Opinion
Online retailers must minimize wares being returned
Summary
- Solutions to the problem of high post-purchase returns lie in a close grasp of what drives such behaviour.
In recent times, shoppers have been displaying new behaviours. A phenomenon called ‘bracketing’ is on the rise. This term describes a tendency of a consumer to buy multiple versions of a product, such as different sizes of a shirt, with the intent of sending back the ones they don’t want to keep. According to a study by Narvar, more than 58% of shoppers in the US resort to bracketing behaviour. Another practice among a few shoppers is ‘wardrobing.’ That is, wearing an item of apparel once and then returning it.
Thanks to the emergence of these new behaviours, shopping returns have reached unprecedented levels. According to industry reports, 16.5% of the goods sold in the US in 2022, valued at nearly $817 billion, have been returned. In 2019, the return rate was only 8%. That it has more than doubled in a very short span of time is a great concern. As per data from Indian retailers, returns in the Indian online shopping market stand at around 25-40%. This high and increasing rate of returns is a serious problem for many an online retailer.
The immediate impact of high returns is the toll it takes on the profit margins of a retailer. According to a Wall Street Journal report, it costs a retailer $27 to handle the return of an online order worth $100. Many of the returned goods are not in a condition to be resold. Some of them gets re-routed to charities. Much of the burden of this return behaviour is borne by the environment. In the US alone, 2.6 million tonnes of returned clothes wound up in landfills in 2020. According to Earth.org, fashion is the third-most-polluting industry in the world after construction and food.
Several retailers are already taking steps to mitigate this growing returns problem. Some of them have started charging for sending goods back. Others have shortened the time-window in which returns could be made. It is a big question whether these strategies will curb the problem or merely motivate consumers to shift their purchases to alternative retailers that make it easy for them to return purchased goods.
There are attempts by some retailers to improve their description of the products on sale, so that consumers have a better understanding of what they are buying. In apparel, measurements across brands might not be consistent. So, making ‘small, medium, large’ type descriptions more widely understood and consistent across the industry would be a step in the right direction.
The returns problem is an ideal one for artificial intelligence (AI)-based solutions to be offered. AI can identify items on sale that have a higher chance of being returned, spot consumers who have a stronger tendency to return the goods they purchase. With real- time tracking, people who pick up multiple products of the same kind could be identified. With such inputs from AI systems, appropriate interventions could be deployed to mitigate people’s returning behaviour. AI technology could also be used for augmented reality facilities that may help potential buyers figure out whether the item they are assessing will look good on them.
Developing a deeper understanding of the consumer’s decision-making process, especially the non-conscious facets of purchase decisions, will go a long way in solving the problem. Returns are clearly much more problematic in the digital space than at brick-and-mortar stores. Are inadequate descriptions of wares and size ambiguity the real reason for high returns in e-commerce? Or are these ‘perfect rationalizations’ for non-conscious behaviours that they themselves cannot explain?
When we look closely at a purchase process in a brick-and-mortar setting, one would realize that there are many strong non-conscious factors at play. To shop at a physical-format store, the consumer has to put in much effort: travel to the location, physically check numerous items, and try out some of them. On the other hand, digital shopping allows one to step into the space at the click of a button and step out with another click. This form of shopping calls for little effort on the shopper’s part. The commitment one has towards an action is directly proportional to the intensity of effort put in the act. No wonder consumers find it so easy to walk away from their purchase decisions in the digital world. It hardly took effort to make them in the first place.
The time that the salesperson spends with us in a physical shop, patiently showing various options, does impact our shopping behaviour. The effort of the salesperson generates a reciprocal mindset in many a shopper that makes it difficult to leave the shop without buying at least one item. There is another important thing that a salesperson will often do in a brick-and-mortar store. Savvy salespersons reduce the cognitive load on shoppers by constantly removing rejected items from their sight. They make sure that at any point of time, there are only three or four items in front of the shopper. This greatly helps the shopper to take a decision with ease.
With no such human interface in a digital transaction, there is no chance for a sense of reciprocity to arise in the digital shopper. Too many choices in the digital world create confusion during decision-making.
So, to mitigate the returns problem of online shopping, platforms need a deeper understanding of the non-conscious factors of brick-and-mortar shopping. These behavioural learnings could be incorporated into their software algorithms.
