- what about them FREE RETURNS In German online trade?
- How many parcels are returned each day?
- Germany is considered The European Champion is back!
- what or what It costs companies Free returns?
- What happens to returned merchandise?
- Returns do not belong Mandatory business model Trade online?
Order it in just a few clicks, try it at home and send what doesn’t work or doesn’t work for you – for free. Until now, this was a common practice for most fashion mail order companies. But that’s about to change: ZARA and UNIQLO have already canceled free returns in Germany, and Hessnatur plans to do the same. In an exclusive interview with inFranken.de, logistics expert Marco Atzberger from the Retail Institute (EHI) in Cologne called Amazing numbers and what the real costs of the free returns are.
inFranken.de: What about free returns at online retail in Germany?
Marco Atzberger:This is still the standard in online fashion retailing. But this is about to change: The last company was ZARA from Spain, and they now charge €2.95 for the proceeds. Japan’s UNIQLO had already taken this step before.
The reason for the fee is the large amount of revenue that companies have in Germany. You have to know that free returns in fashion retail has long been taken for granted.“
How many parcels are returned each day?
“In the private customer area, companies do the shipping Germany 2.2 billion parcels in the year. That’s nearly 6 million a day. About 10 percent of these are returns, i.e. 600,000 or 250 million per year.“
Why do customers return the goods, are there studies on that?
“Of course, retailers ask their customers. Two points stand out in the answers: (1) the goods are not suitable, and (2) the goods are not satisfying. In this regard, of course, many of the returns make sense.”
Is Germany considered the European champion in the return?
Yes, that’s right. In France, for example, returns are subject to fees and returns are lower there. Germans behave differently: they order the goods to take home without obligation and only then make the decision to buy in the living room. Plus, 30 percent of merchandise comes home by invoice. The customer finds this to be less obligatory than direct card payment. This is more of a psychological impetus than the facts. In other European countries, credit card payment is more common. In the past 20 years, retailers have been educating German customers about the fact that they can return merchandise without any problems. The free returns have been an important selling point so far.”
Do you expect this formula to expire soon?
“I would appreciate if returns were charged rather than taken into account in the product price. This enhances transparency. Thus the additional costs appear to the customer. Fees should not be hidden in the price of the product, and it is better to name them explicitly. In the current model, those customers who don’t return anything at all also pay for the returns proportionately.“
What is the cost of corporate free returns?
“This service is free for customers but expensive for businesses. Textile retailer incurs costs quickly between 15 euros and 20 euros. First of all, there is a fee for parcel servicing, but above all, the examination and processing of returned goods takes a long time. Sometimes the merchant has to iron them or sew missing buttons. Some of the returned items are no longer for sale. Retailers often calculate a rate of return of 50 percent or more and spread the costs across all items.”
Is it unreasonable for the customer to bear the cost of 20 euros?
“The return fee amount at the few retailers that currently charge this fee in fashion e-commerce is low. We are currently talking about three euros. So this will only be a small part of the costs that the customer may incur. It’s not a deterrent, but it may encourage you to order more mindfully.
At its core, however, it is about something else: retailers must act to avoid returns. This assumes that there is more responsibility on demand. Retailers have to motivate their customers to think more about whether they really want the goods.”
What can retailers do to prevent returns?
“This is a perennial problem with online retail. The seller is trying to improve product descriptions. This includes more informative photos, clearer fit details, and advice on how the customer can obtain their own measurements to be accurate to sizes. The return should occur as quickly as possible, so the return is simplified. The goal is to return the goods for sale as quickly as possible. A lot happens, but the rate of return is very high, halving or more. This is just too much and above all not necessary.“
What happens to returned merchandise?
“First of all, it returns for sale, of course only in the absence of defects. Some things require reprocessing in order to be able to deliver a 1A product. Some things are sold privately with price cuts and, in the worst case, sorted and recycled.“
Isn’t return a mandatory part of an online business model?
“The legislator has established clear legal rules for online trading. This includes a 14-day right of return for the customer. Which, by the way, I also see as true for the mail order business. Unlike in a retail store, the customer cannot touch, inspect and try the merchandise online. This is really a difference However, we complain that the customer’s right of return is not invalidated by a correction. This right became independent and eventually leads to non-binding orders and we have many shipments that are not actually necessary.”
Will that change now?
“through In the sustainability debate, many customers criticize the mountains of packages and booming orders. So now is the time to reconsider the free returns format. Of course, retailers worry that this will have a negative impact on sales. That is why they act with caution and test first. In competition, there may be those who use the free returns as an excellent selling point for their products.”
So trade can, if it wants, contribute to climate and CO2 reduction goals.
“Of course, if we manage to reduce transport, CO2 emissions will go down. Lower returns are a contribution to climate protection. That’s why merchants, who are now leading the way with their contribution to direct return costs, think the time is right. If more retailers get involved, if there is a trend, the concept of free returns is on edge.”
Who is Marco Etzberger?
Marco Etzberger Member of the Department of Retail Institute (EHI) Cologne. His areas of business are logistics, e-commerce and commercial real estate. Each year he is responsible for the standard work “Shipping and Returns Management in E-Commerce – Trends and Strategies in Online Trading”.
EHI is a German retail-backed research institute that supports companies in evaluating and delivering innovations. “We want to understand what drives merchants and how they can improve,” explains Atzberger, who is busy with his research work and “three kids,” he says.