to prevent wardrobing. Customers can still try on your items, but they can no longer wear them once and then return them.
• Personalized packaging
  If you personalize your packaging, you’re no longer legally required to provide free returns.
• Pretty packaging
• Shipping your items in a beautiful box, maybe even gift wrapping them, reduces the risk of returns. This means that, if you opt for sustainable packaging, it’s still important to make the result look (semi)premium.
• Safety packaging
  This type of packaging ensures that your shipments arrive in impeccable condition.
• Final check
  By doing an extra check before shipping, you can be reasonably confident that the quality will at least not be a return reason.

FINALLY …

A world with fewer returns is not only necessary, but feasible. Depending on the product, the consumer behavior and the specific issue, you can select the best strategy: consumer-based, monetary or procedural – or a combination.

In any case, it’s key to get your entire team on board. Management will probably better understand the importance of returns when you start using them as a KPI. For example, offering free shipping will boost your sales, but because the number of returns will most likely go up along with it, such an action is a bad move, both from an economic and an environmental perspective. By closely monitoring the effect of your actions in those two areas, you can make adjustments when necessary. Close collaborations are not only a must with management, but between every department. After all, a lot of different profiles in your organization are affected by returns.

The advice on this page resulted from “Return to Zero”, a Flanders DC initiative in cooperation with e-commerce organization Becom. “Return to Zero” was made possible with support from the FPS Mobility and Transport.