The fashion industry faces a returns’ crisis, with 80 per cent of online returns attributed to clothing purchases. In India, although apparel returns are less frequent, they still represent 26 per cent of total returns, making them the largest return category in fashion retail with one in four items sent back. Store managers and employees report that nearly 40 per cent of returns within a 30-45 day period involve items worn once and then returned.
Is charging return fees a viable solution?
Returns represent a significant cost component for e-commerce companies, contributing to increased logistics expenses. Online apparel sellers are adding extra fees to cover their costs. For example, Myntra charges Rs. 15 per order, Ajio charges Rs. 19 and Nykaa Fashion charges around Rs. 29.
Last year, the online fashion retailer Myntra started a new experiment involving fees for product returns targeted at customers with high return rates. This initiative, part of the ‘return-as-a-service’ project, follows the implementation of a flat ‘convenience fee’ ranging from Rs. 199 to Rs. 299 on all orders placed by customers exhibiting a high frequency of returns. Typically, these customers engage in twice as many or more product returns compared to the average customer.
The company will test a fee structure of Rs. 15-30 per return for customers with high return rates after they have used up their allotted free returns. Myntra believes that the previous flat charge of Rs. 199 to Rs. 299 per order might influence user behaviour adversely, not only within this group but also among their broader network. Despite constituting a small portion of the total customer base, this group still represents a significant number of individuals.
Globally too, brands such as Zara, Macy’s, Abercrombie & Fitch, J. Crew, H&M and others have added shipping fees for mail-in returns. Abercrombie is charging customers a US $ 7 fee to return items while American Eagle Outfitters deducts a US $ 5 fee from mail-in returns that do not qualify for free returns. In 2023, customers sent back almost 17 per cent of the total merchandise they purchased — totaling US $ 816 billion, according to the National Retail Federation.
However, according to Karam Singh Jaswal, Senior Manager at Monte Carlo, which operates 356 Exclusive Brand Outlets (EBO) in India, implementing return fees could deter customers from shopping with the organisation altogether. “Our customers put a considerable effort in choosing the right fit, type and colour but if they know that they will have to pay a fee to return the clothing, for whatever reason, then they will be put off by that fact and may very well decide to not buy from that particular retailer themselves. So, while imposing return fees might appear beneficial, it ultimately decreases customer transactions.”
Tackling the size challenge
Size was by far the main factor in clothing e-commerce returns last year, according to Statista. To tackle it, Saikat Mitra, Senior Vice President of Design and Creative Director at Van Heusen, emphasises that the brand ensures that all sizing options are clearly listed in the e-commerce space. Furthermore, in terms of fits, including newer ones, efforts are made to base them on existing options to minimise deviation from the current standard.
KR Jayarajan, Product Consultant with ABFRL, India’s first billion-dollar pure-play fashion powerhouse with a bouquet of leading fashion brands and retail formats, highlights the significance of effectively communicating different fit options to customers. “For instance, a specific size may offer slim fit and regular options.” He stresses the importance of providing detailed product descriptions alongside fit choices to ensure customers are well-informed.
Luxury lifestyle accessories e-commerce retailer Hard Graft does a great job describing its products. Its product descriptions are unique in that they give specific measurements, information about the materials used and more.
Saikat stresses on the importance of product descriptions, stating that they adhere to the best industry standards for e-commerce cataloging. He states, “Each brand has its own set of standards and the same models are consistently used, ensuring continuity in product presentation. Additionally, all measurements are clearly stated and the user interface and experience (UI/UX) provide easy access to all options for customers. Moreover, brands now include information about the models, providing another avenue for customers to consider.”
Furthermore, the reason for almost 22 per cent of returns globally is that the product appears different in person than it does online. This demonstrates how important it is to have precise product photos so that buyers can understand exactly what they’re purchasing.
With solutions like MySizeID, an AI-driven provider of apparel sizing and digital experience solutions, consumers are informed about the most suitable size for their body type, facilitating the discovery of the perfect fit and reducing retailers’ returns by 30 per cent to 50 per cent. MySizeID has collaborated with over 100 retailers, including renowned brands like Levi’s, Canali and Desigual to collectively minimise online returns.
Focus on exchange rather than returns
Experts say focus should be more on exchanges rather than returns. “Exchanges offer a practical solution that encourages customers to reconsider their purchase instead of simply returning it. However, this approach must be supported by the brand and accompanied by certain conditions to make the process slightly more convenient, thus discouraging customers from returning products too easily,” says Jayarajan.
Outdoor Voice is a great example of a DTC apparel brand that promotes exchanging products instead of offering refunds. The brand goes a step further by offering a 45-day exchange period, while the return period is shorter, encouraging customers to exchange rather than return products.
Bracketing and Wardrobing
While hygiene factors such as precise product information, size charts, images and content are expected and reasons like ‘doesn’t fit right, doesn’t look good’ are typical in the apparel category, one distinctive practice is bracketing. This involves customers filling their online carts with multiple sizes and colours of the same items. The intention is to try them on at home, decide what they prefer and return the rest. Bracketing results in more items being returned to the fulfilment centre, which in turn decreases its capacity to store other inventory.
Another challenge facing the fashion retailers is the rising trend of ‘wardrobing’, a growing type of return fraud. Wardrobing refers to the practice of buying an item, particularly in the fashion category, wearing it and then returning it to the store as unused to receive a full refund. Surprisingly, Diesel approached the issue uniquely by portraying it as normal behaviour.
Back in 2019, through a witty campaign, dubbed ‘Enjoy Before Returning’, Diesel encouraged customers to enjoy their clothes before returning them, demonstrating how to successfully engage in wardrobing in a 60-second spot.
The advertisement features a group of stylish young shoppers enjoying themselves in their new outfits, complete with visible tags. It humorously depicts these rebellious individuals straightening their clothes and meticulously ironing the labels before repackaging them for return to the store. The result? Diesel reported a 9 per cent decrease in both in-store and online returns, coupled with a 24 per cent increase in sales. Such unconventional solutions may inspire other brands to explore similar approaches.
Need more research
In 2020, Returnly, a smart returns platform, released a study after analysing a sample of four million shoppers in the US, unveiling behavioural insights that led to the identification of six returner personas. These personas include the loyalist, the ‘now’ returner seeking instant refunds, the first-time returner, the lazy returner, the fitting room returner who purchases multiple options and the policy abuse returner. Returnly described the loyalist as the company’s ‘ideal returner’, returning undamaged merchandise on time and deserving of recognition through rewards programs. Conversely, the policy abuse returner can incur costs for retailers and should be addressed by prioritising returns data and implementing fraud prevention tools.
“Our return personas give brands a blueprint to offer memorable return experiences that turn First-Time Returners into Loyalists,” states Eduardo Vilar, Founder and CEO of Returnly.
Expanding on the discussion, Jayarajan says, “Understanding why returns are happening is a very important task that retailers must research. Brands in India do not seem to have the proper mechanisms to come up with proper research on that front. Since the process of return and the product getting back to the warehouse is tedious, data collection may be affected, especially if the customer themselves have not effectively contributed to the process, maybe by not giving a proper reply to queries. Things like these make data collection and analysis challenging for retailers.”
It would be great for brands and the shopping system if customers were careful with their purchases and didn’t make unnecessary returns as part of their regular shopping habits. However, this might not happen right away. With the rise in online shopping, it’s a good idea for everyone involved to review their return policies. The e-commerce players can also look forward to improvements like virtual fitting rooms, AR-VR technology and AI-based solutions in future.
