At Newmine, a startup specializing in returns reduction technology, a mantra echoes: “The best return is the one that never has to happen.” Returns posed a significant challenge for the retail industry in 2019, amounting to a staggering $309 billion, with online sales contributing $41 billion, as per a report by Appriss Retail. In response to this growing concern, a burgeoning ecosystem, including companies like Newmine, has emerged to assist retailers in tackling the returns surge.
The Current Landscape of Returns
Navjit Bhasin, CEO, and founder, along with COO Mark Holmes, shed light on the evolving landscape of returns and its impact on e-commerce. Bhasin emphasized that while returns cannot be entirely eradicated due to the nature of retail, their magnitude can be mitigated.
The proliferation of returns is intertwined with the rise of e-commerce, marked by consumer uncertainty, the dominance of major players like Amazon, and the preference for an in-store-like experience facilitated by the comfort of one’s home. Holmes noted that online shopping inherently carries a trust deficit compared to traditional brick-and-mortar stores, driving retailers to adopt lenient return policies to instill confidence among consumers.
Changing Shopping Strategies
Amazon’s generous returns policy and the advent of rental-based retailers like Rent the Runway have influenced consumer behavior, leading to the adoption of new shopping strategies, particularly in the apparel sector. Practices like “bracketing” and “wardrobing” have gained traction, allowing shoppers to experiment with multiple sizes or use items temporarily before returning them.
Addressing the Challenges
Holmes underscored the adverse impact of unlimited returns, particularly on smaller retailers with narrower profit margins. Apparel and footwear segments, in particular, experience higher return rates, which not only dent margins but also incur additional costs in handling and processing returns.
To mitigate returns, retailers are encouraged to focus on preemptive measures to enhance customer satisfaction and minimize the likelihood of returns. By leveraging data analytics at various levels, retailers can gain insights into consumer preferences, enabling personalized recommendations and improving product descriptions to aid purchasing decisions.
The Path Forward
In navigating the complex realm of returns, a nuanced approach tailored to each retail segment is essential. While the ultimate goal is to minimize returns, it should not compromise consumer trust or convenience. Holmes emphasized the importance of timely intervention and simple solutions to address potential issues before they escalate, thereby fostering a mutually beneficial relationship between retailers and consumers.
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