It’s a problem that is not going away. Returns are causing an ongoing headache for retailers – especially those operators plying their trade at the fashion end of things and without a stores presence.
Right at the epicentre of this is Asos. Its position in the market implies that it will be a victim of a high level of returns – legitimate (wrong sizes ordered) and otherwise (‘wardrobing’).
Apparently one in seven women admits to the latter – whereby clothes are bought, used once and then a refund is demanded – according to research from VoucherCodes.co.uk. And as much as 10% of women undertake this activity on a regular basis.
This certainly does not help the likes of Asos and its returns levels. From a good authority Retail Insider has learnt that the number of returned packages to Asos is a whopping 10+ million per year at the company’s present revenues.
As a best-in-class operator it is fair to say that if anybody can deal with this magnitude of returns it is Asos and its logistics partners
But what about some of the other retailers in the clothing market who do not have the resources or quality of systems/partners to deal with high levels of returns – that typically run at 20% to 33%.
Clearly these merchants operate with pretty healthy margins – target gross is about 65% – but the cost of dealing with returns must be eating a big hole into this number for many clothing retailers.
It seems inevitable that this issue will continue to grow in proportion to the ongoing increases the industry is experiencing in online sales. The British Retail Consortium recently reported that 18.3% of non-food purchases were made via computers, tablets or smart-phones in October, with as much as 24.1% of clothing purchases made over the internet.
The consumer expects free delivery and returns, there is an increasing trend for young shoppers to over-order, there is a rise in wardrobing, and there is the question of availability of capacity in the market for fulfilment. These all combine to create a worrying scenario for the fashion industry.
Retail Insider has covered this topic before and it is inevitable that we will be back here again – such is the potential magnitude of this growing problem.