Returns are a plague for retailers, especially those selling fashion online. Shoppers order items to try them on and often buy several at a time expecting to return what they don’t want. For every item sent back, companies run up costs for shipping and processing. Until the products reenter the system, they can’t go back up for sale. Those that arrive damaged or dirty may never return to inventory. The expenses add up and can eat away as much as a third of a company’s revenue, by one estimate.
But this week, big online fashion retailers reported the usual tide of customer returns has diminished amid the Covid-19 pandemic. It’s helping to plump their profit margins, and they say it comes down to changes in how consumers are shopping and what they’re buying.
UK retailer ASOS said yesterday (pdf) that it has seen a “significant and sustained reduction” in returns since April. The same day, Revolve, based in the US, called out a “meaningful decrease in the percentage of merchandise returned year-over-year” on a call with investors and analysts about its latest quarter. And Zalando, which is based in Germany and bills itself as Europe’s largest online fashion retailer, pointed to lower returns as a boost to its recent profitability on an Aug. 11 earnings call.
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