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Customer Returns in Retail: What to expect in 2022?

What is happening in the retail industry in terms of returns? Keep reading this article to find out!

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Part 1: State of Retail Returns in 2022

 

With so many actual closings in the prior several years, especially in 2020, when The Daily on Retail recorded over 10.700 announcements of shops that have been closed, the retail industry took a big hit. Doubled down by the number of online returns, merchants had to find new and better ways to ensure business continuity and success.

 

You know what they say, old ways won’t open new doors. Quite literally.

 

Fortunately, in 2021, it seemed like the so-called “Retail Apocalypse” seems to have finally come to an end as major retailers announced over 8 thousand new store openings. The pandemic continued to affect the retail industry and global supply chain, and the effects were clearly seen on reverse logistics as well.

 

Still, Dollar General announced 2,160 new store openings last year, including 1,050 planned for January 2022 and another 1,110 that were announced in early December and are planned for the fiscal year 2022 (source).

KEY POINTS

 

 

  • Retail returns jumped to an average of 16.6% in 2021 versus 10.6% the previous year, according to a survey by the National Retail Federation and Appriss Retail (source).
  • That adds up to more than $761 billion of merchandise that retailers expect will wind up back at stores and warehouses (source).
  • “As online sales increase, the return rate has also increased significantly, and I don’t think it’s a secondary problem anymore,” said Mehmet Sekip Altug, associate business professor at George Mason University (source).

State of Retail Return in 2022

You can download the full report with exclusive findings for the fashion retail industry here!

State-of-Retail-Return-in-2022
State-of-Retail-Return-in-2022

State of Retail Return in 2022

You can download the full report with exclusive findings for the fashion retail industry here!

Customer expectations for retail returns in 2022

 

First of all, take into consideration that consumers want free shipping and returns now more than ever. In fact, these are two of the most important consideration factors when shopping online, and can make a difference from an abandoned cart to a successful purchase.

The pandemic was a blow to the retail industry, but businesses have quickly adapted to the situation. Unfortunately, the closing of the physical store is a reality that many business owners had to face in 2020. However, instead of shutting their doors close for good, they came up with innovative solutions to nurture valuable customer relationships online.

 

Besides curbside returns that create a truly contactless experience, home pickup returns are becoming more and more common in the US. In fact, this practice is most likely to become part of the norm in 2022, since consumers want to invest in their comfort more than ever, and expect brands to do the same.

In-Store Vs. Online Returns in 2022

 

Online purchases, therefore, come with a new set of challenges, unlike in-store purchases that are straightforward: you see it, you want it, you try it out (maybe), you buy it— end of story. There’s no post-purchase anxiety due to the lack of order tracking information. When your customers are unaware of the location and status of their package.

 

That’s exactly why offering order tracking can remove one important friction point in the post-purchase experience, reducing the number of returns due to customers thinking their packages are missing.

 

Shipment exceptions are often caused by supply chain disruptions, but there’s more to it than it looks like at first glance. Besides customs and regulatory delays, we also have national and federal holidays, unfavorable weather conditions, unavailable recipients, and even missing or damaged labels.

On the bright side, freight congestion seems to be easing in 2022, but we’re still seeing pressures and high costs that might persist for a while unless handled carefully. This year, the global supply chain might undergo major shifts as countries and organizations are reevaluating their positions in this ever-changing business climate.

Most common types of returned merchandise

 

 

The number of online consumers who return clothing purchases is staggering, with 88% reporting they will do so in general. It’s not surprising that this was the most frequently returned type. The runner-up category is that of shoes with 44% of purchases being returned, immediately followed by electronics with 43% of returned merchandise.

 

 

But that doesn’t mean that other industries are not affected by online returns, as seen below:

types-of-products-returned-

Why do consumers return their purchases?

 

But why are consumers returning their purchases?

 

It comes as no surprise that the most common three reasons why customers return a product are the following:

  • Item didn’t fit (70%)
  • Item was damaged or defective (65%)
  • Item didn’t match the description (49%)
top-three-return-reasons-05

No doubt there are a variety of other return reasons you need to take into consideration this year, and we’ll look at some of the most common below:

Impulse or opportunistic purchase behavior

 

“The internet made me buy it.”

 

We all have similar excuses to explain our impulsive online shopping behavior. Unfortunately, this conduct leads to a significant number of returns. In fact, 30% of shoppers deliberately over-purchase and return unwanted products.

 

It’s safe to say that online shopping makes it so much easier for consumers to find products they think they’ll absolutely love to, well, return them in the end.

 

Post-purchase anxiety

 

What drives post-purchase anxiety that makes your customers ask for a refund before the package even arrives at their doorsteps?

 

For instance:

  • The product is taking too long to arrive due to shipment exceptions.
  • No order tracking service to keep customers informed.
  • Unresponsive customer support team due to too many WISMO inquiries.

You can solve all of the above by implementing an order tracking solution that lets customers know the whereabouts of their package, any order status updates (preferably in real-time) while taking some pressure off your customer service team as well!

 

Incorrect or lacking product description

 

40% of online purchases are returned, in fact, due to sizing issues. Moreover, if the color looks different in real life than the product image you have on your website, this might also lead to your customers returning the product.

 

As a matter of fact, two in three shoppers agreed that they would be less likely to return an item if they’re able to see user-generated content or reviews prior to buying the product. Keeping these facts in mind, you might want to consider updating your product descriptions, images, even videos or 360-degree overviews to create an accurate portrayal of the item.

 

Bracketing or wardrobing

 

These practices were not uncommon in the early days of online retail, however, they truly took off in 2020, as a consequence of the pandemic that took from people the freedom to shop in-store and try on outfits as they please.

 

Bracketing and wardrobing marked the retail fashion industry these past couple of years, as more and more people want to show off different outfits both online and in real without having to pay the price of their actions. “Renting” apparel items from fashion retailers and returning items to receive a full refund took a toll on these eCommerce businesses.

 

Simply put, these consumers would purchase clothes online, wear them a couple of times and then return them for a refund. So what can you do? Luckily, products like 360 ID Tag make it easier to keep track of what’s been worn and which customers are trying to take advantage of your return policy.

 

This combined with a solution such as WeSupply’s Return Policy Enforcer that lets you ask a simple yes/no question to ensure the item is eligible for returns, you’ll be able to prevent this type of behavior while making the returns process more efficient for legitimate customers.

 

Damaged or defective items

 

Mistakes happen, and products often get damaged during transportation. Other times items are simply defective because of the manufacturing process— maybe materials or parts were assembled erroneously, wires and circuitry were not properly installed, and so on. In these cases, customers can rightfully demand a return and exchange or refund, depending on the circumstances. Some of the most common reasons why your products arrive damaged at your customer’s doorstep are:

  • Unfavorable warehouse conditions
  • Mishandling by courier
  • Inappropriate road conditions
  • Human errors
  • Adverse weather conditions

To avoid this as much as possible, try choosing the right-size packaging (i.e., boxes), find a reliable courier that ships domestically or internationally, depending on your needs. and consider getting shipping insurance.

 

The product was a gift

 

Did you know that, in 2020, 10.6% of holiday gifts (about $428 billion in value) were returned? Keeping up with the increased customer demand during peak return season is challenging for many retailers, particularly when it comes to online purchases, and we know that a lot of customers might be looking for an extended return policy in case they need to return gifts purchased online.

 

What was traditionally known as ‘National Returns Day’ became National Returns Week, with an average of 1.75 million packages returned for five days in a row during the week of January 4, 2021. This only proves that returning gifts is a very common reason why retailers see an increase in the number of returns shortly after the peak holiday shopping season. Since this has happened every year so far, there’s little to no doubt at all that 2022 will have the same fate.

 

Online returns are, indeed, more complicated than in-store returns due to the necessity to track orders while also dealing with return fraud and abuse. This is why return policies are a must in helping you manage online retailer customer expectations. If you need help with your return policy, check out our free Return Policy Generator here!

See how we handle the return process

how-to-handle-returns
how-to-handle-returns

See how we handle the return process

Part 2: Trends That Will Impact Retail Return In 2022

 

These past couple of years were anything but easy on the retail industry, whether we’re talking fashion, electronics, small appliances, toys, or cosmetics. But in chaos, there’s always a hidden opportunity— you just have to find it or create it yourself.

 

Luckily, we can already see some retail groundbreaking trends starting to settle in, and your business can take advantage of them for better results. After all, the early bird gets the worm, so see what works for your company best:

 

‘Green’ Returns On The Rise

Recently, more and more fashion brands have been concerned with sustainability, hence the publishing sustainability strategies. Their main goals were to cut down on waste and carbon emissions while improving working conditions for their employees.

 

In terms of returns, reusable packaging, digital and paperless invoices, and QR code return shipping labels are some of the most efficient ways to reduce waste and carbon emissions without compromising the returns experience for the customer.

 

Moreover, properly disposing of items also helps retailers make reverse logistics more sustainable. Solutions like WeSupply’s Intelligent Dispositions enable online and omnichannel merchants to choose the right return location to cut down on transportation costs, carbon emissions, and waste.

sustainable-ecommerce-returns

Omnichannel Returns

 

There’s one thing for sure in 2022— omnichannel is always the right answer when it comes to convenience! Besides, bringing in-person experiences online through Buy Online Return In-Store (BORIS) can help retailers drive additional revenue and foot traffic to brick-and-mortar stores and physical locations.

 

Getting customers through your doors gives you the opportunity to grab their attention with your latest products and promotions, increasing the number of sales. You can streamline the entire process and clear up confusion by listing all stores that can accept returns and pre-approving returns online. Your customers can walk right in, drop off their package, and get a refund to the original method of payment.

 

Another option is to enable them to drop the package off at a convenient return access point (e.g., UPS or FedEx). This gives them enough freedom to return products however they see fit and saves you some time and energy.

 

Try-On Technology

 

With a return rate this high, it comes as no surprise that many retailers focus on figuring out how best to utilize new technologies like virtual reality for sizing. Turning to these tools before shoppers proceed with their purchases might help reduce the number of returns, especially in the fashion retail industry. Although this area still needs more research, the results are promising— and 2022 might be just the year for VR sizing to take off!

 

Moreover, virtual reality companies like Fit Analytics can help shoppers choose the right sizes of clothing online and ultimately enable retailers to tackle the issue of online returns. Artificial Intelligence and Machine Learning are here to make our lives easier, after all.

 

Returns Logistics Technology

 
  • Printerless returns

Return labels are a crucial tool in reverse logistics. Carrier-compliant labels that are free from any misspellings, blank fields, etc., are a must to ensure a hassle-free returns process. This is where printerless return labels come into play! Since there’s no need to print them out, customers can use their return code online or have a digital copy of their QR code to show at the dropoff location to avoid situations like damaged or missing return shipping labels.

 

  • Data holds the key

Returns data from previous seasons can help you assess product category performance, including returns processing costs and return reasons. Then you can optimize your processes according to the data you’ve collected. There’s no doubt that return data offers valuable insights on items, services, and the overall customer experience, enabling retailers to make informed decisions in the future.

 

  • Self-service returns

If you want to change your order details or to look up some piece of information, would you like to be able to help yourself or to wait for a person on the other end to assist you? If you’re today’s average customer,  you’ll probably for the self-service option. Consumers nowadays demand fast responses and solutions. Let’s be real, nobody wants to wait around for a support person to email them.

 

  • Scheduled pickups

What if you want to return a product but can’t make it to the post office or dropoff location?

 

This is where return pickup services work their magic! Customers can schedule a pickup time for any returns purchased from an online retailer, eliminating the hassle of generating printing labels and physically going back to the post office or drop-off location!

 

Companies like Returnmates make the whole process much easier for US consumers by enabling them to schedule pickup times for their returns when circumstances won’t allow them to return items themselves.

Turn returns into opportunities with our 14-day free trial

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girl working on returns

Turn returns into opportunities with our 14-day free trial

Part 3. Diving into Fashion Retail Returns in 2022

 

In 2020 and 2021, the fashion retail industry was thrown into deep water as many companies were shut down due to the pandemic. As a result, innovation in the industry was more than welcome and the already technology-driven industry turned to online media and digital tools in order to survive and even thrive.

 

Furthermore, 2021 was a year of assessing current processes and improving for the future, motivating retailers to come out of their comfort zones more than ever and take action. Their efforts were focused on engaging shoppers while ensuring safety, successfully overcoming supply-chain issues and backorder difficulties while conquering the “final boss”— the significant labor shortage caused by the Great Resignation of 2021.

 

Holiday retail sales increased 8.5% year-over-year from November 1 through December 24, 2021, according to Mastercard Spending Pulse. And the return rate also increased, as a consequence, according to our latest report findings.

Customer Returns in The Retail Industry 2022

Check out the full “Customer Returns in 
The Retail Industry” Report here!

Customer-Returns-in-The-Retail-Industry-2022
Customer-Returns-in-The-Retail-Industry-2022

Customer Returns in The Retail Industry 2022

Check out the full “Customer Returns in 
The Retail Industry” Report here!

In conclusion, returns make a difference for a profitable business!

 

For most retailers, returns can be transformed into opportunities to earn the trust of their customers and drive future sales. What matters the most is to take action, be proactive, and stay updated on the latest industry trends and best practices, especially considering the increasing number of sales and returns.

 

You, too, can make the most out of returns management to create a better post-purchase experience for your customers with WeSupply’s Self-Service eCommerce Returns Center. See our platform in action here and get started with a 14-day free trial!

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