Yasmine Sayed is running and talking on the treadmill. Fitting right in New York’s energetic Lower East Side vibe, Newmine’s Senior Consultant...
The Hidden Millions You’re Losing in Your Supply Chain
The State of Affairs in Apparel eCommerce
There’s no question that online retail is a thriving market, one that’s expected to nearly double by the turn of the next decade. That growth is clear in the Fashion and Apparel industry, where 46% of customers report either occasionally or very frequently purchasing clothing, shoes, and accessories online. Furthermore, one study concluded that customers who purchase apparel online typically have baskets that are 25% larger, on average.
However, big growth means even bigger challenges. Customer expectations continue to rise, and retailers are doing their best to keep up by offering frictionless customer experiences online. As a trade-off for providing these experiences, apparel retailers have seen an important number quadruple on their spreadsheets. We wish we could say we’re talking about profit, but we’re talking about Customer Return Rates.
Returns have always been a given in retail, especially apparel. By offering no-cost, hassle-free returns as part of their growth strategies, retailers have created what Forbes calls the “ticking time bomb” of eCommerce. Return restrictions have gone down, and consumer expectations—from same-day shipping to instant refunds—have gone up. And with online apparel return rates climbing to anywhere between 25-45% (depending on product category), retailers are left to wonder: Who is responsible for controlling high Return Rates?
Since customers are the ones who decide to return, it makes sense that many retailers believe that returns management starts with solving problems in customer experience and shift their attention to activities that begin post-purchase. However, when you take a birds-eye view of the returns management process, it becomes clear that growing the bottom line starts at the bottom. Taking a look back at the entire apparel life-cycle sheds a light on why eCommerce businesses lose out on profits due to high supply chain costs, especially when upwards of 30% of sales may be returned.
Zeroing-in on Supply Chain Vulnerabilities
The challenge in returns management is that everyone is responsible for returns, but no one owns the entire process, from concept to consumer. This blog series will detail the areas of vulnerability across the entire process, to help shine a light on areas that have a significant impact on online apparel return rates. Being able to monitor those vulnerabilities is the first step in discovering how to reduce customer returns.
Consider how many teams work together within a retail organization to develop a continually flowing product assortment to the ideal customer. From the initial design concept to merchandising and sourcing, there are multiple departments whose contributions can affect customer satisfaction. Product development calendars are strategically set to meet aggressive deadlines. Translation? Lots of room for error. And even minute errors that occur when pushing an item to market can become expensive returns.
Actualizing the vision of the designer, including Fabric, Trim, and Styling details, is an iterative process, with multiple reviews and approvals. Raw material qualities, colors, and prints are selected to set production standards. Every checkpoint counts. These become an expectation for the customer. If shortcuts are made during development, the customer will notice.
Negotiating competitive product costs, while improving quality and timelines, is an ongoing challenge for import sourcing teams. Pressure on vendors to meet increased demands means more temptation to cut corners to protect their own margins. Monitoring performance and keeping good relationships with your vendors is of utmost importance, but paying for your vendor errors doesn’t need to be part of the deal.
It is easy to understand why Size & Fit is the leading cause of Returns for many retailers. eCommerce and Fast Fashion emerged almost simultaneously, leading to a perfect storm for technical design teams, with less time in the calendar for typical fit cycles.
According to Andrea Kennedy of Fashiondex, companies are fitting two samples per style, whereas 20 years ago, companies would fit as many as four: “We’ve halved our fit samples and doubled our returns,” Kennedy said.
So, how retailers digitally communicate Size & Fit is an increasingly important factor, leading to our next point…
As eCommerce customer journeys become more complex, precise communication across all digital touchpoints becomes more critical. Taking the time to accurately display and describe an apparel item can save millions and countless hours that your team puts in when accepting returns. Is the color portrayed, and named, reliably? Are customers able to zoom-in and view patterns? Will a less-savvy shopper be able to tell the difference in feel and give between rayon and polyester? When you say “true to size” is it? Really? Having pre-defined editorial standards for copy and photography across all silos is a must.
Across the many touch points in the apparel life cycle, there is an inherent focus on product quality and customer satisfaction. However, the pressure from increasing speed-to-market introduces opportunities for error across all those touch points. And retailers lose out when returns are narrowly analyzed. The next part of this series will discuss Operations and its impact on return rates.