Consumer buying and returning habits have changed significantly in recent years. According to the International Trade Administration, eCommerce now comprises nearly 50% of all international purchases, with Spain, Japan, and Brazil seeing the most significant jump amidst pandemic-caused business pivots.
Unfortunately, with the rise of online purchases comes a rise in returns. According to CBRE, during the 2021 holiday season, consumers returned 30% of purchases in the United States. This represents a whopping $66.7 billion worth of purchases returned. To add insult to injury, the retailer will never recoup the cost of accepting and processing returns. Bracketing, a relatively new consumer spending behavior, only compounds this issue.
What is Bracketing?
Bracketing is a consumer trend that increases the number of items the customer intends to return. When someone practices bracketing, rather than purchasing a single size or color, the consumer buys a range of colors and sizes to try on at home. They then keep the items that fit best and return the rest. These high-volume returns increase backward flow into fulfillment centers. Not only does the high return volume impact profitability, the retailer’s ability to store inventory is compromised. In a 2021 survey, 36% of U.S. consumers said they bracket online purchases. Most cite the inability to try on garments in a store, though incorrect and hard-to-read online sizing guides also contribute to the phenomenon.
The Compounding Cost of Bracketing
Returns are already expensive for retailers to process. For example, product returns result in an average loss of around 3.8% of profit per retailer. This is despite the fact that only about 5% of returns have defects. Additionally, offering free returns, which is increasingly popular in the retail space, further piles on additional costs for the retailer. In these cases, companies cannot guarantee that returned items can be resold, resulting in a loss of both inventory and revenue by having to absorb transportation costs in two directions.
Bracketing compounds the cost of returns for retailers. The practice increases the likelihood that any given customer will return their product. The goal of bracketing is to return items that don’t suit the purchaser. It is a conscious decision by the consumer, understanding that they will return at least part of the purchase. This can make it difficult for businesses to account for the increased cost of lost inventory financially, return processing overhead, and reverse logistics costs.
Bracketing is no longer an just an online phenomenon
Managing the Increased Cost of Bracketing
Online shopping skyrocketed during the pandemic, and retailers raced to keep up. Unfortunately, bracketing is an unintended consequence of lacking product information online. Although the online consumer experience improves with new technologies, bracketing has become a habit for many consumers.
Regardless of how comprehensive online shopping experiences become, the ease of product returns buoys continued bracketing practices. So much so that consumers are bringing their bracketing habits into the “real” world.
Retailers are reluctant to add friction to the returns process. Therefore, companies must find alternative ways to curb the bracketing phenomenon amongst their consumers.
- Provide better product descriptions: Customers bracket because they don’t know a product’s shape, fit, and style. Including better product descriptions can give consumers a better sense of the item. For example, include measurements, materials, and qualitative descriptions of the garment’s texture. In addition, whenever possible, advertise the garment on various body types and skin tones and mark which models are wearing with sizes. This gives customers a better item of what a piece will look like on their own body and potentially reduces the likelihood of bracketing.
- Offer virtual try-ons: Virtual try-ons provide customers with a unique opportunity to try a piece of clothing in the comfort of their home. This technology uses augmented reality to layer products over a customer via a phone or computer’s camera. For companies who don’t want to spend resources developing this tool, there are non-augmented-reality options. Some platforms allow customers to mix and match models of varied sizes and skin tones with various garments to approximate how a piece may look on their own bod
- Promote exchanges over returns: Promoting exchanges over returns enables the customer to try various sizes and colors one at a time. Offering exchanges over returns allows businesses to preserve the revenue generated through a purchase. Accepting returns also increases the likelihood that a returned item is not damaged and can be resold.
- Reduce reverse logistics costs: The average cost for retailers to accept returns via mail averages between $22 to $35 per item. And that is before the cost of processing returns at a store or fulfillment center. Such high logistics costs seriously impact profitability even for the highest ticketed products. Retailers can reduce return costs by leveraging aggregated return services. Several return solutions are coming to market, with return locker networks showing significant promise. Conceptually, return logistics providers offer convenient drop-off locations for consumers and then aggregate products to ship back to retailers using bulk, negotiated pricing, saving retailers upwards of 50% on return costs.
At ParcelPort, we understand how impactful the movement of goods is to the retailer’s bottom line and the environment. We believe that retailers can take the sting out of returns without jeopardizing customer loyalty by using Smart Lockers as nodes in a greater return network.
To learn more about how your organization can maximize Smart Lockers to reduce cost, increase revenue, and delight your customers, contact the ParcelPort team online by visiting www.theParcelPort.com, email at sales@theParcelPort.com or calling 1-800-818-0870.