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Returns: Convenient for the buyer, expensive for the retailer – could you do without them?

2023-12-05T15:57:15.871Z

Highlights: Retail research institute EHI surveyed online retailers from Germany, Austria and Switzerland. For each returned item, retailers have to spend an average of between five and ten euros. Biggest cost driver is checking the returned items and checking their quality. Only 14 percent of online retailers make use of this option to reduce the number of returns. Almost two-thirds cover the shipping costs. Return rates are stagnating, with 58 percent of retailers state that the rate is constant, with 21 percent tending to increase.



Status: 05.12.2023, 16:45 PM

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Order, try on, return: Free returns make online shopping more attractive for consumers. For retailers, however, they are an expensive problem.

Cologne - Order four pairs of trousers, send three back - this is common practice for clothes bought online. After all, unlike in the store, customers cannot try on the goods. That's why many people order several sizes at the same time and only keep the right one. As a rule, they do not have to pay anything for the return. Other products are also causing them to decline. However, the return rate is highest for fashion items, at an average of 26 to 50 percent, according to a recent study by the retail research institute EHI.

To this end, the institute surveyed online retailers from Germany, Austria and Switzerland. For them, returns mean costs above all. For each returned item, retailers have to spend an average of between five and ten euros. Returns in the area of living and furnishings are more expensive at 10 to 20 euros because of their size and the higher value of the goods. According to the respondents, the biggest cost driver is checking the returned items and checking their quality.

Trade Association: Companies with Strong Measures - Reality Looks Different

"Returns are an enormous burden on online retailers," says Stefan Genth, Managing Director of the German Retail Association (HDE). "The handling of the returned goods costs money and human resources." Companies are doing a lot to reduce returns. "For this reason, retailers are constantly perfecting their product descriptions and size specifications," says the HDE. "Artificial intelligence is often used in this process."

So far, this has achieved little. Return rates are stagnating. According to the EHI study, the average item-related return rate across all product groups is between six and ten percent, which is at a similar level to previous years. 58 percent of retailers state that the rate is constant, with 21 percent tending to increase, and 15 percent tending to decrease. According to the study, the pandemic did not have a significant impact on development.

Pass on costs to customers? Why retailers shy away from it

This may also be due to the fact that retailers have so far shied away from passing on the costs to customers. Few sellers, for example, leave the shipping costs for returns to them. According to EHI, only 14 percent of online retailers make use of this option to reduce the number of returns. Almost two-thirds cover the shipping costs. "It seems inevitable to them to offer this service, because of the high level of competition and because they assume that such a service is expected from the clientele," the authors write.

A shopping cart when shopping online: Customers often buy several products here, but send most of them back promptly. © Karl-Josef Hildenbrand / dpa

Especially in the upcoming Christmas business, the volume of shipments will increase significantly again. The deliverers are working at the stop. However, the many returns do not make their business more difficult, the transport industry emphasizes. "The returns are handled without any problems with the existing capacities of delivery by the parcel service providers," says the Federal Association of Parcel and Express Logistics. "Returns are also unproblematic for parcel service providers insofar as there is a consolidation of returns on the last mile and the recipient (i.e. the retailer) is always present."

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The market leader DHL expressed a similar view. "The capacities for returns are taken into account at an early stage in transport planning and planning for the Christmas business," the group said in response to an inquiry.

Clothes are often destroyed

Not all returns are resold. Especially in the case of clothing, some parts that cannot be reprocessed are destroyed. In a study for 2019, the Returns Management research group at the University of Bamberg concluded that just under four percent of returned goods are disposed of. However, the EU Commission has now put a stop to this practice.

Larger retailers will no longer be allowed to destroy unsold clothing in the EU. Negotiators from the European Parliament and the EU states also agreed on Tuesday night that the EU Commission can extend the ban to other products in the future, as the two negotiating sides announced. According to the information, there are exceptions for small companies, and a transition period of six years for medium-sized enterprises. In principle, the ban is to be applied two years after the entry into force of the regulation.

The biggest player in online retail is undoubtedly Amazon. Hundreds of millions of people regularly order products on the platform, founder Bezos is considered one of the richest men in the world. But in addition to new electrical appliances and fashion pieces, the company also often delivers negative headlines: be it because of poor working conditions among its employees or, in the latest case, because of unauthorized activities to consolidate power. This is even attracting the attention of American law enforcement. (dpa, lf)

Source: merkur

All news articles on 2023-12-05

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