Online Shopping Sector Grows...As Does The Pile of Returned Stock

Friday, May 21, 2010 - 09:32 by Graham Miller

There is both good news and bad news for online retailers after the latest study from Stockshifters.com. The good news is that safe shopping online is looking set to overtake the high street retail sector in terms of profitability; the latest estimates indicate that this year, the online retail sector will be worth more than £42.7 billion, meaning that it may soon be worth more than the high street.

But whilst safe shopping online is fast becoming commonplace, there are less welcome elements inherent in this trend. The study found that online consumers are returning far more goods to online retailers than to their high street counterparts. UK online shoppers return roughly 22 per cent of goods purchased. Compare this to the returns rate on the high street, which stands at just ten per cent.

This returns problem might soon become a crisis, with retailers admitting that they have no clear back up plan when it comes to dealing with returned goods. There are huge losses ahead too: this year, online retailers stand to lose some £9.4 billion from returns, whilst this figure could climb to £10.5 billion by the end of next year if these returns figures remain consistent.

Things could even get worse as consumers become ever more aware of their online rights. Currently, researchers believe that a quarter of online consumers are unclear as to their rights when shopping online. But this could change, leading to a potential increase in the number of returned items.

So what items are most likely to be returned after being purchased online? Perhaps unsurprisingly, the researchers found that clothing is the worst offender with 33.93 per cent of clothing purchases returned, a trend reflected in other "high touch" categories. Clearly online retailers will need to factor this into their business and pricing models as they plan for continued growth.