The UK is one of the world’s biggest ecommerce markets – worth over €200 billion (approx US$238 billion) in sales in 2019, there’s never been a better time for big brands to take advantage of this opportunity. However, the sheer volume of sales comes with a downside – an increased number of online returns.
Return deliveries are estimated to cost US retailers $550 billion by 2020, with online returns increasing almost 95% in the last five years. Shoppers tend to return 5-10% of store-bought items, but between 15-40% of online purchases. It is clear there is a need for reverse logistics across borders, particularly from the UK to the US, as this is a key cross-border market in the region. The average retailer’s reverse logistics costs for consumer goods are equal to around 8% of total sales—a figure which includes the value of the goods, unlike forward logistics.
Today we are going to look at UK online returns to give retailers an insight into shopper expectations, and how to handle an influx of cross-border returns – without considerable loss.
Returns climate in the UK
UK online shoppers are some of the savviest in the world – they know how to find a bargain, and they also know how to return it. They want to be able to return items for free to a UK address, and want to receive a refund quickly so they can get back to shopping. If this is not provided, the shopper will likely never return.
In the UK, there has been a recent influx of serial returns – according to a study from Brightpearl, over 40% of US and UK retailers have seen a spike in intentional returns compared with a year ago. This increase which is largely due to the try-before-you-buy model – although sometimes even without this model, shoppers can take advantage of a free returns policy.
As the average customer returns around four items a month, and with the growth of the try-before-you-buy, retailers could lose at least quadruple the return costs if they do not update their returns technology.
According to a survey over 1,000 UK online shoppers, they return on average, 2.2 items out of every 10. Of these returns, 76% are sent back due to a fit or sizing issue. 60% of UK online shoppers say the returns policy is one of the most important things they look for when considering using an online store, however 50% say they’re ‘happy to buy things online that they’re not sure about, as it is easy to return them’.
The survey found “returners” are more likely to be female, younger and earning a higher income., and are more than twice as likely as men to say they ‘ordered more than one of the same item to try different sizes’ (15% vs. 7%).
44% of US retailers said the increase in returns has strongly affected their bottom lines. Conversely, 85% of shoppers polled said they expect free returns, highlighting the need for retailers to consider a new strategy that satisfies customers whilst also limiting losses.
Despite the influx of returns, almost two-thirds of US retailers admitted they do not yet have the technology solutions to process returns.
How to provide a great UK returns policy
For a really great shopping experience, UK shoppers should be able to return items to a local returns center using a prepaid label, and ideally should be able to receive a full refund including any duties and taxes they have paid. The Brightpearl study shows UK shoppers want faster returns processing – down from an average of six days to three-to-five days.
Shoppers in the UK should also have a choice to drop off the item using their local service or schedule a collection with the ability to track the item through to refund.
The first step is for retailers to decide on the policy and making it easy to find and understand. Once a shopper has decided to return an item, brands should provide a web-based portal that allows them to select the items they wish to return, provide a reason for return, print a pre-paid label and send it back to the retailer in the way they choose. From the brand’s perspective, a returns portal offers visibility of inventory in the returns pipeline, with easy reporting and decision making on refunds.
Using regional or UK returns centers helps to expedite shopper refunds, which means happier shoppers (who can get back to shopping much faster). Product inspection can be done locally in the UK, with consolidation of returns leading to reduced cost and higher efficiency.