Costly returns management compromises e-commerce growth

Thursday, May 19, 2016 - 10:20 by Simon Crisp

Retailers in the UK that choose to offer safe shopping online to customers are having to absorb significant costs associated with handling the returns process, according to a new study from Barclaycard.

TechWeek Europe reports that the survey found that 57 per cent of companies feel restricted by the need to make sure that customers can return products to them after they have purchased them from their e-commerce site. Furthermore, a fifth of those questioned said that they have actively chosen to raise prices in order to help counter some of these costs.

Twenty two per cent of the retailers operating on the high street at the moment said that they were taking a deliberate decision to avoid entering the market for safe shopping online, specifically because of an awareness about how expensive and complicated the management of returns can be.

Analysts report that the availability of free returns services means that consumer habits are changing in a way that could negatively impact retailers, with people choosing to buy more items than they actually need because they know that doing so will not result in any additional costs, should a return be necessary.

Retailers are looking to embrace new technologies so that people can shop online effectively and get a better idea of what a product looks like before they make a purchase, reducing the likelihood of returns increasing. Virtual fitting rooms are seen as a useful tool which could soon be widely deployed, helping clothing retailers to clamp down on the practice of customers buying the same garment in multiple sizes.

This is just the latest in a long line of reports that suggest how important free returns are to consumers, while also showing this trend from the other side of the coin and indicating the pressure that it puts on retailers.