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With the holiday season in the rearview mirror, retailers and their shipper partners are turning their focus on the massive number of returns. But, says one e-tailer, consumers also bear some of the responsibility for reducing returns.
Returns appear to be an ever-increasing, year-round problem, says Melodie van der Baan, co-founder and CEO of the online marketplace Max Retail.
“I wish returns were only bad in the months of December and January,” she says. With online merchants becoming more and more favorable with their policies, returns have gone “through the roof all year,” she says. “It jumped and became the new norm after the pandemic.”
For example, 30% is the standard return rate for a major retailer like Walmart and goes as high as 50% for Macy’s. Yet, van der Baan argues, the partially brick-and-mortar nature of these giant businesses means they can benefit from returns.
“If somebody is going to come back into the store to make a return, at least that gives retailers another chance to make another sale when the customer comes back,” she says. “There’s an opportunity to save the sale.” But that’s not the case for purely online retailers, of course. “They’re not having a human walk back in to convert the sale into something else.”
Some items, such as beauty products or undergarments, cannot be restocked, so those products have to either be disposed of or liquidated, which creates other extraneous costs.
“I believe that certain items should be final sale because of the mess that they create when it comes to returns and the inability to resell,” she says. “I’m a big proponent of donations. I believe that every item has a rightful home.”
This is where consumer responsibility comes into play. In terms of recycling and reuse, donating can achieve a far better result. According to NPR, retailers throw away about a quarter of their returns, creating what returns and resale company Optoro estimates at around 6 billion pounds of landfill waste in the U.S. every year. So it’s worth thinking about eating the cost, especially if it’s a gift, and donating rather than returning.
Retailers, too, are making these types of calculations, weighing the potential resale value against the costs of return shipping, restocking, consolidating, or warehouse space. Van der Baan points to Amazon as an example. When you request a return on Amazon, the company uses an algorithm to determine whether it is or isn’t worth it. If not, the customer gets to keep the item and gets a refund.
But small and medium-sized businesses (SMBs) do not have the luxury of denying a return or exchange, van der Baan says, and should probably never dispose of their inventory.
Smaller retailers are already paying the highest costs for merchandise because they don’t get a break from making bulk orders. “What they paid for the item, that’s their cold, hard cash that they worked for,” van der Baan says. “It is up to them to make sure that they can sell the item, get that investment back and get into the next thing.”
All the same, it is important for SMB retailers to offer flexible return policies during and after the conclusion of the holiday season, regardless of how difficult or time-consuming the procedures might be, in order to retain precious customer loyalty. “The return policy either needs to be extended for more days or for an exchange in-store,” van der Baan says.
When she ran her own store for nine years, van der Baan says that her organization had a carefully considered process for how to convert a return back into a sale.
“We wanted customers to buy their loved ones gifts over the holidays. And, when that loved one came in to make a return, we saw them as a new customer,” she says. “Independent retailers have the capacity in their stores to restock a returned item. It’s not thousands of units getting sent back each day. It might be five or 20 returns a day, which go back on the floor immediately and are resold.” So, in the case of an item bought from an SMB, it’s probably best to return it.
There is another way consumers can help reduce returns (and growing landfills), van der Baan says: Shop more conscientiously. “The retailer is accommodating us so that we will be their customer,” she says. “But it is on us as consumers to be intentional about what we buy.”
Van der Baan says that the best way is by going into stores to test out products before making a purchase. “Try on your blush in-store,” she says. “If you want to try a new lip color, you should not do that online, because you are not going to like what you get.”
But, after you’ve bought something once in person, and know you like it, then you can buy it again online. “If consumers go to a store and try on an item, at least they’ll know their size,” van der Baan says. “At least they’ll know it’s a product they love, and it will not end up being in a landfill if they do not like it.”
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