More than ever, the wrong returns policy can make or break a fashion retailer.
Shoppers are increasingly buying apparel online, despite the uncertainties that come with it: Choosing the right size is often a crapshoot, even with retailers’ best efforts to provide fit guidance. And, unlike when shopping in store, there’s no way to test a style’s comfort or get a feel for its quality. As a result, returns and exchanges policies have never been under more scrutiny. There’s too much risk involved without the proper cushion.
Online apparel sales now represent 20 percent of total industry dollars, according to data by market research company NPD Group. And 30 percent of clothing and shoes bought online are returned, a rate that’s double that of pieces bought in store, as stated in a report by Bold Metrics. To ensure they aren’t stuck with purchases they’re not happy with, 57 percent of consumers check a retailer’s returns policy before checking out, said a report by SaaS company Narvar.
Retailers are finding new ways to take the guesswork out of the online buying process. Zara, for one, is testing an online-focused store concept with its click-and-collect pop-up it’s hosting in London through May. Shoppers can pick up online orders the same day, and return and exchange styles on the spot.
Other retailers, including Nordstrom, have maintained an “anything goes” returns policy, allowing customers to change their mind about purchases months later, even after they’ve removed the tags.
A spokesperson for Nordstrom confirmed the company has no formal returns policy. “Our philosophy is to deal fairly and reasonably with customers, and we hope they are fair and reasonable with us,” they said. “Many customers choose to shop with us because they know if their purchase isn’t right, we’ll work to fix it.”
But retailers can shoot themselves in the foot by accepting any and all returns. Earlier this month, L.L.Bean abruptly ended its generous, lifetime satisfaction guarantee with a Facebook post by executive chairman Shawn Gordon. It cited abuse of the system, costing the company $250 million over the last five years.
“A small, but growing number of customers has been interpreting our guarantee well beyond its original intent,” it stated. “Some view it as a lifetime product replacement program, expecting refunds for heavily worn products used over many years. Others seek refunds for products that have been purchased through third parties, such as at yard sales.”
The new policy allows for returns within a year, with proof of purchase.
Revolve has also implemented a “modified returns policy,” which some have discovered the hard way.
“I was using Revolve like a try-on-before-you-buy service: buys tons of things, returning all but maybe two,” said a Sacramento-based shopper, who asked to remain anonymous. “Now I have to pay a 15 percent restocking fee when I return anything. I started shopping at Shopbop instead.”
A fellow shopper reported a similar buy-and-return ritual when shopping Shopbop and Zara, as well as Net-a-Porter “because they are so speedy with refunds.” All three retailers provide free returns within around 30 days of purchase (28 days for Net-a-Porter).
According to Revolve’s policy, the restocking fee goes into effect when a shopper returns more than $7,500 worth of merchandise or over 80 percent of the value of their purchases in a 12 month period. On top of the fee, flagged shoppers forfeit their right to free merchandise return labels.
“If I go to purchase anything, I now get the message: ‘You’ve been warned,’” said the shopper.
As retailers increasingly feel the brunt of e-commerce returns, updated guidelines like these are set to become more prevalent, said David Naumann, vp of marketing at consulting firm Boston Retail Partners.
“Retail returns policies will likely evolve to moderate returns policies that won’t turn off customers and won’t bankrupt the company,” he said. “A reasonable returns policy will have a realistic time limit and won’t charge shipping for damaged, inferior or exchanged goods.”
On the flip side, there are retailers that have upheld a rigid returns policy from Day 1. But rather than losing money thanks to shoppers taking advantage, they found they were losing customers.
That was no doubt the case for Forever 21, which announced in January 2017 that it was overhauling its longstanding policy of providing store credit only for returns. Now, shoppers can receive a full refund within 30 days of making a purchase.
“Updating our returns policy is something we are pleased to give our customers in order for them to have the best shopping experience possible,” Linda Chang, the company’s vp of merchandising, told Refinery29.
Sustainable fashion retailer Reformation still gives store credit versus a refund to those looking to make a return. However a spokesperson was quick to point out the policy applies to in-store purchases only. Shoppers can receive a full refund for online purchases.
Even retailers specializing in custom fashion have are permitting customers to place orders without risk. Frilly, the L.A.-based brand making made-to-order apparel in a range of styles, offers free returns and promises no-commitment shopping. Customers have seven days to return unwanted pieces. Custom footwear brand Shoes of Prey allows shoppers to return unworn shoes up to a year after purchase.
As the going gets tougher for retailers, they’ll have to decide how much flexibility they can afford to provide.
Amazon, the reigning industry benchmark, allows shoppers to return most new, unopened items within 30 days of delivery for a full refund. It also pays the return shipping costs if the return is a result of the company’s error. A study by marketing company Epsilon called ease of returns one of shoppers’ main draws to Amazon.
“Today’s consumers have high expectations; they demand convenient ordering, fast and free shipping, and a friendly returns policy,” said Naumann. “These are now table stakes for retailers, and the cost of these features need to be built into the pricing model for sustainable profitability.”