Sky-high footwear return rates: the hidden costs and how to fight them

Posted by Monica Nastase on Nov 14, 2018 9:00:00 AM
Monica Nastase

Your primary concern in online retail is to balance these two critical success factors: customer satisfaction and keeping return rates low.

One way to win customer preference is to offer free returns. As there is no sizing standard across international markets or footwear brands, shoe shoppers are never 100% sure of which size to pick. Giving them the option to buy multiple sizes and then return the wrong ones makes retailers think they retain a satisfied customer.

However, apparel and shoes return rates are some of the highest across industries, ranging from 25-30% up to a whooping 70% (source: KPMG research), while for electronics they are as low as 10%. What’s more, for offline purchases the average return rate is 8.89%, significantly lower than online return rates. These staggering footwear return rates are due to more than just occasional damage or style preferences.

The main reason customers return footwear bought online is because the shoe doesn’t fit.

Until you address the sizing and fit problem, you will not be able to improve your customer satisfaction, even if you offer ‘hassle-free’ return options.

An insecure shopper purchasing multiple sizes or picking the wrong one generates more expenses than just the return cost.

 

Logistics cost escalation

When you allow return rates to stay high due to sizing confusion or shopper skepticism, you lose in logistics spending.

Operational costs related to returns, from handling, delivery and all other processes represents lost revenue, undermining your finances. Also, products that are out of your inventory cannot be sold again before being received back and checked that they are not damaged. And if they are part of a special promotion or have a short shelf life they might be sold for a lower margin or never be sold again.

As an example of the scale of the issue, in a year German footwear retailer Görtz saved €120.000 in operational costs and logistics related to handling returns, when they lowered their return rate by 5.4%.

 

Poor customer experience

It’s all about the behavioral psychology of online shoppers and the reasons why customers finalize a purchase or not. If an online shopper hesitates or is confused about a part of the shopping journey, you will probably lose them. If they finalize the purchase, they will probably take multiple sizes to try at home, but they will not feel confident in your web shop and may never return.

A study by insights provider Clear Returns shows that 80% of first-time customers who have to return a product will not shop with that retailer again. So, you might have plenty of one-time shoppers, when what you want is recurrent ones. Shoppers who don’t abandon the cart and are not frustrated about which size to pick for the shoes you sell.

 

Customer service expenses

One of the main problems our customers mention is related to the costs of a customer service team, which needs to deal with returns logistics and unsatisfied customers. When you use the right tool for your footwear e-commerce, your customer service costs will drop with less tickets and issues to solve.

Make your customer service team forget that there is even a National Returns Day.

 

The root problem of footwear returns

Just like when one is ill, it’s best to combat the cause of the problem not just the effects. Footwear brands and retailers need to start looking at the root of sky-high return rates and the associated loss of revenue, not to simply offer free returns in the hope to increase shopper volume at any cost.

The root problem is people are insecure not only about the right size, but how the shoe actually fits them.

As we are specialized in footwear, we come in to solve this issue. Our transaction-based technology matches people with the right size, based on how it fits other similar customers. By combining information about previous successful purchases of other shoppers and a model they already own and wear well, we are able to give the most statistically accurate recommendation on the market. With our solution we have helped increase the conversion rate of retailer Deerberg by 23% and lowered the return rates for Globetrotter by -25%.

 

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Topics: shoe shopper experience, footwear return rates, return rates retail, shoe fit app, shoe size tool