There’s a seismic mind shift by brands and retailers when it comes to the increasing burden of returns, which is highlighted even further with environmental spotlights such as June’s World Environment Day. Where returns were once accepted as a necessary evil of eCommerce, retailers are now more conscious than ever of their financial and environmental impact and are looking for solutions.
But why the shift, and how can implementing a social proof messaging strategy help to drive up conversion rates and reverse the upward trend in returns?
The shift in sentiment around returns is two-fold. It’s fuelled by a greater awareness of the environmental impact of returns for both retailers and consumers, the former having sustainability targets to hit and the latter developing more of an environmental conscience.
And, for retailers at least, it’s also coupled with the sheer cost of dealing with returns which can hit margins hard. The cost of factors from transportation to markdowns as well as reprocessing or repackaging can mean that a return can cost two-thirds of the price of the item.
The scale of the challenge of returns is particularly evident in fashion, where the need for customers to be able to check that something fits or suits means higher returns than in other product sectors – and that can lead to waste simply because disposing of items can be cheaper than trying to resell them.
Figures in the DeliveryX 2023 Returns Report show that the UK fashion industry lost £7 billion in returns last year, with 3% of all returns not able to be resold and half of all unsold returned items ending up in landfill. The British Fashion Council says that 23 million returned garments were sent to landfill or incinerated in 2022. Until recently, consumers simply weren’t aware of practices such as these, but they now make headline news – and consumers expect change.
The challenge of returns is further exacerbated by the cost-of-living crisis, which means that when customers do buy, they are being more stringent about whether to keep a product or not. In November 2022, for example, online returns jumped more than a quarter (26.6%) – a new high for the industry.
In fast fashion, returns are an even greater problem simply because customers have always tended to order at greater volumes because of the lower prices. When money is tight, it’s natural consumers will be more discerning. In May, results from both Boohoo and Asos highlighted the impact of consumers keeping less of what they buy with return levels higher than pre-pandemic. Boohoo pointed out that the transition from lockdown “comfies” to fitted dresses and occasion wear, which demand a more accurate fit, was also to blame.
In 2022, in an effort to reduce the burden of returns, retailers, including Zara and Next, introduced charges for consumers looking to return products bought online and returned online. Returns to store remain free. Although this is simply an online shipping charge, most retailers had previously offered free returns whatever channel the customer used and as such, it was another returns issue that made headlines. A quarter (25%) of leading brands now charge shoppers to return online purchases, a year-on-year increase of 14% and with an average cost of £3.53, and the figure is rising.
The strategy was designed to redirect consumers to stores instead, where returns remain free and retailers can consolidate or redistribute items for sale more easily as well as recapture a sale. The retailer can instantly confirm that the item can be accepted for a return and authorise a refund, and retail staff are able to offer potential alternatives to the returned item, as well as cross-sell other items.
But minimising the impact of returns means reducing the potential for returns in the first place. And that means the customer buying right first time. There are many different technologies and tools that retailers can implement to enable this. In fashion, for example, fit and sizing tools can help customers better assess how something will fit before they buy.
But customers also react well to knowing what their peers are buying – which is where social proof messaging can help. It does this through messages presented during different stages of the sales funnel, which show what other customers are buying or browsing by highlighting popular, trending items and bestsellers. Based on the real-time, accurate data of retailers, social proof messaging harnesses this power of the crowd to help increase customer confidence that they are making the right buying decision increasing conversion rates.
Coupled with aggregated review data, social proof messaging increases confidence further. In fashion that might be a more assured fit and so can help with the challenge of bracketing for clothing retailers – when customers buy a selection of sizes/ lengths or cuts of the same style to try on.
It’s a tactic already used by fashion retailer FatFace, which can help to reduce returns because customers can get a clearer idea of how other customers have rated the fit of that particular garment. For example, it might show a message that says “Top Pick! 98% of people rated 5 star”. Integrating product reviews within social proof messaging can also help customers assess the quality of a garment which can also increase confidence to buy and reduce the likelihood of returns.
The returns challenge won’t go away. Retailers need to offer customers the ability to change their minds on goods, but with changing sentiments and the very real drivers of sustainability and cost returns need to be handled better – and one of the best ways of doing that is by reducing their likelihood in the first place.
