Much like the retail industry itself, the long-standing e-commerce business model of “free shipping, free returns” is changing.
After normalizing and fueling the growth of online apparel shopping over the past 20 years, a mix of rising spending, inventory disruptions and environmental impacts is causing more and more retailers to rethink a policy that has served them well. served, but which also cost them dearly.
The latest big player to revise its policy is fast fashion giant Zara, as the biggest brand in the empire of the world’s largest clothing retailer by sales, Inditex, now charges customers the equivalent of 2 $4 if they want to return items. by email.
“We now have this policy in 38 markets,” Inditex head of capital markets Marcos López told investors during the company’s first-quarter earnings call last week, noting that a trial which debuted in South Korea late last year has been well received.
“So far the impact has been positive in the sense that there is no impact on sales,” López said, adding that store returns, customer satisfaction and sales have all increased. “So clearly we believe this is a process that can continue over time to make our industry more efficient and more sustainable.”
The rise of in-store returns
By encouraging customers to return merchandise directly to a store, retailers not only save a lot of money on high and rising shipping costs, but also save a ton of time on the process of getting merchandise back on shelves that quickly. possible, a benefit that is almost immeasurable for seasonal items.
Additionally, the benefit of driving foot traffic to your stores is also significant. While little data is available to detail how many customers make another purchase while returning something to the store, or whether those subsequent purchases exceed the value of the original purchase, most retailers would likely agree that having customers in store with cash on hand is a winning formula.
To adapt to this new commercial flow and make this stage of the customer journey a smooth and positive experience, Zara and others had to rethink and reorganize their physical locations.
For example, Inditex CEO Oscar Garcia Maceiras told investors that the company’s Zara location in Madrid’s Plaza de España – the largest Zara store in the world with a fleet of 2,000 locations – incorporated a range of new digital shopping features to meet the changing needs of the modern shopper, delivering what he called “a complete digital experience”.
“Customers can use the [app] geolocate products, book fitting rooms, use self-checkout via Pay & Go, and use Click & Collect points for online orders, or use silos [kiosks] for online in-store returns, and finally, customers can use clothing recycling points that help us move forward in terms of circularity,” said Garcia Maceiras.
Taken together, he said, all of these factors provide customers with “one of the most advanced store experiences in the world today” while reinforcing the benefits of a fully integrated digital approach.
Integrate vs Alienate
While many retailers have been reluctant to tinker with the “free delivery, free returns” model as it has proven to be a watershed deal-breaker for many consumers, the experience of Zara and others has cast doubt on this long-standing model. publish.
At the same time, industry watchers point out that the delivery side of this deal also faces a growing number of stipulations, such as minimum purchase amounts, that further limit the free portion of the benefit.
While shipping and delivery times and costs will always be a point of competition between retailers, it’s far from the only issue driving customer buying decisions these days, as the inflation has put renewed pressure on prices and supply chain constraints have put a premium on the value of inventory on hand.
As for Zara and its fast fashion rivals, H&M and Uniqlo are also charging US customers a fee of $6 and $7 respectively if they choose to make returns by mail, rather than bringing them to a store and do it for free.