In modern commerce, the landscape of shopping has evolved dramatically with the advent of online retail. The convenience and accessibility offered by digital platforms have revolutionized how consumers engage with products and make purchasing decisions. However, convenience-return behaviour is a significant challenge in the online retail industry.
Exploring Return Behavior
Recent studies have shed light on intriguing consumer behaviors in online shopping, notably ‘bracketing’ and ‘wardrobing’. ‘Bracketing’ refers to the tendency of consumers to purchase multiple versions of a product, intending to return those that do not meet their expectations. However, Niranjan Gidwani, Consultant Director and Board Member Ssgmuae, has explained this in a great way. This behavior is particularly prevalent in industries such as fashion and garments, where sizing and fit are critical factors in purchasing decisions.
On the other hand, ‘wardrobing’ involves the practice of purchasing an item, using it once, and then returning it, often after a single use or for a specific event. These behaviors have become increasingly common, with a significant percentage of consumers engaging in such practices, as evidenced by studies conducted by industry experts.
The Rising Tide of Returns
The surge in return behavior poses profound challenges for online retailers, both operationally and financially. According to statistics, the rate of returns in the United States has escalated, with a staggering 16.5% of goods sold in 2022 being returned, compared to just 8% in 2019. This upward trend is mirrored in other regions, with Indian online shopping markets reporting return rates ranging from 25-40%.
The Cost of Returns
Returns incur substantial costs for online retailers, with each return transaction costing an average of $27 for every $100 order, as reported by The Wall Street Journal. Moreover, the environmental toll of return behavior cannot be overstated. Landfills are inundated with millions of tons of returned goods annually, contributing to environmental degradation and pollution.
Addressing the Challenges
To combat the adverse effects of return behavior, online retailers must adopt proactive strategies to mitigate losses and streamline operations. Implementing robust return management systems, leveraging advanced analytics to anticipate return patterns, and investing in sustainable packaging solutions are crucial steps towards addressing this challenge.
The Role of Technology
In an era defined by technological advancements, online retailers have a myriad of tools at their disposal to optimize the returns process. From automated return processing systems to AI-powered predictive analytics, technology plays a pivotal role in enhancing efficiency and reducing costs associated with returns.
Shaping Consumer Behavior
While technological solutions are instrumental in managing returns, fostering a culture of responsible consumption is equally vital. Educating consumers about the environmental and economic implications of return behavior can incentivize more mindful purchasing decisions and mitigate the prevalence of excessive returns.
Conclusion
In conclusion, the phenomenon of return behavior poses multifaceted challenges for the online retail industry. By implementing proactive strategies, leveraging technology, and promoting consumer awareness, online retailers can navigate this complex landscape and pave the way towards a more sustainable future for e-commerce.
Article authored by: Niranjan Gidwani | Consultant Director | Board Member Ssgmuae
