25 Aug 2020 • Retail
How e-commerce returns are reshaping the physical store
Brands are taking notice of the fact that an increasing number of customers prefer to make returns in-store.
On UPS’s calendar, 2 January is a key day. It’s the day on which consumers make the most returns to e-tailers after the holidays. And to give some insight into just how significant a burden those returns are placing on brands – both those who sell the products and those who manage the infrastructure involved in getting them to your home and back – 2020’s ‘returns day’ was forecast to see a 26 per cent year-on-year increase in packages.
The key to the rise of e-commerce is increased convenience in almost every aspect of the purchasing process. The challenge lies in the crucial final step: delivery. This so called ‘last mile’ problem, where goods travel from the distribution centre to individual addresses, is the point at which all logistical efficiencies break down. But if receiving packages is a pain, sending them back is often worse. The ability to offer not only a free, but also a seamless returns process is becoming a major factor for consumers in their choice of which brand to shop. This is especially true for fashion retailers, for whom sizing issues mean they’re by far the biggest contributors to the return package pile.
As e-commerce retailers continue to provide more return-friendly policies, shoppers are buying and returning more online than ever before
‘As e-commerce retailers continue to provide more return-friendly policies, shoppers are buying and returning more online than ever before,’ explains Andrew Lipsman, a principal analyst for eMarketer. ‘Although returns can eat into retailers’ bottom lines, it’s important they treat the process as a way to build brand and customer loyalty by delivering a great end-to-end shopping experience.’
What does this mean for spatial design? Recent research by Navar shows that a significant number of consumers prefer to return in-store (35 per cent) over other options. Closer to half are willing to do so because of the environmental benefits.
Brands are already taking notice. This year will see fast-fashion retailer H&M invest in making its current footprint more useful to a consumer base that increasingly shops online. The strategy? Transform H&M stores into an effective touchpoint for customers who nonetheless prefer to browse and buy digitally. ‘We think the role of the stores will change,’ CEO Karl-Johan Persson told the Financial Times. ‘How can we use those stores even better as logistical hubs for deliveries, for pick-ups, for returns?’
H&M currently allows online orders to be collected in-store in only 14 countries, while online returns can be made in-store in 16 countries, something that will expand drastically under the new directive. The move might also help H&M facilitate an expansion into the fashion rental space, something it started localized experiments with last autumn.
Those wondering how such facilities might materialize should look to Target’s newest stores, which feature a dedicated entranceway for online pickups and drop-offs. Or standalone concepts like Helsinki’s Posti Box, which combines fitting rooms and hospitality elements alongside lockers, unboxing stations and recycling points. These projects show precisely how the need for more efficient interfaces between customers and e-commerce brands is driving the development of new physical typologies.
This piece was originally featured in Frame 134. Get your copy here.