Researchers at the University of Bamberg have investigated the return rate in online retailing. Companies incur five billion euros in costs as a result of the returns.

Online trading continues to grow. In 2018, Germans spent 53.4 billion euros on their purchases on the Internet. This is an increase of more than nine percent compared to the previous year. What distinguishes Germans from other European shopping nations, however, is the high return rate. Customers returned around 280 million parcels or around 487 million articles last year. This was determined by the research group Returns Management at the University of Bamberg. This means that approximately every sixth parcel was sent back to the retailer. The figures appear high, but the actual returns rate is at a similar level to the first analysis by the experts four years ago. Dr. Björn Asdecker, head of the research group and research associate at the Chair of Business Administration: “The established return rates have hardly changed since 2014 and are still clearly related to the product group”.

Level of return rate depends on product group

As expected, the return rate for shoes and clothing is particularly high. Around 46 percent are returned here. Asdecker cites one possible reason: “The individual feel-good factor plays a major role, especially in the case of clothing. Since the body is constantly changing and textiles are handmade, and retailers consciously stimulate impulse buying, returns are particularly frequent”. In contrast, the return rate for electronic devices, media and books is significantly lower. Here the value is in the low single-digit range. For Asdecker, this is a logical consequence of the more intensive process of conscious purchasing decisions: “In addition to better comparability, one explanation for this could be that consumers inform themselves much more intensively in advance about the product, such as a digital camera, than they do about clothing”.

What does a high return rate mean for online retailers?

A high return rate also entails enormous costs for the retailer. A return with postage and processing fee costs an average of eleven euros. Many companies rely on a fast resale of the returned items. This works particularly well with garments. According to the EHI Retail Institute, at 82 percent, the fashion sector is the segment with the highest share of resales as A-goods. “This share varies greatly from industry to industry, and retailers also make great efforts to avoid returns,” explains Hilka Bergmann, Head of Packaging and Shipping Research. On average, around 70 percent of the returned articles are suitable as A goods for resale. In addition to the Fashion & Accessories segment, the share in Sports & Leisure (70 percent) is also particularly high. Only a few retailers are able to resell any or only a few articles at all. These include in particular products from the food and stimulant sector. However, there are hardly any returns here.

Considering the external impact of dealing with returns

Large online retailers in particular have recently made a name for themselves with their handling of returns quotas. The destruction of returned goods landed prominently in the media, the echo was devastating. Here it is advisable to optimize the processes in online sales. Detailed product information, lots of pictures and customer reviews can help to avoid returns.

 

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Link: The research group Returns Management at the University of Bamberg has investigated the return rates in online trading.

Image: DHL, EHI Retail Institute