Dusseldorf A real shopping spree can be expected on Black Friday again this year: Germans want to spend 4.9 billion euros on this day, 27 percent more than last year. But many online retailers are also threatened with a flood of returns. After all, an average of 16 percent of all online orders are returned to retailers.
This is not only bad for the environment, but also a major financial loss for retailers: a retailer incurs an average of 19.51 euros in ancillary costs for each parcel returned. With 315 million returns a year, that’s an additional burden of more than six billion euros.
A large part of these returns could be avoided with simple tricks. This is shown by a field experiment that researchers from the University of St. Gallen and the consulting firms Elaboratum and Behamics carried out with 100,000 customers when they actually bought something in online shops, and the results of which are exclusively available to the Handelsblatt.
The conclusion: “Decision-making aids during the purchase process can be highly effective in reducing the number of returns,” says Philipp Spreer, behavioral psychologist at Elaboratum. With simple behavioral interventions during the buying process, customers could be encouraged to shop more consciously and returns could be reduced by four percent in one fell swoop.
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What sounds like little at first would have a big effect. If all retailers implemented these measures, there would be almost 16 million fewer returns in Germany every year. This corresponds to CO2 emissions of 13,000 tons. To compensate for this, 13 million large trees would have to be planted.
Customers don’t want to be patronized
The problem: “All customers say they want to avoid returns, but two thirds of them still send back the items they have ordered,” observes Spreer. “At the decisive moment, they lack an effective impulse to translate their good intentions into action.”
This is exactly what the researchers changed in their experiment. For example, customers who wanted to order an article in several sizes as a precaution received a message that 83 percent of customers do not. As a result, many checked again whether multiple orders were really necessary – which reduced the return rate by almost five percent.
“It is particularly effective to appeal to social norms,” confirms Spreer. The wording is very important: the customers should not feel patronized, but the retailer should rather remind them of their own responsibility.
It also had a big effect in the experiment to make customers aware of how much effort it means for them to return a product. Research has shown that it takes an average of 32 minutes for customers to return an order.
Despite the high effectiveness with little effort, so far only relatively few dealers have worked with behavioral psychological interventions. Companies such as Otto or fashion retailers such as Esprit or Hirmer, for example, are already using these methods and have had good experiences with avoiding returns.
Zalando, Otto and Amazon are reducing the return rate
However, the trade is not idle. Many retailers take a wide variety of measures to reduce the return rate.
Zalando, for example, has its own sizing team. The team evaluates the reasons given by customers when they return their textiles and shoes. It also tries new collections and clothes from new brands. On this basis, it gives the customer information about the fit and whether a product is small or large.
Large platforms such as Amazon and Otto also rely heavily on the exchange between customers and therefore place the reviews prominently under the products. At Otto, customer ratings are not processed or commented on, even if they are extremely negative – which provides more credibility and has also had a positive effect on the return rate.
Careful product descriptions are also an important tool. Thanks to their good content, product videos and professional product translations, among other things, they have had a return rate of less than ten percent for decades, explains Hans Thomann, Managing Director of Musikhaus Thomann. “We are very proud of that.” But he also complains that, overall, many retailers are not yet sufficiently aware.
Many companies are worried that warnings during the buying process would discourage customers from making purchases and thus reduce sales. However, according to the experts, this is short-sighted. “Anyone who just wants to maximize sales without taking the return rate into account is damaging themselves in the long term,” warns behavioral psychologist Spreer.
Prohibition of free returns requested
Especially since the field experiment has shown that the fear of lost sales is mostly unfounded. On the contrary: “Various interventions in our experiment even ensured that sales increased,” reports Spreer.
Surprisingly, the memory of the effort involved in a return for the customer had a particularly positive effect on sales. In the experiment, this increased sales by more than nine percent.
After such an intervention, customers spent an average of 22.48 euros. The control group without intervention only generated net sales of EUR 20.59. Apparently, customers found this to be a helpful hint that encouraged them to buy. Customers may also have chosen a higher quality product as a precaution to make sure they are satisfied. At the same time, this reduced the return rate by 3.61 percent.
But despite such successes, some retailers are calling for even more radical measures in view of the environmental damage caused by the returns. “Returns are a big problem for online retailers and society, and too little is being done about it,” complains Benjamin Sadler, co-founder and managing director of underwear retailer Erlich Textil.
“There are countless new supportive approaches – they just have to be taken,” warns the online retailer. He therefore supports a legal ban on free returns.
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