Fashion focus: Automate to slash cost of repeat refunders

BRITAIN’S RETURNS culture is becoming the Achilles heel of fast fashion, with repeat refunders presenting a significant financial and logistical challenge for retailers. PrettyLittleThing recently announced it was taking the bold step to deactivate the accounts of customers who are guilty of chronic product returns, which was met with dismay by some shoppers. To help reduce the cost impact of returns, retailers must focus on how they can better automate returns processes.

According to an online survey from Statista[SJ1] , the most returned item in 2023 was clothing, making up 28% of returns. In IMRG’s Navigating the returns challenge report, some fashion retailers reported that up to 45% of the items they sold are returned, with an average return rate of 25% in 2022. 

This has led many fashion retailers such as PrettyLittleThing – which is owned by Boohoo Group – to scrap free returns on their products to discourage the trend from growing further. The company’s decision to deactivate certain accounts is the latest escalation in this battle. Despite these challenges, scrapping free returns or banning repeat offenders is only part of the solution.

For retailers, the issue of reverse logistics can be a perplexing one: companies need a rapid means of processing millions of returns and getting items back into sellable stock fast to prevent lost margins. This headache can be reduced by embracing modern warehouse automation that is best equipped to deal with returns.

This is even more critical for the fashion industry as seasons are very short: lines are moved quickly to “sale” status and discounted, destroying margins and revenues. Many omnichannel retailers can offer free returns in store even for online purchases, which gives customers the chance to browse and potentially buy other products, while enabling in-store employees to place goods back on the shelf as soon as they’ve been checked.

However, this is not the case for pure-play online fashion retailers, many of which sell hundreds of thousands of items between £10 and £25 at low margins. With such high return rates, this is costing retailers a great deal of money if they’re unable to get returned items checked, cleaned, and repacked rapidly before returning them to the pick face in time to sell them at full price. Even with return fees, it is a costly process and one that must be managed efficiently.

Online retailers must ensure that reverse logistics is given just as much attention as the rest of the operation.

Many retail warehouses use manual picking operations for their ecommerce fulfilment, requiring four to five times the labour to fulfil orders compared to high-performance automated robotic systems. Productivity takes a further hit when putting away and re-picking returned items in a manual warehouse.  

Automated systems, in contrast, can speed up the process by quickly scanning returned items into a mixed SKU bin, so they go back into the main inventory. This eliminates walking time to each stock location for each SKU or putting them in a pick-first returns area, making the process much faster and less labour-intensive. Then, when another customer orders a specific SKU as part of their order, a returned unit is always presented at the pick station first. No consolidation or sortation is required.

Overhauling returns processes can be the difference between having to offload a returned item at bargain basement prices and being able to resell it at full price. At a time when profit margins are being squeezed and consumers have become accustomed to returning purchases at will, the importance of slick, efficient reverse logistics cannot be overstated.

Simon Jones, sales executive, Exotec

For more information, visit Exotec.com