Discussions about the fashion industry thread

[JohnAAG]

Curbing this trend of constantly increasing return rates, thoughtless purchases triggered by the idea that there is absolutely zero cost associated with them, is the only way we can have a viable online shopping economy that isn’t continually increasing waste.

Charging something, even nominal, for returns may be enough of a psychological trigger to get shoppers to be a little more thoughtful.

I think one of the biggest challenges facing retailers is the volume of options customers have now. What percentage of vendors in a particular sector would need to adopt charging for returns before customers accept it as standard practice? Especially after years of being conditioned to expect free returns?

I can see it being accepted more quickly in the case of a speciality shop such as yours. There's simply a premium that needs to be paid to acquire the select products you offer (and I imagine your typical client is more aware/discerning than the average shopper and can better understand the trade off, notwithstanding that guy in Cali).

But I think the average customer's understanding of the personal dynamics of online shopping tends to be very one-sided. In their mind there's still important disadvantages to shopping online vs. B&M: they can't try things on before buying, they can't feel the fabrics or see the true color, they have to wait for the product (so no immediate gratification), there's the hassle of boxing up the stuff they don't like and going to a post office or UPS drop off to return it. Customers seldom weigh those issues against the disadvantages involved in going to a physical store (drive time and time in store, paying for gas and parking, etc.). In their mind free returns are an essential part of the transaction, the trade-off for the risk of sending a vendor their money and then waiting days before they can determine if they actually like a products or not.

Imagine if B&M stores told customers they had to buy a shirt, a pair of pants or shoes before they could try them on in the changing room? For many customers, stores are asking them to do exactly that when they charge for returns.

 

[hpreston]

I don’t think the article does a good job at explaining why stores are evolving these policies. It seems to focus on the idea that once consumers are hooked to online shopping, the big bad wolves online stores can stop subsidizing free returns. But it doesn’t quite address the fact that there’s a confluence of variables that make this “subsidy” no longer tenable. Namely two: consumers return more and more often (despite product photography and sizing help being far better than it used to be) and shipping costs are rising as a % of revenue. If something happens more often and each occurrence is more costly, something needs to change. There are only two ways to address that: increase margins to support the higher subsidies (increase prices) and reduce costs of returns (pass on part of it to the customer, encourage in person drop off…).

In all of those cases, what happens is a transfer of $ from consumers and retailers towards courier companies (and to be fair, this is also driven by increased costs, not just greed).

Curbing this trend of constantly increasing return rates, thoughtless purchases triggered by the idea that there is absolutely zero cost associated with them, is the only way we can have a viable online shopping economy that isn’t continually increasing waste.

Charging something, even nominal, for returns may be enough of a psychological trigger to get shoppers to be a little more thoughtful.

instead of 100 orders and 25 returns, I would much rather have 90 orders and 15 returns - for the same net result. And I think we would all agree that it would be better for everyone and more sustainable.

I got a call from a customer yesterday afternoon who was not happy that he couldn’t print his free return shipping label because he was out of the return window. I said I’d help him on the phone and started working on his return request on screen with him. He had about $2k of purchases, maybe 8 or 9 items in that order. Alright, what do you need to return or exchange? Everything! Everything? Nothing worked out? Nah. Wow ok that’s too bad. Why is that, I ask? I’d love to understand how we can avoid this in the future. Oh! Don’t worry about it, he says. I do this all the time. I just like to get big bulk orders and see what I like.

He’s in California and each of those big shipments costs us probably $25 just in UPS/Fedex.

The part about the customer in CA is infuriating, and I don't even work in retail.

 

[gdl203]

But I think the average customer's understanding of the personal dynamics of online shopping tends to be very one-sided. In their mind there's still important disadvantages to shopping online vs. B&M: they can't try things on before buying, they can't feel the fabrics or see the true color, they have to wait for the product (so no immediate gratification), there's the hassle of boxing up the stuff they don't like and going to a post office or UPS drop off to return it. Customers seldom weigh those issues against the disadvantages involved in going to a physical store (drive time and time in store, paying for gas and parking, etc.). In their mind free returns are an essential part of the transaction, the trade-off for the risk of sending a vendor their money and then waiting days before they can determine if they actually like a products or not.

Imagine if B&M stores told customers they had to buy a shirt, a pair of pants or shoes before they could try them on in the changing room? For many customers, stores are asking them to do exactly that when they charge for returns.

I don't quite understand these points TBH with you. The rise of online shopping disproves them. Consumers are willing to trade off the extreme convenience of getting everything delivered to them against the occasional inconvenience of sometimes having to box things up for returns if they don't work out. So many people simply do not have access to B&M stores that carry what they want to buy.

The idea that everything should be shipped to us for free is reasonably recent - buying from catalogues and online stores did not use to be like that. And the idea that all the costs related to a customer changing their mind should be borne by the retailer and none by the customer is frankly hard to justify. It creates strong incentives to put less thought into online shopping and to create a lot of waste and carbon impact - because there is simply zero friction. Get one of everything in the store, in a couple sizes? Why not, right? Full refund as a reward for such behavior... It's a textbook free-rider problem. Everyone who's taken Econ 101 knows that is a form of market failure.

Friction is good - distributing the risk and costs is good. It's healthy

 

[gdl203]

The part about the customer in CA is infuriating, and I don't even work in retail.

I didn't mean to present it as an outlier - it is not AT ALL. It is just one of those unusual instances where I actually hear the customer spell it out. We have dozens of customers who buy a lot and return more than half of what they order. It's becoming increasingly common. And all of you guys who do not behave like that, have to subsidize it somehow.

 

[Epaulet]

I think one of the biggest challenges facing retailers is the volume of options customers have now. What percentage of vendors in a particular sector would need to adopt charging for returns before customers accept it as standard practice? Especially after years of being conditioned to expect free returns?

I can see it being accepted more quickly in the case of a speciality shop such as yours. There's simply a premium that needs to be paid to acquire the select products you offer (and I imagine your typical client is more aware/discerning than the average shopper and can better understand the trade off, notwithstanding that guy in Cali).

But I think the average customer's understanding of the personal dynamics of online shopping tends to be very one-sided. In their mind there's still important disadvantages to shopping online vs. B&M: they can't try things on before buying, they can't feel the fabrics or see the true color, they have to wait for the product (so no immediate gratification), there's the hassle of boxing up the stuff they don't like and going to a post office or UPS drop off to return it. Customers seldom weigh those issues against the disadvantages involved in going to a physical store (drive time and time in store, paying for gas and parking, etc.). In their mind free returns are an essential part of the transaction, the trade-off for the risk of sending a vendor their money and then waiting days before they can determine if they actually like a products or not.

Imagine if B&M stores told customers they had to buy a shirt, a pair of pants or shoes before they could try them on in the changing room? For many customers, stores are asking them to do exactly that when they charge for returns.

I agree overall, but I talk to quite a lot of Gen Z consumers and online shopping simply is shopping to them. Especially post-Covid.

I don't think they're weighing the options of shopping in store vs. online as much as older generations might, because the idea of shopping in store is innately inferior. If you work a busy professional job, then why take the time out of your day AND have way less options to choose from.

Buying clothing somewhat impulsively and then returning it in volume is just baked into the shopping strategy for many people. It used to happen at my physical stores too.. and this was after someone had to chance to see the piece in person and try it on.

As a retailer, the only way out of this is to actively discourage it. I've never offered free returns and have most likely lost a mountain of sales because of that. But I've avoided a somewhat smaller mountain of costs and frustration. And I only get away with that because I'm a monobrand that's direct-to-consumer, and my clothing has a strong value already built into the price. Potentially paying for returns is a cost my customers will bear in exchange for getting great clothing for less than others charge.

If anyone has data on how free returns positively impacts sales and negatively impacts margin, then I'd love to see it. I imagine that the benefits might outweigh the costs for a mainstream brand (ex. Bonobos) who's advertising on Facebook and trying to convince very normie guys to guy a pair of chinos. But my gut feeling is that speciality retailers with unique products (including NMWA) could probably get away just fine with either charging for returns or requiring a restocking fee. By the time you're considering that level of product, the cost of returns is far less of a factor then if you're buying something cheap or basic with lots of comparables in the market.

Just looking around at some speciality brands. .. Aime Leon Dore only offers store credit and may or may not (I suspect not) pay for returns. Noah charges a $15 restocking fee. Corridor sends a label but deducts $9 from your refund. I think this is more typical than not for retailers in our space.

 

[JohnAAG]

I don't quite understand these points TBH with you. The rise of online shopping disproves them. Consumers are willing to trade off the extreme convenience of getting everything delivered to them against the occasional inconvenience of sometimes having to box things up for returns if they don't work out. So many people simply do not have access to B&M stores that carry what they want to buy.

The idea that everything should be shipped to us for free is reasonably recent - buying from catalogues and online stores did not use to be like that. And the idea that all the costs related to a customer changing their mind should be borne by the retailer and none by the customer is frankly hard to justify. It creates strong incentives to put less thought into online shopping and to create a lot of waste and carbon impact - because there is simply zero friction. Get one of everything in the store, in a couple sizes? Why not, right? Full refund as a reward for such behavior... It's a textbook free-rider problem. Everyone who's taken Econ 101 knows that is a form of market failure.

Friction is good - distributing the risk and costs is good. It's healthy

There's obviously a lot to unpack with this issue. But I was trying to present things from the perspective of the customer, who is clearly biased in their own favour in this relationship. The rise of online shopping is tied directly to making it increasingly as risk free (or low friction) for the buyer as possible, which includes free returns if something doesn't work out. And that's what people are now used to, whether they're buying shoes, a jacket, golf clubs or spark plugs. Again, the scarcity/desirability of a specific product can make it an exception. But, in general, people now expect free (or very inexpensive) shipping and free returns. Thank Amazon or whoever, but it is what it is. I've seen similar discussions here about discounts: J.Crew didn't always offer 40% off everything all the time. But once they started, there was no going back to people buying their stuff at full retail.

And, again from the perspective of the customer, your comment that, "the idea that all the costs related to a customer changing their mind should be borne by the retailer and none by the customer is frankly hard to justify" misses the mark. That's exactly what the average customer expects. This isn't directed at NMWA specifically in any way. But let's say someone is shopping for jeans. They do their research, order from company X and pay for shipping, wait 3 to 10 days for the jeans to arrive, try them on and hate the way they fit. So now they have to pay company X again just to get rid of the jeans that make their a$$ look fat. How does company X explain to the customer that throwing good money after bad (the customer is still out the original shipping cost) is a benefit that makes for a better shopping experience instead of a punishment?

I may be reading into your posts incorrectly, but I think you're focused on changing existing customer expectations and behavior (for many good and valid reasons). However, there are a lot of companies that are simply interested in selling as much as possible. Which frequently means adapting to existing customer expectations and behavior. That's why I asked what % of the operators in a particular sector would need to adopt something like charging for returns before customers accepted it as simply the cost of buying online.

 

[LA Guy]

I don't quite understand these points TBH with you. The rise of online shopping disproves them. Consumers are willing to trade off the extreme convenience of getting everything delivered to them against the occasional inconvenience of sometimes having to box things up for returns if they don't work out. So many people simply do not have access to B&M stores that carry what they want to buy.

The idea that everything should be shipped to us for free is reasonably recent - buying from catalogues and online stores did not use to be like that. And the idea that all the costs related to a customer changing their mind should be borne by the retailer and none by the customer is frankly hard to justify. It creates strong incentives to put less thought into online shopping and to create a lot of waste and carbon impact - because there is simply zero friction. Get one of everything in the store, in a couple sizes? Why not, right? Full refund as a reward for such behavior... It's a textbook free-rider problem. Everyone who's taken Econ 101 knows that is a form of market failure.

Friction is good - distributing the risk and costs is good. It's healthy.

Basically, returns to a faceless entity or to a person who you never have to see encourages jackass behavior.

Without having read that article in the Atlantic, but looking just at that highlight, the majority of sales online are from small retailers. Here are the "big guys": https://www.statista.com/statistics/274255/market-share-of-the-leading-retailers-in-us-e-commerce/

After Amazon (37.8%), the next biggest player is Walmart, at 6.3%, and then it's Apple (3.7%) , and then it's Ebay (so, small sellers) at 3.5%. Something close to 50% of ecommerce sales are from much smaller retailers.

The characterization that big retailers have captured that much of the market and killed B&M, and are now just telling people to suck it is just not very accurate.

And e-commerce sales account for about 15% of all retail sales, for a variety of reasons, so the demise of B&M stores is greatly exaggerated. There are definitely certain sectors that have become much more e-commerce, but it's definitely not universal, though it's grown is considerably more rapid (something like +16% vs +8% in 2022), but again, the narrative explanation is again, mostly inaccurate.

 

[Epaulet]

Our dudes at Self Edge don't offer free returns...

https://www.selfedge.com/store-policies

I get that J.Crew does, but you can't exactly buy Self Edge products at J.Crew. No one is thinking... "do I get a pair of $40 jeans or $340 jeans? Guess I'll check and see if they cover returns and that's gonna decide things for me."

It's a point of incredible waste at scale in our industry but I still don't think it needs to be an issue for the brands and shops trading in our space.

 

[kiya]

Our dudes at Self Edge don't offer free returns...

https://www.selfedge.com/store-policies

I get that J.Crew does, but you can't exactly buy Self Edge products at J.Crew. No one is thinking... "do I get a pair of $40 jeans or $340 jeans? Guess I'll check and see if they cover returns and that's gonna decide things for me."

It's a point of incredible waste at scale in our industry but I still don't think it needs to be an issue for the brands and shops trading in our space.

We're not alone.. almost none of our direct domestic competitors offer refunds either, some even have more strict policies compared to ours in terms of how long you have to send something back, which we may get in line with pretty soon.

 

[Epaulet]

We're not alone.. almost none of our direct domestic competitors offer refunds either, some even have more strict policies compared to ours in terms of how long you have to send something back, which we may get in line with pretty soon.

I totally see the point of that. You've always been ahead of the curve with giving out detailed measurements and product knowledge. The amount of information in one of your listings is far superior to the generic size chart that mass retailers will often have.

It's a considerable amount of work that you're putting in for the customer's benefit, so that they can make a better informed choice on the product. I bet that gives you guys a level of respect for your time and energy, and the turns them off from making frivolous purchases and returns.

 

[K. Nights]

As someone who is chronically between sizes, I admit that I love free returns because I semi-frequently order two sizes and return the one that doesn't fit. Garment measurements really are helpful in preventing the need for this, of course. For better or worse, If I can't get free return shipping at one place I can usually find another store that does provide it (with some exceptions, as noted above).

Weirdly, this behavior almost seems to be encouraged by many retailers. Often enough if I reach out to customer service for garment measurements, the response is, "we aren't able to provide those, we suggest you buy multiple sizes and return the ones that don't fit."

 

[gdl203]

But, in general, people now expect free (or very inexpensive) shipping and free returns. Thank Amazon or whoever, but it is what it is.

I understand this point but the reality of the current retail landscape and what that article was all about, is that it is no longer what it is. Retailers are realizing that this is unsustainable and one by one are adding friction and fees into the process. I'd argue that this not just to recover some $ lost, but also to change behaviors by adding some (minor) mental blocks.

Many retailers, small and large have reduced return windows, gone away from free return shipping, etc... and I can only hope that (a) this will hold, and (b) this will indeed change the shape of the return curve. There is simply no reason return rates would be higher now than they were years ago when product photos were worse, descriptions were worse and sizing info/help was inexistant. Stores used to say * 100% cotton * imported and put two photos front and back. And return rate was lower than now ! No rational reason for that

 

[cb200]

When I worked with online sales our return rate varied, but was always averaged out to be around 20%. Not sure what % you're seeing as retailers today.

Amazon and venture backed DTC brands didn't have to do stupid things like make money to stay in business like their competition. Free shipping and return training are -in part- a reflection of that.

 

[looseandwavey]

just seen this on linkedin from ASOS's end of year report. 6% of 'bad' customers make up >£100m of losses for the company, costing >£6 per order And adjusted EBIT was only (£69.4)m...

 

[gdl203]

https://s2.q4cdn.com/892021348/files/doc_financials/2023/q1/c19b29c4-a766-4cff-815e-ef03f800f697.pdf

If I'm reading Revolve's quarterly filing correctly, their return rate is now 56.8% of gross sales. That's up 4 points since Q1 last year. Unbelievable numbers.