About 40% of items are returned to the companies that sent them fashionable that consumers ordered in 2023 via internet in Europe.
However, in no other country in Europe are returns of fashion products ordered online as frequent as in Germany.
With more than 87 million returns on online orders in fashion retail alone, consumers in Germany were well ahead of other markets in 2023, such as the much larger UK market or the Dutch market. This is the result of a large-scale study by the consulting firms Elaboratum and Behamics, which was made available to Handelsblatt.
53% of all fashion items ordered are returned by German customers, according to Behamics calculations. In comparison, the return rate in the UK is just 26%, while the European average is less than 40%.
The damage to retailers is huge. The average cost of a return, based on studies by the University of Bamberg, especially due to the inspection and preparation of the goods, is just under 20 euros. That means returns alone cost German fashion retailers around €1.7 billion. euros last year.
Amazon – Otto: Extension of return periods
However, consumers are not the only ones to blame. Major fashion retailers seem to accept returns as a necessary evil of online retailing. Amazon and Otto, for example, have extended their returns period in the run-up to Christmas until the end of January – effectively inviting customers to return items. At the German fashion retailer, Zalando, the returns period is generally 100 days.
Zalando CEO Robert Gentz said in comparison to shopping in a store that “the analogy would be this: You have to keep what you get in the changing room.” Zalando itself admits that the return rate has remained constant at 50% for years.
Experts believe that this attitude is wrong. “Big fashion retailers are doing little to combat returns,” observes Philipp Spreer, a behavioral economist at Elaboratum, who is responsible for the study along with Behamics boss Thilo Pfrang. .
How psychology can be used to reduce the rate of returns
Psychology offers very effective tools for reducing the return rate, “but only very few retailers put the findings into practice,” Sprir wonders.
The experts at Elaboratum analyzed the results of these psychological tools – and came to some surprising conclusions. Their study is not based on research, but on actual purchases made by more than 220,000 customers in 8 European countries. Researchers have found that targeted messaging to customers during the sales process can reduce the number of returns by up to 7%.
“Many online retailers still believe that reducing returns automatically costs them sales,” says Spreer. “But our research has proven otherwise. With targeted psychological interventions during the purchase process, the number of returns can be reduced without suffering sales.”
Many online retailers’ attempts to influence customer behavior are limited to a general appeal reminding them that returns are bad for sustainability. However, these messages can have the opposite effect. In Elaboratum’s study, they actually increased the number of returns by 5.33% while simultaneously reducing net sales by nearly 7%.
Behavioral researcher Spreer is not surprised by this. “If customers feel pressured or patronized, they are even more likely to return,” he explains, advising: “It’s not enough to make clear to customers the negative consequences of returns, how you communicate them is key ».
Customers have to spend an average of 32 minutes on returns
It is especially effective with German customers to let them know that with a return they are also hurting themselves. For example, customers who ordered an item in two different sizes were told shortly before the order shipped that they would have to spend an average of 32 minutes on a return – but that it would only take three minutes to find the right size using the chart sizes.
This intervention reduced returns by 1.14% on average. At the same time, net sales increased by 13.58%. Customers bought more because they were more confident in their decision.
This tip works even better if you combine it with another psychological phenomenon. Reassuring the customer that they make the decision to return, this obvious statement has a big impact. This small hint is enough to reduce the number of returns by up to 3.41%.
“Even small changes can have a big impact,” observes behavioral researcher Spreer. For example, the list in the shopping cart was sorted so that the products with the highest return probability were at the end. This draws customers’ attention to these products and makes them think more carefully about whether to actually order them. As a result, the return rate for UK customers fell by 7%.
“The level of the return rate is a determining factor in whether an e-commerce business model is profitable or not,” points out Sprir. Given the low profit margins in retail, this can make or break a business. High return rates in e-retail have also helped drive retailers such as P&C Düsseldorf and Görtz into bankruptcy.
H&M, Zara and Asos charge fees for returns
Therefore, there is much debate in the fashion industry about whether the return rate is reduced if customers have to contribute to the cost of returning products. Some retailers, such as H&M and Zara, have introduced return fees. Online market leaders Amazon, Zalando and Otto, on the other hand, insist on free returns.
At first glance, a recent survey seems to vindicate them. Trusted Returns, an IT platform for e-commerce returns management, surveyed 1,000 German citizens together with market research company Onepoll. Two-thirds of them said that free returns are a deciding factor for them when making a purchase.
The problem, however, is that returning the product and getting a refund is often the only solution on offer. However, 60% of respondents would like alternatives such as repair, shipping of missing parts or exchange.
Trusted Returns founder Artjom Bruch therefore cautions against focusing too one-sidedly on the question of who bears the cost of the return. “The reasons for returns are varied and affect many areas where new strategies and solutions are needed,” he says.
Retailers often rely on short-term measures to overcome problems, rather than addressing the root causes, he criticizes. They should also inform customers more transparently that the cost of returns may be reflected in higher product prices in the long run.
Bruch supports, for example, the selective introduction of return fees, depending on the value of the order or how often the customer returns products. Retailer Asos recently introduced something like this: It subtracts €3.95 from the refund amount for customers who return goods too often.
However, return fees will not become the industry standard. According to expert Spreer, there is a simple reason for this: market leaders Amazon, Zalando and Otto have developed their returns management so perfectly that they can better cope with the burden. “That gives them a competitive advantage over smaller retailers,” Sprier says, “that they don’t want to give up so easily.”