As the digital marketplace continues to evolve, eCommerce returns have become an increasingly hot topic. For businesses in the UK, understanding the dynamics of returns is crucial for maintaining customer satisfaction whilst protecting profitability. With Performance Marketing and sustainable eCommerce Growth at our core here at BFG Digital, we recognise the significance of staying ahead of these trends to better serve our clients.
Here, we delve into key insights and projections surrounding eCommerce returns in the UK landscape.
The Current Landscape of eCommerce Returns
According to research conducted by Whistl, returns in the UK eCommerce sector reached a staggering £4.2 billion in 2023. Here are some other headline numbers:
- A report from Shopify found that the average return rate in eCommerce is between 20% and 30%. Clothing being the highest and things like toys, baby products, stationary and furniture being amongst the lowest at around 7%.
- 38% of customers became more comfortable with the concept of returns during COVID
- 56% of UK customers would be hesitant to buy from a retailer with a charged returns policy
The above metrics underscores the substantial impact returns have on the retail ecosystem. Particularly with regard to profitability. Consumers have come to expect convenient and often free returns processes, with 86% stating that an effortless returns experience influences their decision to shop with a retailer. Now retailers are beginning to feel a need for change.
Trends Driving eCommerce Returns
The rise of free returns and lenient return policies has significantly influenced consumer behaviour. Shopify highlights that 58% of shoppers review a retailer’s return policy before making a purchase. It’s therefore imperative that businesses strike a balance between offering flexible returns and mitigating the financial implications of excessive returns.
Furthermore, the proliferation of online marketplaces and the globalisation of eCommerce have contributed to a surge in cross-border returns. This presents a unique set of challenges for UK retailers, including logistics complexities and regulatory considerations.
An ominous trend here is that the younger shopper (16-34 year olds) are much more comfortable with returns. 49% of UK online shoppers have returned goods in the past year. It’s 60% for that younger demographic.
What are the key drivers for returns?
Key trading dates also correlate strongly with returns. It can be challenging for retailers to know that the most popular time for year for online shopping (Q4) is also the time of year where we can expect the highest volume of returns.
Future Projections and Strategies
It’s really important for retailers to adopt a data-driven approach to understand not just emerging trends in returns but how returns affect them specifically. Retailers should try and understand where their returns are coming from in terms of brand or category and react accordingly. Is there any value in putting a huge marketing spend behind a brand or product with a massive return rate? The revenue might be interesting, but when returns are factored in is this really a profitable, viable or sustainable endeavour? In which case, it’s time for change.
Getting ahead of the problem and serving customers first class experiences can really help. This could include having better quality of information on your size guides or making personalised product recommendations we anticipate the customer will love. Increasingly, tools like ‘virtual try on’ are also making an impact in tackling the rate of returns. Measures like these can mitigate the likelihood of returns and help customers make better decisions.
The trend of the past few years were that customers were exploiting the leniency of returns policies and it left retailers vulnerable. Particularly in fashion, eCommerce customers had a tendency to buy 4 outfits and return 3 (buy, try, return). Whilst a terrific service for the customer, the costs loom large for the retailer.
More recently we’ve seen many retailers introduce a cost to their returns process. Not in pursuit of profit, but to cover costs and still keep offering the same great service.
This ties in with an increasing environmental awareness amongst a pocket of UK consumers. Whistl states that 45% of UK consumers are concerned about the environmental impact of over ordering and returning items. Additionally, it appears that 71% of customers would consider paying extra for a more sustainable return option.
Conclusion
As eCommerce professionals, we all have to stay abreast of emerging trends and implement innovative solutions to drive growth and differentiation in the increasingly competitive online marketplace.
How retailers handle returns represents a challenge and an opportunity and we remain committed to empowering our clients with the latest insights and winning strategies to navigate this dynamic, ever changing landscape successfully. We must be customer centric, but not at the expense of the viability of our business. Mitigation, honesty, fair pricing and sustainability are new and increasingly important factors in eCommerce returns in 2024.
If you want to talk to someone who can help you navigate this terrain, please do not hesitate to get in touch.
