- Ecommerce.Online returns pass invoice to the merchant: three out of 10 products are 'lost'
Tomorrow starts what is probably the week with the highest consumption of the year : Black Friday is celebrated on Friday, but there is talk of Black Week, even Black November. This big week of discounts has managed to unseat sales, sales and participation.
In these days, almost 80% of Spaniards will make a purchase and three out of 10 will allocate a third of their Christmas budget to this day, according to the 2019 Christmas consumption study by Deloitte. What we are going to spend ranges from 127 euros (according to Deloitte) to 262 euros, according to the Cetelem observatory.
This avalanche of purchases has its face B : returns. In the United States, after Black Friday 2018 there were almost one million daily returns and on December 19 there were around 1.5 million returns , according to UPS figures. 10% of what was sold was returned.
«There is a big problem, because that day you buy a lot on impulse, but then the rational part makes you reflect. This is one of the great problems of omnichannel, ”says Laureano Turienzo, of the Spanish Retail Association (AER), which predicts that December 19 will be“ the worst day of the year for retail trade ”, because it will be the day With more returns.
Buy on impulse and repent
"When you do an offensive campaign of offers there is always a momentum factor and that makes the return ratio higher than normal, " says Marc Nicolás, of the association of manufacturers and consumer companies, Aecoc.
In Spain, the week after Black Friday (bought during the weekend, but online orders are prepared and shipped the following week) deliveries will be multiplied by 322%, according to data from the logistics company Uno.
These days the commercial and courier companies "generate peaks of activity that no other sector in the economy generates," says Francisco Aranda, president of Uno.
"January 7 has traditionally been the day with the most returns of the year, " says Bruno Rodriguez, an expert at Deloitte. It was when the sales began and the day in which many returned Christmas gifts. Now, with phenomena such as Black Friday or Cyber Monday, this has been advanced.
According to Seur, with the emergence of "Black Friday", where online sales figures soar, «returns double in this period of time if we compare it with a normal period without rebates».
30% expense
The cost linked to these return processes can range between 10% and 30% of the total cost of the supply chain of the companies, according to Enrique Porta, partner responsible for consumption and distribution of KPMG. It means, therefore, for the trade, to triple what it has cost to send it.
"Returns have a double impact for companies. On the one hand, the cost of reverse logistics itself; and on the other, a series of additional costs linked to the marketing of the returned product again: the re-labeling, the re-packaging, the new additional transport, the opportunity cost for non-availability of the stock, the storage cost, the cost of reconditioning for sale and, at the end of the product's life cycle, the reduction of the margin if this is finally it sells at a lower price in sales and outlets, and the destruction of the manufactured product if it is not sold, "says Porta.
The rate of return in physical store is around 8-10% while in online commerce it is more than 20%, according to the AER. "We make it easy for the consumer, we say: try it and return it free of charge," says LaureanoTurienzo.
If you are not satisfied ... Return it without cost
The problem is that the slogan "If you are not satisfied, we will give you your money back," which El Corte Inglés popularized in the 1990s works in the physical store, but when the purchase has been made through the Internet, "it generates a significant cost. for companies that, in many cases, reach almost zero profitability , ” says Ángel Asensio, of ModaEspaña, the Confederation of Fashion Companies in Spain.
According to their data , in normal season (without discounts) online returns are 20% more than physical returns. After the celebration of promotional dates such as Black Friday, Single Day, "this figure is doubled, while store returns barely register variation."
At this time "compulsive buying is encouraged, and contrary voices are already rising , which show that periods of continuous sales impoverish the fashion industry. It is precisely this consumption that makes the fashion industry generate such a worrying environmental impact, ”says Ángel Asensio.
Express orders
According to Aecoc, 78% of companies intend to deliver the order on the same day in 2023. These express deliveries mean "that you have less time to consolidate orders and to plan , so you take less trips and increase traffic," he says. Marc Nicolás, of Aecoc.
Between 5% and 25% of deliveries on the first attempt are unsuccessful, according to this organization, which includes more than 30,000 companies, brands, manufacturers and chains in the commerce sector. Precisely for that reason in Spain triumphs the delivery in two hours, because «the merchant makes sure that you will be at home at the time of delivery. That there is no one generates a return trip and, therefore, more expense ».
The peak of returns that will occur around that December 19 (the weeks after Black Friday) does not imply all sectors equally. According to the data provided by Seur, fashion is what returns most, with an average of 26%, followed by technological and electronic products (15%), while sport and footwear is in third place (12%) .
In food the rate is almost nil. " In fashion, the impact of returns after Black Friday will be brutal," laments Laureano Turienzo.
"Your house cannot be a tester"
Fashion is the worst stop because "there are people who deliberately ask for several sizes or colors and then return them," says Marc Nicolás. "This is because it is one of the sectors where online commerce has a greater penetration, and due to the nature of the products, which are more prone to returns due to issues associated with product testing," says Porta, of KPMG.
"Your house cannot be a tester, because you generate a problem of sustainability, environmental, the consumer has to be aware of the decisions he makes," says the expert of Aecoc.
This means "a very large expense for companies." Not only does the price of distributing that garment multiply, but it generates “a huge management problem with stocks because it is something that comes out of inventories as sold, you don't have it, but then you have it and you have to re-incorporate it to the inventory, but it enters through another channel, that is the one of the returns, reason why from the administrative point of view it is a mess ”, says Marc Nicolás.
In the United Kingdom there is a consumer profile they call "serial returned" : they are mostly young people (10% of shoppers) who buy clothes on the internet to take a picture and publish it on networks such as Instagram or Facebook, but immediately return it . In the United States, after Black Friday, 50% of what was purchased in luxury jewelry and clothing was returned. "A more expensive, easier for the customer to return," says Turienzo.
Lose money to earn fee
Amazon and Asos are already blocking these repeat users in these practices of buying a lot and returning everything. Zalando already also charges shipping costs, something he did not do before. Although in general the shops are very benevolent with the subject.
“We are at a time when ecommerce is growing and companies fight to gain market share. To do this, they offer the highest level of service, ”says Marc Nicolás, of Aecoc.
For Porta, the increase in returns "is intrinsic to the evolution of online commerce" and "has been largely generated by the distributors and retailers themselves." According to KPMG estimates, 91% of returns are a direct result of retailers' efforts to attract new consumers by offering free returns for unwanted items.
40% of people who enter a website, the first thing they do is look at the delivery and return policy, according to Aecoc. "There are campaigns, such as Black Friday, which for many businesses are not profitable but have another objective, which is to loyalty to your customers or gain more market share. Not everyone seeks to earn money with campaigns such as Black Friday," says the Aecoc expert.
Companies allow free returns because they catch the customer; Then they will take advantage of it. "It is the way they choose you, although it depends on the priority of the trade: if you are at a time when you want to earn a share, if you want to amortize the distribution costs ...", adds Nicolás.
What leads us to choose a physical commerce instead of a website are, according to Deloitte, the return and exchange policies: « This inverse logistics is where online commerce is working more now, to compete with that attribute that makes us go to the physical store, which is being able to return, ”says Bruno Rodríguez, an expert at this consultancy.
He believes that, although during Christmas time the return periods are extended because purchases are anticipated, "the gifts are still delivered on Christmas dates, so returns continue to be concentrated in January."
According to Seur, returns “are another process of online purchase, and therefore, we must always offer reverse logistics, simple, fast and transparent. In fact, a satisfactory return process is one of the best loyalty tools in eCommerce, ”said company sources.
Amazonization of commerce
José Ángel López, commercial director of eBay Spain, agrees that “ the e-commerce user increasingly values a good return policy , as well as fast and free shipping and agile customer service”.
Returns are usually concentrated, according to Aecoc, in the week after the receipt of the merchandise, although the return terms are being extended more and more.
To facilitate its customers the return of their Christmas purchases Amazon has extended the return period, so that the products shipped between November 1, 2019 and January 6, 2020, both included, can be returned until February 28 of 2020 included.
We could attend another peak of returned packages even after the January slope. The challenge for companies on dates such as Black Friday, say from Aecoc, is "to be able to make the offer profitable and a return rate higher than usual . " This depends on the price of the product. If you sell t-shirts for five euros "and only transportation will be more expensive and you will lose money," says Nicolás.
"The problem is that we have created a consumerism that comes from fast fashion, we have made so many discounts that we have lost value," says Laureano Turienzo, of AER. "The stores are becoming amazon, they are sending everything in an hour, but they do not realize that Amazon does not make money with fashion, but with other businesses, and that you cannot compete with it."
More optimistic, Enrique Porta warns that thanks to advanced analytical techniques, artificial intelligence, virtual and augmented reality, "technology not only allows to significantly optimize routes, warehouses, stock movements and order preparation, but can also predict a return or other patterns of consumer behavior, as well as facilitating the selection of the most suitable product without the need to prove it, which will be very useful for planning and cushioning the impact of returns. "
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