NIRANJAN GIDWANI
CONSULTANT DIRECTOR | BOARD MEMBER SSGMUAE | MEMBER UAE
SUPERBRANDS COUNCIL | HBR ADVISORY COUNCIL | CHARTER
MEMBER TIE DUBAI
When one takes a closer look at a purchase process in the world of
brick-and-mortar, one realizes that there are many strong factors at
play which operate at a sub-conscious level. In the case of a physical-
format store, the average consumer must put in much more effort. The
consumer must travel to the location, physically go through various
items and maybe try out or even touch and feel some of them. Digital
shopping, on the other hand, allows consumers to step into a similar
virtual space at the click of a button and step out with another click.
This requires little effort on the part of the shopper.
In the case of a digital transaction, there is no such human interface.
Too many choices in the digital world could and many times do create
confusion during decision-making.
In recent times, particularly in the world of fashion and garments,
shoppers have been displaying new behaviors. In a recent article
written by Biju Dominic, Chief Evangelist, Fractal Analytics, an
interesting phenomenon called ‘bracketing’ is on the rise. “Bracketing”
is a tendency of a consumer to buy multiple versions of a product, such
as different sizes of a shirt, with the intent of sending back the ones
they don’t want to keep. According to a study by Narvar, more than
58% of shoppers in the US resort to bracketing behavior. Another
practice among a few shoppers is ‘wardrobing.’ That is, wearing an item
of apparel once, maybe even for an event, and then returning it.
According to industry reports, a whopping 16.5% of the goods sold in
the US in 2022, valued at nearly $817 billion, have been returned. In
2019, the return rate was only 8%. As per data from Indian retailers,
returns in the Indian online shopping market stand at around 25-40%.
This high and increasing rate of returns is a serious problem for many
an online retailer.
According to a Wall Street Journal report, it costs a retailer $27 to
handle the return of an online order worth $100. Many of the returned
goods are not in a condition to be resold. Some of them get re-routed
to charities. Much of the burden of this return behavior is borne by the
environment. In the US alone, 2.6 million tons of returned clothes
wound up in landfills in 2020. Fashion is the third-most-polluting
industry in the world after construction and food.
Making it easy for customers to return items at no cost started as a
retail strategy to entice more people to shop online. But it’s getting
expensive for retailers and irreversibly expensive for our planet.
High-priced electronics, such as laptops and tablets, have short product
life cycles and lose value quickly, sometimes at a rate of almost 1% per
fortnight. Seasonal items, such as back-to-school supplies or winter
coats, become more difficult to resell if retailers get them back on
shelves after demand has bottomed out.
The interesting part is that once the returned goods are back in the
hands of a retailer, a fairly large portion may need to be sold below full
price, according to Gartner Research. According to US consumers, the
most returned items were clothing (26%), bags (19%), shoes (18%) and
accessories (13%), consumer electronics (11%), and food and
beverages (11%).
While returns are a big problem for retail, large number of online
retailers do not quantify its full cost and an equally large number do not
use some kind of technology or software to better manage it. In regard
to packaging, while online shopping generates 4.8 times more
packaging waste than brick-and-mortar stores, returned products
often require extra plastic or cardboard that contribute more waste.
While all of us are very happy with the advent of ecommerce and
online shopping, this planet of ours is surely going to face adverse
consequences unless every part of the chain handles the returns
process the right way. In this area, my assessment says, surely the start
must be with the end consumer.
