Returns and ecommerce – five facts and figures for 2023
For any ecommerce operation, returns are a fact of life. While online shopping now makes up approximately 26.3% of all retail transactions in the UK, the reality of not having the product to hand at the moment of purchase means returns are something that has to happen. The expenses and effort involved in this issue are why so many more businesses are taking a serious look at warehouse automation, and why ERP software is so valuable to keep track of stock moving in and out. To understand the scale of the situation and the difficulties involved, consider the following five facts and figures for returns in 2023.
1. 15% of all online sales are returned
According to the IMRG’s 2020 benchmarking data, the average ecommerce business saw a 15% return rate. However, that is an average. Specific sectors saw significantly more, with women’s clothing being the highest at 23% while gifts were the the lowest at 6%. Health and beauty items did technically fall lower at only 4% returns, however given the level and kind of restrictions on returning these items this should be considered a non-representative outlier.
This situation belies a much bigger problem. If we use the average of 15% returns rate, that means that the work to both send out and re-stock the items involved ultimately generates no profit. If we assume the restocking takes as much work as the sending out, that means that 34.5% of a given warehouse’s work time is dedicated to operations that do not directly bring in any revenue. This represents a major loss and a major problem. Especially when considered in the context of other statistics here.
2. 38% of customers became more comfortable with returns during the pandemic
Prior to the COVID pandemic, the issue of being unable to physically handle and/or try on goods when shopping online was seen by most customers as just “the cost of doing business”. A certain degree of risk had to be expected when buying some items (clothing especially) online. Those shoppers who more readily bought online used returns as and when they had to, but many other customers simply limited shopping for those kinds of items to bricks and mortar establishments. Avoiding what they perceived as the inconvenient hassle of going through a digital returns process.
After COVID, the situation has changed. During various levels of restrictive lockdowns, returns had to be engaged with more often and more readily, and many customers found things to be more convenient than they previously believed. Many courier services used non-printer options, while others had drop off points at convenience shops, petrol stations, shopping centres and the like.
Consequently, customers are now much more likely to use returns features than ever before. This means more businesses must put more effort into the systems that avoid these types of problems. For apparel in particular, 360 spin viewers, clearer size guides, and better video content are among some of the solutions that could be employed to prevent a potentially costly extra influx of returns. If this comfortability rating is reflected in overall future return trends, the research from Mintel reveals that the 15% average return rate figure mentioned earlier may only be the tip of the iceberg.
3. 7.5% of online returns are fraudulent
There are a wide variety of types of fraud perpetrated against ecommerce retailers by consumers. The one believed to be most common, and also arguably the most innocent, is something called “wardrobing”. This is where an item of clothing (often high-end) is purchased, worn, and returned for a refund with tags still on.
Others include “double-bagging” where a product is reported as not being received, and then the ecommerce business either sends a refund or pays for an additional replacement.
The more scandalous were things like “weight-gaming”. This takes advantage of when refunds are issued the instant a parcel is picked up, when consumers send back items with the same weight, but entirely different value. UK electronics retailer Maplins ended up with packages of potatoes, beans, and sweets instead of various electronic items.
These scams, and many others, make up nearly a tenth of all online returns. This represents a serious challenge for ecommerce operatives of all stripes, and might lead some companies to think about alternatives. However, these issues have problems too.
4. 56% of Britons are “hesitant” to buy from any business charging for returns
The simple idea for many businesses when confronted by the reality of returns in 2023 would be a culture change. Declaring the era of free returns over, some businesses may be tempted to throw in the towel and start putting fees in place to send items back. However based on research by Signifyd, attempting to charge for returns in 2023 may be closing the stable door long after the horse has bolted.
56% of Britons surveyed have said they would be hesitant to shop with any ecommerce company that didn’t offer free returns shipping and processing as standard. That’s the low end of the numbers for European countries. In both France and Italy that number rises to 77%. The British case gets worse for anyone thinking of charging when the same survey showed that 40% of respondents said that free returns shipping was what made for a good return experience. At this point, trying to change the culture around returns may not be possible. However, there is important hope.
5. 200% increase in sales growth and 50% faster operational tasks when using ERP
It seems there is only one way to realistically solve the issue of returns and ecommerce operations in 2023. Sell more, and work faster. The best way to do that is with an end-to-end ERP solution. With the best kind of software suite on hand, your business can accelerate all its processes and get much more done with less.
When your business is properly equipped, properly coordinated, and properly positioned to make the most of every ecommerce opportunity the moment it comes in, returns become much simpler. Discover how you can achieve all of this and more with OrderWise. Speak to a specialist today.