Returns – the true cost to fashion brands (and how to prevent them)

By Steve Johnson, co-founder HOLM

Technology has transformed the way in which we shop for clothes: purchases are made at the touch of a button. Yes, as we whizz towards a 5G world, the buying process has never been easier. It’s what happens next that has failed to keep up. Here we examine how ‘the returns problem’ is set to be the decade’s defining issue for online fashion retailing, and more importantly what can be done to solve it.

Returns are growing at the expense of margins

Returns from online purchases are estimated to cost retailers £60bn a year* with fashion retail unsurprisingly impacted more than other sectors. It’s a growing problem, with the online fashion market forecast to increase 79% by 2022 to just under £29 billion*. Retailers must cope with a new overhead that simply didn’t exist back in the days of pure ‘bricks and mortar’.

Yet, the impact on the bottom line won’t just come from logistical costs of a failed online sale, but from damage to your brand.

What do customer returns do for your fashion brand?

The true cost of returns

The true cost of a return involves the customer, for them it’s never been about percentages. They don’t want to return anything. Hassle is hassle, disappointment is worse. If the retailer is lucky, the customer will order more than they need next time and return what they don’t want – inefficiency driving inefficiency. More likely however, they will go elsewhere.

‘Elsewhere’ has got much bigger. The internet has grown our choice exponentially. Great service used to be sourcing unique product that was difficult to find. Now it’s about curating. Filtering wheat from chaff and saving the customer’s precious time.

Hassle is hassle: your retail brand is now associated with a wasted lunchtime in the Post Office queue.

Rethinking fashion returns

So what should fashion retailers do about this? Invest in a super-efficient returns logistics to minimise losses, ask the customer to pay a premium for free returns, or…how about simply helping the customer choose the right product first time?  That’s right, reduce the cost of returns by preventing them! The mindset changes from mitigation to prevention.

A personal approach

Online fashion retailers have started to explore this approach, throwing money at personalisation technology. But is asking a customer to guess their measurements using pieces of fruit or 2D shapes, or asking for their weight as a reference a truly personal, enjoyable, or indeed accurate service?

HOLM thinks differently, providing an inexpensive digital solution that does exactly these three things. It starts in-store with a rapid measuring service (customer experience – tick, accurate – tick, personal – tick) to create fact based data sets that accurately match clothes to body shapes first time. Precise from the off because for women alone, our algorithms consider for more than 4,000 body shapes. Armed with their new profile, the customer now feels confident that what they buy online (or indeed next time in-store) it will look great when they try it on.

Those retailers that focus on getting purchases right ‘first time’ rather than forcing disappointed customers to battle lunch-time Post Office queues will soon be the ones enjoying a totally different type of return!

To find out how HOLM (www.myholm.com) can reduce your returns by as much as 70 per cent contact steve.johnson@myholm.com.

*           2016 study for BBC by Savvy Marketing

**          Mintel Online Fashion UK 2017 report.