“Try-now-pay-later” options could trigger returns tsunami, claims new report
A new report released today (21 March) by Brightpearl has warned that the “try-now-pay-later” options being offered by online companies such as ASOS, Topman and schuh could lead to a “returns tsunami”.
“The trend is threatening to overwhelm retailers– many of which are already reaching crisis point – with a huge surge of intentional returns that may undermine profits,” said Brightpearl.
According to the report, more than three quarters of consumers (76%) would ‘definitely’ or ‘maybe’ purchase more items if offered a try-before-you-buy option, with shoppers ordering on average three extra items each month, only to return them without ever paying a penny.
“Worryingly, 87% would return up to seven purchases – with research showing that 85% of consumers expect retailers to provide returns for free,” said Brightpearl.
The report also reveals that more than 40% of retailers have seen a marked increase in ‘intentional returns’ over the past twelve months, when customers deliberately over-order multiple items knowing returns are free or cheap.
Furthermore, more than half (51%) agreed that their margins are being strongly impacted by the process of handling and packaging returns and 72% believe they will be squeezed even further as the try-before-you-buy trend intensifies.
“The survey reveals that 17% of global retailers have already adopted the try-before-you-buy model,” said Brightpearl. “By 2019, more than a quarter will offer this type of service to customers.”
Derek O’Carroll, CEO of Brightpearl said: “For consumers, try-before-you-buy is a positive trend, removing another barrier to purchase.
“The good news for retailers is that this will almost certainly lead to an uplift in sales. Our study indicates that shoppers want the option to order items such as clothes online but only pay once they decide to keep them, so it’s something that all retailers will need to consider to remain competitive.
“However, this trend could spell disaster for retail business owners if they do not prepare by having the right framework and solutions in place to manage returns. And, they’ll need to do so quickly as the trend becomes more widely adopted over the next year.
“Consumers will buy more, but retailers must be ready for a potential flood of returns. With shoppers indicating that they could return an extra three items a month on average, it could spell an unmanageable tsunami of returns for some merchants.”
However, O’Carroll, added: “It is not all bad news; the fact that two thirds of retailers are still processing returns ‘by hand’ shows that with the right preparation, and by exploiting the relevant technology, forward-thinking merchants should be able to turn the tsunami into a tide of fresh profits.”
