The challenge of managing product returns in the fashion industry is one I’ve witnessed firsthand during my tenure leading the digital customer experience at H&M. This persistent issue, plaguing nearly every brand, motivated me to seek a comprehensive solution, culminating in the founding of eComID. Our mission? To provide the fashion industry with collaborative returns reduction technology.
Let’s set the scene: Over the last five years, retail has transformed. Digital shopping, omnichannel fulfilment, and shifting customer expectations are now the norm. Returns have evolved too, with retailers increasingly recognising their strategic importance, reflecting a fundamental change in shopping habits.
This shift has dramatically impacted retailers. Customer behaviour has evolved, with practices like ’bracketing’, where consumers buy multiple sizes or styles to try on at home and return what they don’t want, becoming commonplace. Initially encouraged by the industry to boost sales, this behaviour has now created significant challenges for retailers, who must manage an influx of returns. It’s no wonder that while only 3% of retailers prioritised returns five years ago (Kodali, S., 2018), today, more than a third rank it among their top three priorities (Optoro, 2023).
Why this change? Retailers have realised that returns touch every part of their business, offering insights into product performance and customer satisfaction. Returns are a microcosm of a company’s overall health, impacting everything from inventory management to customer loyalty.
Ecommerce sales are set to soar by 55% from 2023 to 2027, and returns are rising even faster (Statista, 2023). 91% of retailers experience a higher growth rate in return rates than in revenue (Business Wire, 2022), and the average return rate now exceeds 20%, up 50% since 2020 (3Dlook, 2022).
The returns landscape is shifting rapidly. Between 2022 and 2023, 87% of retailers updated their returns policies (Optoro, 2023), but many still underestimate the true cost. Processing a return costs between $21-46 on average per returned item (McKinsey, 2023). With economic uncertainty ahead, reducing returns is becoming a financial imperative. However, Gartner reports that 69% of companies don’t fully understand their return costs, and fewer than 20% have clear metrics for returns performance (Ryan, T., 2023).
Why is this? Often, there’s no clear ownership of returns within organisations. Who’s responsible for managing returns from start to finish? The answer is typically no one, leading to fragmented accountability.
Consider a retailer that recently changed its return policy to stop offering free returns — a current market trend. While this might lead to a slight drop in topline sales, it will likely boost profitability. And what about customer satisfaction? Without a dedicated team or leader to manage this complex process holistically, the retailer will struggle to even understand the full impact of charging for returns.
This is why brands need Chief Returns Officers now. A dedicated individual or team who can take full responsibility for returns, driving efficiency and accountability. With a Chief Returns Officer in place, retailers can better manage the returns challenge. This role not only boosts profitability by reducing returns but also cuts down on the environmental impact associated with them.
The environmental benefits of reducing returns are significant. Every return contributes to carbon emissions from shipping and handling, not to mention the waste generated when returned items can’t be resold. By managing returns more effectively, retailers will significantly reduce their environmental footprint.
Moreover, effective returns management and returns reduction initiatives significantly enhance customer loyalty. Customers value hassle-free return processes and proactive guidance in finding the right products more easily. This fosters a virtuous cycle of satisfaction and loyalty, benefiting both the retailer and the customer. Our company’s returns reduction components are designed to address this challenge head-on, offering retailers a proactive solution to the complex returns dilemma.
It’s time for the fashion industry to explore this approach and lead the way toward a more sustainable and efficient future. Here’s to seeing more Chief Returns Officers driving positive change and making a real difference for brands, customers, and the planet alike.
Oscar Rundqvist is co-founder of eComID
