What: Dealing with e-commerce returns has become critical for retailers

Why it is important: the fastest-growing channel, e-commerce, is also the less profitable per se (for now) and its profitability is even further hampered by returns. If not properly treated, this topic could be very well the cause of more casualties on the retail scene.

The NRF reports that in the US, USD 428 billion in merchandise at retail value were returned in 2020, an increase of +23% vs. 2019. This increase is logically explained by the pandemic, stay at home instructions, an extension of maximum delay to return products from 30 to 90 days and forced at-home-try-on attitude from customers, unable to go to stores. In addition to impacting P&L, it also leads to overuse of space: CBRE estimates that the additional warehouse space needed to accommodate the returns in the next 5 years will equate to 40 million square metres.

This is why SDC reminds a few simple rules about the way to deal with this potentially explosive situation:

• Integrate the return process into a true omnichannel approach, at the structural core of the retailer’s organisation, and allow customers to return goods to many different points (Note: this is exactly this year’s IADS Academy topic).
• Clearly explain to the customer the consequences of returning products in terms of environmental impact, to share the responsibility and the efforts,
• Consider alternative ways to sell returned products, such as second-hand channels (see for instance Galeries Lafayette’s partnership with Vestiaire Collective)

The Way Forward with E-Commerce Returns