U.K. Online Retailers Struggle With Product Returns - InformationWeek

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1/30/2013
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U.K. Online Retailers Struggle With Product Returns

U.K. shoppers adore buying things online. But they also like returning a lot of that stuff and expect snappy turnaround when they do.

E-commerce managers or CIOs supporting their organization's sales processes may already know this, but if you don't, here's a fascinating side effect of the move from bricks-and-mortar to bricks-and-clicks or even just clicks:

What you gonna do if their shoes don't fit?

This is the particular issue that's starting to bedevil U.K. retailers, who have been adjusting their routines to deal with a huge rise in online consumption by that nation's shoppers -- but who are also learning it may be a bit early to think we shop only online now.

There's no sharp consensus, but U.K. retail analysts estimate that online returns can range from as much as 25% to 50% (depending on goods bought or even region of the country). In practical terms, that means holiday season purchases or New Year-sales impulse buys are translating to hectic late Januarys as shoppers troop back, demanding replacements.

[ Is your online marketing strategy helpful? Or creepy? See 5 Tips For Proactive Customer Engagement. ]

The issue seems particularly acute with women's shoes, with one online purveyor, Daniel Footwear, telling the BBC as many as one-third of shoes not physically tried on in a store are coming back as not fitting right. Maybe we shouldn't be surprised: a company representative admits, "it's impossible to make one style of shoe that fits everyone, and that makes shoes one of the hardest things to sell online."

But the challenge facing British online retailers is that if a customer hasn't tried, touched, smelled or shaken a product, they may well end up dissatisfied with it when the courier company finally shows up with it.

E-commerce experts also think that online consumers may typically overbuy, assuming they can easily return what isn't perfect -- which again, presents issues for companies that went to the Web as an easier, simpler way of selling goods.

Brits aren't the only fuss-pots, by the way; apparently Germans demand returns at a rate three times their European peers in France or Spain. In any case, vendors are turning to technology like 360 degree/panoramic imaging of products on their websites, as well as tweaking their profit-and-loss ledgers to more closely reflect what stock they will actually shift in this busy trading period.

Another potential solution, according to analysts at the Boston Consulting Group, may be better analysis of data retailers are accumulating on real customer behavior; a giveaway is when they snap up two items in different sizes, says the firm, you can be pretty sure one is a reach and you're only going to end up with 50% of the sale. Some are even talking about the need for augmented reality, which might allow users a more real-world peek at what their chosen fashion item might really look like on them.

Whatever the choice, retailers -- in both the U.K. and beyond -- need to learn how to cope with this new form of shopping. This was underlined by Tuesday's financial results from Amazon, which confirmed it built three new U.K. distribution centers in 2012. The U.K. was estimated to generate at least 10% of Amazon's sales, while international sales, including the U.K., went up 20% to $9.09 billion (£5.7 billion) for those last three busy shopping months of 2012.

The firm doesn't break out country-by-country performance, but estimates say the company's U.K. sales between 2009 and 2012 were in the range of $12 billion (£7.6 billion) to $16.3 billion (£10.3 billion).

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