No such thing as a free return, new research

Returns from online sales, particularly those to store, are seriously impacting company profits, according to a new report from University of Portsmouth on behalf of ECR Community Shrinkage and On-shelf Availability Group.

For example, businesses have to find more physical space to store returns in their shops and use store staff to process them. It has also been difficult for firms to integrate and develop underlying IT systems quickly enough to cope with the demands of online shopping. Many businesses have complex procedures in place. With little senior management oversight of the process, retailers find it difficult to pin down crucial information such as the rate of return and the costs of handling a returned item.

The report includes a study of 100 retailers’ online returns policies, four case studies with major UK retailers, including over 25 interviews, observations and site visits, and interviews with another 17 companies in the UK and Europe.

Dr. Sally-Ann Krzyzaniak of the University of Portsmouth says: “Treating returns as assets with the potential to generate income and contribute to net margins is key to realising a profitable fully omnichannel shopping environment for the future. We suggest that making returns activity effectively a profit centre, led by senior management and with a cross-functional team engaged in maximising the benefit from returns would bring an impact on the bottom line and help ensure that retailers can continue to offer the service, such as free deliveries and returns, which today’s customers expect.”