Why fashion retailers are rethinking their returns policies

Glossy – More than ever, the wrong returns policy can make or break a fashion retailer. Shoppers are increasingly buying apparel online, despite the uncertainties that come with it: Choosing the right size is often a crapshoot, even with retailers’ best efforts to provide fit guidance. And, unlike when shopping in store, there’s no way to test a style’s comfort or get a feel for its quality. As a result, returns and exchanges policies have never been under more scrutiny. There’s too much risk involved without the proper cushion.

Online apparel sales now represent 20 percent of total industry dollars, according to data by market research company NPD Group. And 30 percent of clothing and shoes bought online are returned, a rate that’s double that of pieces bought in store, as stated in a report by Bold Metrics. To ensure they aren’t stuck with purchases they’re not happy with, 57 percent of consumers check a retailer’s returns policy before checking out, said a report by SaaS company Narvar.

As retailers increasingly feel the brunt of e-commerce returns, updated guidelines like these are set to become more prevalent, said David Naumann, vp of marketing at consulting firm Boston Retail Partners. “Retail returns policies will likely evolve to moderate returns policies that won’t turn off customers and won’t bankrupt the company,” he said. “A reasonable returns policy will have a realistic time limit and won’t charge shipping for damaged, inferior or exchanged goods.”

On the flip side, there are retailers that have upheld a rigid returns policy from Day 1. But rather than losing money thanks to shoppers taking advantage, they found they were losing customers.

Amazon, the reigning industry benchmark, allows shoppers to return most new, unopened items within 30 days of delivery for a full refund. It also pays the return shipping costs if the return is a result of the company’s error. A study by marketing company Epsilon called ease of returns one of shoppers’ main draws to Amazon.

“Today’s consumers have high expectations; they demand convenient ordering, fast and free shipping, and a friendly returns policy,” said Naumann. “These are now table stakes for retailers, and the cost of these features need to be built into the pricing model for sustainable profitability.”

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