And a study by the University of Bamberg estimates that returns rates may actually exceed 60 percent for e-commerce fashion retailers. The trend is likely to continue as more people shop online and are more likely to return their purchases.
For the fashion warehouse, this trend can mean:
- A third of business operations is spent on returns – not only do operators not earn money on items sent out but incur costs in handling returned items – demanding ever more efficiency to realise profits.
- Inability to plan – operators cannot plan resources to handle the returns given the unplanned nature of returns.
- Increased handling costs – handling returns requires qualified staff to ensure quality control and every touch of an item incurs costs.
- Impact on space – returns take up valuable warehouse space and conflict with incoming new season and sale items.
Unfortunately, for most fashion distribution operators, the primary focus is on order fulfilment and they often treat reverse logistics as an afterthought. But facilities can no longer afford not to concentrate on their reverse logistics – there’s too much at stake in terms of brand protection, sustainability requirements and ultimately, profitability.
So, the question is, how can fashion distributors refine their returns management processes to reduce costs and loss of profit?