Are Free Returns Hampering UK E-Commerce?

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Barclaycard research claims that managing returns is damaging profits for many British online businesses

British online retailers are bearing the brunt of improved customer service, according to new research that found free return policies may be causing businesses to lose profits.

Research from Barclaycard found that consumer demand for free and easy returns when shopping online is placing increased pressure on retailers and impacting their bottom line.

Overall, nearly six in ten (57 percent) of retailers said that dealing with the day-to-day cost of dealing with returns is negatively impacting their business, with one in five (20 percent) even admitting to increasing prices to try and counteract the cost of returns.

And more than a fifth (22 per cent) of current high-street retailers are choosing not to sell online, because they are concerned about being able to afford the costs of managing the delivery and returns process.

Time to change

online shoppingThese solutions are grating against consumer habits, Barclaycard warns, as 30 percent of shoppers admitted to deliberately over-purchasing and subsequently returning unwanted items, safe in the knowledge they will be able to benefit from a range of quick and easy returns such as hourly courier services and local drop-off points.

The company is now advising retailers to make significant improvements into how they run their business both offline and online. One in five (18 percent) of shoppers said that a better in-store experience, such as shortened queues for clothing store fitting rooms so they can try on sizes without the wait, would also reduce the number of returns they make.

A similar proportion would like retailers to introduce technology to help them better visualise an item when shopping online, such as the ability to virtually ‘try on’ clothing after uploading an image of themselves – a system currently being trialled by several big-name retailers.

“Today’s time-pressed shopper expects the process to be fast, easy and free – and that applies to both buying goods as well as returning them,” said Sharon Manikon, director of customer solutions at Barclaycard global payment acceptance.

“Online spending will continue to rise and the need to keep pace with customer demands presents a dilemma for businesses needing to protect their bottom line. Fortunately there is light at the end of the tunnel with many ways retailers can streamline the returns process.”

“From developing universal sizing to offering virtual dressing rooms, the key for today’s businesses is to determine which innovations work best for them – while ensuring they don’t lose out to their more savvy competition.”

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