Returns pose significant challenge for US retailers: Blue Yonder study

While a vast majority (89 per cent) of retailers have announced stricter or more expensive returns policies over the past 12 months, more than half (59 per cent) experienced an increase in the rate of returns over that same period, suggesting these changes have failed to achieve their intended goals.

Retail product categories that traditionally haven’t experienced high return rates for in-store purchases are now seeing increased return rates online. Overall, only 13 per cent of retailers reported a decline in returns over that same 12-month period.

“This proves that putting the onus on consumers is not necessarily the solution to control returns. Instead, retailers should be looking at technology to help them find better ways to manage the returns and reverse logistics process to reduce costs, improve inventory resell rates, and protect customer loyalty,” said Shannon Wu-Lebron, corporate vice president, retail industry strategy, Blue Yonder, in a release.

Four-fifths of the surveyed retailers said prioritising improvements around the returns process was either high or very high priority, with 16 per cent saying it was medium priority.

To measure their success in returns management, retailers are looking at different key performance indicators, including return rate (65 per cent), average cost of return (58 per cent), the percentage of returns eventually resold (49 per cent) and customer lifetime value (37 per cent).

Changes to return policies were made by some retailers to help control increasing costs and recoup a portion of the expenses via customer fees. The reverse journey of a returned order incurs a multitude of costs related to shipping and transportation, processing, restocking and customer service.

As return rates increase, these costs affect the profitability of the company as retailers incur these charges without earning revenue.

Retailers were surveyed on the cost of returns as a percentage of the product’s original value, with responses ranging from 5-10 per cent (32 per cent), 11-15 per cent (29 per cent), 16-20 per cent (24 per cent), and over 21 per cent (14 per cent). Product categories reporting percentages higher than 21 per cent included apparel and fashion.

Despite retailers’ clear focus on controlling returns costs, the survey found that many retailers still rely on unsophisticated returns processes, resulting in poor customer experience and inefficiencies.

ALCHEMPro News Desk (DS)