It’s been another year of record-breaking ecommerce sales combined with unprecedented growls in the shipping and inventory ecosystems, so it’s no surprise that return rates for 2021 are expected to have peaked. UPS, for example, stated that he will manage 60 million return package for the 2021 holiday period alone, a ten% increase from the previous record set in 2020.
Indeed, the events of the past two years have made returns – previously accepted by many retailers as a mere cost of doing business – a key area. Returns, unlike port backlogs and factory closures, are something that retailers can (at least to some extent) control.
“Research has shown that approximately 70% returns can be vetted by the retailer, ”said Navjit Bhasin, founder and CEO of the retail tech company Newmine in an interview with Retail Contact Points. “Of course, that doesn’t necessarily mean that all 70% can be avoided, but retailers can take proactive steps to ensure product is retained. Product descriptions, consumer education, product quality, customer service – these are all tangible things that retailers can control.
With supply chain and manufacturing disruptions expected to continue through 2022, the Barcelona-based shoemaker Viscata is working with Newmine to offset the impact of some of these uncontrollable challenges by reducing the amount of returned product. Returns for online purchases are noticeably higher than store return rates, especially in the apparel sector where they can reach 30% compared to the average 8% to 10% for physical sales. So, for a digital brand like Viscata, reducing returns can have a substantial impact on the result.
“We are living in a period where there are a lot of uncertainties, both in terms of demand and in terms of costs,” said Guillaume Benoit, Global Supply Chain Manager at Viscata in an interview with Retail Contact Points. “I hear a lot about how to optimize the returns process to make it easier for customers, how to consolidate returns to reduce the carbon footprint, but I don’t hear a lot about preventing returns. Ultimately, what’s the more sustainable way to deal with returns than not having to deal with them?? “
Here’s how Viscata was able to do just that:
- With noticeably high online returns in the apparel industry, Viscata uses insights from existing data to identify and alleviate product design issues so that more customers keep the products they buy;
- Through improve the quality of product information it offers customers online, Viscata has been able to ensure that customers know exactly what they are buying; and
- The fact that reducing yields can not only improve results, but also aid sustainability efforts helped the company to justify its investment.
At the root of clothing and footwear returns
Founded 10 years ago and launched on Amazon, Viscata’s espadrilles are handcrafted in Spain, but the majority of the company’s customers (around 90%) are located in the United States, making the reverse logistics involved in returns all the more complex. In fact, it was Viscata’s returns processing partner in the United States that first introduced the company to Newmine. Newmine’s Return Manager platform helps retailers identify the reasons why products are returned through data analysis, and then recommends actions that can be taken to mitigate those returns.
One of the reasons clothing brands in particular are experiencing such high returns is the difficulty of translating the reality of fashion products into a virtual environment. In reality, McKinsey estimates that nearly 70% of all fashion retail returns are due to bad fit or style.
As of June 2021, Viscata can use the Return Manager to identify product design issues and improve their product. For example, there was one shoe in particular that the Newmine Platform reported as being too big. When the Viscata team looked at customer feedback, they realized that everyone was saying the same thing: the straps on the shoes were too loose. They realized it was because of a combination of a heavy sole and elastic straps that were stretched when worn. “With that idea, we went back to the factory and said, ‘Okay, we have to change this product to make it stronger, more robust,” said Benoit.
“You know, a certain level of performance is good,” Bhasin added. “If those early returns hadn’t happened, Viscata wouldn’t even have known about issues like this. The key is to learn from the first returns in order to avoid future ones.. “
Turn data into action
Of course, it’s not always financially possible to make changes to a product, especially in season, but retailers can also prevent returns by, for example, ensure product detail pages are accurate and include all the information customers are looking for. And for retailers analyzing their early returns data, they can use the product information they share with shoppers to mitigate potential issues.
“Is the customer well informed when buying a product? Bhasin asked. “Tell them,” The size is a little big, you might want to order half a size smaller. Because the production run is already over, you have the inventory there. As a brand, you are already engaged in your inventory and the goal is to always get the maximum margin. This is the opportunity of the season. The long term opportunity is that you can go back to the factories and talk about the next set of products that you put on the market for. make sure known issues do not recur. “
In the case of Viscata, Newmine’s returns manager reported high returns across its product lines for beige products. Benoit and his team realized that there was an inconsistency in the way the color of beige products was presented on his site. They came back and re-photographed these elements to make sure the images were both more cohesive and more life-like.
“Sometimes the trend is really clear and that’s where you can take a set of actions,” Benoit said. “The thing is, there is data overload today, but how do you turn that data into a set of actions? This is where the Newmine tool really helps. It lets you look at the data in a really smart way. Ultimately, we want to increase the quality of the product we deliver to customers, and now we can use the data we already have to improve our product and therefore reduce the return rate.
“Retailers have all of this data in various different silos, we take it and put it forward in a meaningful way to identify the information from that data,” Bhasin added. “Humanly, it is impossible to go and verify every opinion or every transaction. But if the machine is already formed, as these sales occur, these returns occur, the consumer voice data comes in, it’s like putting it in the mixer and coming up with the right output.
A solution to several business problems
This increased focus on the cost of returns is not driven solely by retailer bottom lines. Consumers also demand that the companies they shop with to operate in an environmentally responsible manner, and the impact of returns on the environment is undeniable. Only 54% of all packaging is recycled, and an estimate 5 billion books of returned goods end up in landfills each year, according to EPA.
“Sustainability is a larger mission, but when you focus on tactical execution, while trying to keep costs down, how do you still keep that larger agenda alive? Said Bhasin. “In the case of returns, you’ve already sold a product, you’ve generated a top notch demand, so the question is how do you keep as much of that demand as possible and make sure there isn’t a leak? of income? This is where the economic and environmental impact [of returns reduction] converge.”
For Benoit, it is in the very interest of finding ways to avoid returns before they happen. When done well, it can be a holistic solution that solves several business needs at the same time: “It’s not just about reducing the rate of return and increasing the margins,” he said. “It is also a set of actions that increase the customer experience and quality.
“We are all under great cost pressure right now, but you need to keep investing in these initiatives that will improve your business and generate savings., added Benoît. “The truth is that [solutions like] Newmine will increase the costs, but generate more savings and generate an increase in the customer experience.