In this episode we get into the following:
- Why processing returns (also known as “reverse logistics”) is very expensive
- How finding a fix for returns has become an entire industry
- Why retailers are changing their return policies
- The environmental and social impact of so many returns
- How the high volume of returns is both the result and cause of declining clothing quality. And yes, it is very ironic that retailers could reduce the number of returns by improving quality!
- Ways we can try to reduce our own number of returns…(yes, it’s difficult)
Follow and connect with everyone:
Emily: @emaustin11 and @acommonrose (her vintage shop)
Ren: @renb.designs and renbdesigns.com
Ruby: @spokesandstitches Check out her workshops here.
“Revolve Execs Outline Plans to Slash 60% Return Rate,” Glenn Taylor, Sourcing Journal.
“The True Cost of Apparel Returns: Alarming Return Rates Require Loss-Minimization Solutions,” Sunny Zheng, Coresight Research.
“Forget Black Friday, it’s time to plan for ‘Returns Thursday,'” Alex Timlin, IMRG Blog.
Download the National Retail Federation’s “2022 Consumer Returns in the Retail Industry” here.
“Your Brand New Returns End Up in Landfill,” Harriet Constable, BBC Earth.
Welcome to Clotheshorse, the podcast that was once a returnaholic!
I’m your host Amanda, and this is episode 184!
This week we are going to talk all about one of retail and fashion’s dirty secrets: returns! Meaning, all of the stuff that customers buy every year that they then return. This is perfect timing for a conversation about this because (if you’re listening to this episode around the time it is originally released), this week is Black Friday. And 1 in 3 customers who shop on Black Friday will make a return, sending back about 30 million unwanted items in the UK alone. I can’t even begin to imagine what the returns in the US will be, but according to the National Retail Federation, about 18% of all items purchased during the holiday shopping season will be returned. In fact, the Thursday after Black Friday is often called “Returns Thursday” because it tends to be the biggest return day of the year–beating out even the day after Christmas–as people return their Black Friday purchases. Returns themselves are kinda shrouded in secrecy, possibly because our continued overshopping from brands means that we have to believe that we are making the most environmentally responsible decision when we return something. If brands told us they were actually ditching a big chunk of the stuff we return…we probably would think differently about shopping, right?
For this very important conversation, I am going to be joined by Emily, who has a lot of experience in the world of returns, customer care, and the intersection of technology and returns. We will be talking about how big of an issue returns has become for the retail industry (particularly in the world of apparel, where roughly a quarter of all clothing bought each year is returned). And we will get into how the industry is reacting and what it might do next.
Before that…we are going to listen to two audio essays from small business owners in our community. We will get started with Ren of Ren B. designs.
Okay, so Ren wins an award for most vivacious audio essay of 2023!
And I have to say, I was really excited to share this one with you. As a nonbinary person myself, and someone who thinks a lot about clothing and gender, I was super stoked to discover Ren because I really hate how gendered clothing is right now: specifically how we perceive someone’s gender based on their clothing. I know that we kinda can’t help it at this point, because we will have to do a lot of unpacking. It’s been drilled into our heads since birth that certain colors, silhouettes, prints, and details are “feminine” or “masculine.” And strangely, as Ren points out, most gender fluid or “unisex” clothing out there falls under that “masculine” umbrella: muted colors, patterns like plaid or stripes, only a few silhouettes like pants and button ups, and a complete lack of razzle dazzle like sparkle, ruffles, bows, etc.
Another thing I think about a lot (seriously, where am I finding all of this time to think?) is reclaiming fashion and style as art and creative expression. And I think un-gendering clothing, truly expanding the mainstream concept of “unisex” or “genderless” clothing means dismantling all of these unwritten rules about what is masculine or feminine. A cis man can wear pink and red heart prints. A nonbinary person can wear a floofy pastel dress. We can all wear whatever we want. I know that sounds like a sort of utopian dream, but I do think that with innovators and designers like Ren out in the world, we can make that a reality. I truly believe that some of our overconsumption (maybe most of it actually) stems from unhappiness: dumb jobs, the non-stop anxiety of living in 2023, and not being able to truly be ourselves, feeling constantly pushed into a box dictated by society. And that box is so uncomfortable, it often feels like we are playacting as someone else. I know for me, the constant pressure as someone AFAB to be more “feminine,” (meaning more fun–but not too fun, more pretty–lots of concern about what was “flattering” to wear, less brainy, more accommodating) really felt so uncomfortable. Just something for us all to think about. Thank you Ren, for recording such a great audio essay and starting this conversation.
Okay, next you’re about to hear a familiar voice…it’s Ruby of Spokes and Stitches, a regular guest around here. I kinda can’t believe how different Ruby’s essay is from last year, when she told us that she had to kinda backburner her dream of being a small business owner for financial reasons. Let’s take a listen!
Thank you Ruby for being so…honest with us all! I’m going to tell you that 1. I’m so glad Ruby has been working with a professional to figure out how to make her business more sustainable–both financially and emotionally. And 2. Everything she is saying is 100% true (and why it is super important to get someone outside, unbiased, professional advice on your business, no matter how long it has been around. Sometimes we offer certain services or products because we “always have.” And often, they are no longer (or never were) profitable or sustainable. Honestly, some of us are probably doing something similar in our personal lives: offering our time and emotional energy for things that might be consuming all of that without really accomplishing anything. I know a lot of small businesses are struggling right now. I would ask you to take some time, take a step back, and look at what you are offering the world. What makes sense financially? What actually sells? What could you be doing more of? And what could you be doing less of? All businesses change over time, and small businesses tend to see shifts every few months. The businesses that survive and even flourish will be the ones that see those changes, those trends, and react in a timely manner.
Thank you to Ruby and Ren for taking the time to write and record your audio essays! I’ll be sharing their IG accounts, websites, etc in the show notes, so please give them a follow and check out what they do!
Okay, so let’s talk about returns for a few before we jump into my conversation with Emily.
First, let’s start with some pretty staggering numbers. Ready?
- In 2022, US retail sales were…$4.95 Trillion.
- $816 billion worth of merchandise was returned, 16.5% of those total sales. That means in simpler terms, that for every $100 in sales done in 2022, $16.50 worth of product was returned. That might not sound too terrible, but when you start talking about close to $5 trillion in retail sales…you end up with more than $800 billion worth of product being returned. And while we are talking about all categories of products landing at a 16.5% return rate, clothing is closer to 24-25%…meaning 1 in 4 garments purchased is returned.
- Processing those returns–an arduous and very expensive process often called “reverse logistics” –costs a lot of money. It’s hard to get a clear number because it turns out that a lot of retailers either aren’t tracking it or are trying to keep it a secret because, well it’s not good for stock prices…but analysts believe it is somewhere between $50-200 billion each year. Others say that the cost of returns is more like 59% of the original selling price of an item. So if the selling price for an item was $50, we’re looking at about $30 to process the return, including shipping. That sounds WILD, but then again…
- When you think about it…well, it makes sense that returns are expensive to handle.
- IF–and this is a big if–the company actually processes all returned items and puts them back in the inventory to sell to someone else–it takes a lot of time (which is money, right?), particularly when we talk about online returns
- First there is the return shipping cost
- Next, unpacking the return, inspecting it, steaming/folding/repackaging it, then having someone put it away in the inventory.
- There’s the process of returning it in the warehouse management system and refunding the money.
- And there are the customer service teams managing the communication around returns, smoothing things over with unhappy customers.
- Many retailers have found that this process is actually MORE expensive than just trashing or donating the returns unprocessed. Which speaks to both the cost of this process AND the shockingly low costs (and high margins) of the fast everything era. For example, it’s not uncommon in the fast fashion realm to price a garment with an 80% markup. That would mean that say, a $50 shirt, cost $10 (that includes all materials, production, shipping, duties, etc). Of course, many of those shirts are going to sell on sale, maybe for $30 or $40. But with that kind of markup, you can make the math MATH while also throwing out/donating any returns.
- Let’s say you sell 1000 units of that $50 shirt for $30.
- That’s $30,000 in revenue.
- But, 25% of them were returned (250 units), so let’s reduce that revenue to reflect those returns, bringing us to $22,500 in revenue.
- Now we know that the 750 units of that shirt that were sold and not returned cost $10 each, so that’s a cost of $7500. Let’s subtract that from the $22,500. That leaves us with $15,000 in gross profit.
- But remember, 250 units of that shirt were returned and we are like “there’s no way we are paying to return those to inventory, let’s just donate them or toss them out.” Those 250 shirts cost a total of $2500 to make.
- We are still left with $12,500 in gross profit.
- Now multiply that by hundreds of thousands, millions, or billions of shirts being sold…and you can see that by creating very profitable products, tossing out returns is kinda NBD from a financial perspective (unless you’re Revolve, which Emily and I will be talking about in our conversation).
- IF–and this is a big if–the company actually processes all returned items and puts them back in the inventory to sell to someone else–it takes a lot of time (which is money, right?), particularly when we talk about online returns
We just did all of that math, not just because it was fun, but because I wanted to illustrate how creating low quality product with a very high profit margin keeps fast fashion brands profitable even while dealing with lots of returns. Remember what fast fashion does to make clothing as profitably as possible (while keeping prices low): swap into low quality synthetic fabrics, cut out details like lining and pockets, swap out high quality trims for less expensive ones (like crappy zippers), skip fittings and samples to actually get the fit right and of course, squeeze factories on pricing, while underpaying everyone involved in making, shipping, and selling our clothing.
Fast fashion cuts a lot of corners to cover the cost of free shipping and all of those returns.
The irony of this is of course that cutting all of those corners, like fabric, fit, details, etc, actually leads to more returns. But it’s almost like fast fashion brands can’t see the big picture. Or don’t want to see the big picture. It’s better for them to sell us lots and lots of shoddy stuff that we will absolutely return, that they will absolutely write off on the books, that will absolutely fill up our landfills, oceans, and every nook and cranny of the earth over time…because in the short term, it drives profits, drives up stock prices, and makes a lot of people at the top very, very rich…all while the rest of us cope with the economic and environmental impact of all of these shitty clothes. It’s no joke when you learn that in 2021, returned products turned into 9.6 billion pounds of trash heading to the landfills. That’s the equivalent of 10,500 Boeing 747s! It makes sense when you realize that at least half of returned clothing is never worn by another person. The data here is murky because obviously no one wants to admit to destroying that much stuff, so it may be even more.
The carbon impact of transporting those returns around? The equivalent of 5.9 million cars driven for one year.
Does that make you angry? Because it makes me beyond angry!
I think that’s a great time to jump into my conversation with Emily, right?
Afterwards, I’ll talk about how WE as individuals can maybe return a little bit less.
Okay, Emily, why don’t you introduce yourself to everybody?
Hi Amanda, thank you so much for having me. My name is Emily. I live in sunny Seattle, Washington. I have a four pound Yorkshire Terrier named Toffee. He’s very cute, quite a handful.
Yorkies are my favorite dog, period. You have to, yes. Ha ha ha.
Oh, well, I’ll have to send you some photos of him afterwards because he is a delight. I have over 10 years of experience working in retail and customer experience in some form. And I’m really excited to be talking with you about returns today.
I am excited to talk about returns today because I was telling you before we started recording, there are many things that are kind of hidden secrets about the stuff we buy, but there are two things that are really, I don’t know, I would say people have the most confusion or lack of knowledge about. One is shipping. I do really truly believe that a lot of people think that shipping can actually be free, whereas as in no one pays for it, we know that’s not true.
The other thing is people do not know what happens to the stuff they return, how it works, anything like that. And I was telling you, I just really started to understand returns and what really happens to the stuff we buy online in return, maybe in the last five or six years, even after working as a buyer for all these years, and definitely looking at the percentage of something that is being returned.
But never being told where the returned stuff went. I just assumed probably like most people, if I bought something online and I didn’t like it and I returned it, that they received my package and then they put it back on the website and someone else bought it and it was a happy ending. Right?
I wish it was that easy, but honestly, I think it’s a secret and for a reason, probably.
I think so too. And I will also say, and we’re going to unpack this in all kinds of ways today, what I have noticed in my career when it comes to returns is that I don’t think retailers knew it was going to be the big thing that it has become. It’s like a monster now. And I’m going to tell you, at some point when we’re talking today, all the stuff I was reading about Revolve that just blew my mind.
I can’t believe how much stuff gets returned to Revolve. Anyway, we’re going to talk all about that today. So how did you get into the returns game?
Yeah, it’s kind of a funny story, but I’ll try to sum it up. I was working at a skincare startup and was one of two people responsible for manually issuing, issuing return labels to customers. There was one person in the warehouse responsible for documenting the receiver turns in a Google sheet. So fine. Yes. The Google sheet classic. And then I would manually refund the customer in Shopify. Super manual, very labor-intensive, not at all fun for anyone involved.
Haha, yes. Classic.
I think it was early 2019 when we got approval to look for a returns management software. We decided on a company called Returnly because of this feature they had called Green Returns. With this feature, merchants can offer a refund to eligible customers without the customer actually having to ship back the return. As you can imagine, a feature like this was a serious game changer for us and any other skincare company shipping all their products in glass bottles.
And fast forward a couple of years, I start working at Returnly.
Wow, I mean, you just touched on so many points I wanna discuss, even just in that short little blurb you just shared with us. So first off, I think it’s really interesting, you talking about how until 2019, basically, your employer was doing all their returns using a Google Sheet and manual returns, manual refunds in Shopify. And that’s…
Basically every place I worked up until around that point was doing the same thing, no matter what the size was. And I feel like you were almost working in a really luxurious job in that you had two people working on it. Really lucky, you know, I’ve talked about this in the past here on the podcast, but when I was working for this one startup in the Pacific Northwest, we had one customer service person.
I know, I can’t believe it. We really, we were really lucky.
And they were dealing with everything. I think they also had to write all the copy for the products on the site. I mean, it was like, how was this person possibly managing all this stuff? Being on the phone, taking emails, doing chat, and writing product copy. And the returns, we had a 3PL at that point. So that was like out on the edge of the city, like far away. I mean, if you didn’t have a car, very far away, which most of us didn’t.
And so all the return packages would ship to our office, where they would, in theory, be processed by the customer service person, who would then do exactly everything you talked about, track the return in the Google Doc, right? And then manually do the return. We didn’t have Shopify, but we had something similar, manually refund the money there. And what would happen, because this person is doing 9,000 other jobs, is of course they would fall behind on returns. And I…
The way we were kind of keeping track of what was going to be coming inbound in terms of returns is like when you were a customer, if you decided you wanted to return something, you would be sent a link to a form. It was a Google form. And you would like fill in what you were returning and why. And I could then see what was going to be coming back. And there would be times where I’d say like, wow, we are out of stock in half the sizes of this item, because we’re like a small company, you know?
Here’s the thing, we have like 50 units of these things that are out of stock sitting in a pile over there in the corner and all those bins of returns that need to be processed. And so oftentimes I’d have to get like my team, the buying team, we would go over and start processing them, opening them, you know, inspecting them, returning them to the inventory, issuing the refund. And for me, that was a major unlock in understanding just…
how much time it takes to process even just one return. It is so much more complex in my opinion than packing an order and shipping it out. And you get them, and for a company, it’s like not only does it take more time and then therefore cost more money to process a return, it also, you don’t make any money off of it. You lose the money on it. And it’s like, what a bad situation. So it’s interesting, this green returns feature of.
course that’s what it’s called, right? Yeah, yeah. You know, it’s interesting, like, how many returns do you think you were getting in like a week or a month that really allowed you to get the permission to go find a service to do this for you? Like, what was the tipping point?
because they have to make it seem sustainable.
Honestly, I’m actually not sure. I think it was less than number of returns and more how much money we had because, you know, being a startup, we didn’t really have a lot of available funds for that kind of thing. And we just really wanted to grow and make our customers’ lives easier. So, and honestly, my brain cannot even think of a number right now. So, but I would say making…
the lives of our customers easier was a big one. And then how much money we could save in return shipping for these using the green returns feature.
Yeah, I mean, I am familiar with the company that used to work for. I’ve actually bought stuff from them in the past. Yeah, I love their stuff. I think it’s great. And those glass jars are heavy. They are really heavy. Yeah. And so would a lot of people before the green returns think they would actually physically send you the product back? Is that what was happening? And what would you do with that? Because I mean, I’m not like super reversed in that area. But.
Oh, really? Good. I’m happy to hear that. Yes, they are.
I do follow the subreddits for Ulta employees and Sephora employees because I’m creep. And they talk about how basically everything that gets returned, they have to damage out for like health reasons or whatever.
Yes, that’s exactly what it is. I mean, shout out to the one person who was receiving all those return packages and opening them up because that is a huge pain. Um, but yeah, we would just, no matter for any reason, even if the customer said the return was like, the product was unused, we would have to damage it out and you know, if they said the product was unopened, unused, maybe we’d, since the production facility was.
where the returns were received was so close to where the office was. Some of us would just like maybe waltz on down to the production facility. Um, and if we happen to see a returned product that was usable still, we would be able to take that off of our hands, but, um, yeah, they would just be sitting in large bins in a closet somewhere or thrown away. It’s yeah, it’s really unfortunate.
It is really unfortunate. And I mean, in that kind of business, it makes perfect sense that you would be like, we’ll just give you your money back, because why spend the money to ship something out, back to throw it out? And that is actually, that is like actually more green. You know? Like. Yeah, it’s good. It’s like.
I know, it’s so wasteful.
Yes, it is. It is. That is truly green on a lot of levels, but also saved us a lot of money. So it was a win-win.
So, you know, I asked you like if perhaps returns had increased a lot because I just like in my career, I have seen…
returns just grow and grow and grow. And a big part of that is shopping online, right? I mean, it’s even more complicated than that, though, because companies put on these free shipping thresholds, encourage people to add more stuff that they end up not wanting, and companies make a lot of clothes and other things that are really disappointing, don’t fit well, aren’t good quality. Maybe they have bad photographs or bad sizing, or there’s a million reasons why. And also, like,
I don’t know, we kind of we live in a moment of hall culture where you’re it’s like, I don’t know, we were socialized to buy a lot of stuff in one order. And I think that’s why a lot of stuff gets returned to, I would say a big chunk of returns, especially in the clothing area are really the fault of the retailer in the first place. But in general, like
I would say the increase in returns is coming from all directions, right? It’s like a perfect storm of everything going bad all at once. And like we were kind of alluding to already, returns are really painful. They are expensive. I mean, just thinking about your employer shipping back all that stuff that’s gonna get thrown out, it makes me really sad. It makes me sad for everyone actually, because it’s like…
Wow, you’re spending money to just collect trash, basically. You know? Yeah, I mean, I will say.
I mean, that’s a really good way to put it.
I mean, you and I talked about this before. More and more retailers now are just like, don’t return it. And they just don’t want to deal with the return expense, even if it would it would be usable again. It’s like not skincare stuff. It’s other things. They’re like, you can have it. But, you know, like in something that definitely 100 percent could not be sold to someone else, it’s really it’s really sad. And then, you know, processing these returns, it’s called reverse logistics is so time consuming, which means it costs so much money.
And depending on how soon the person ships it back and how soon it’s processed, inventory is unavailable for purchase. So it kind of just becomes a liability over time. And if it’s received and returned to the system way too late in the game, now it’s just like a markdown. You know, like.
I would dread working places where all of a sudden, like one week before Christmas, like all of the like holiday dresses would come back and it’s just like, no, now we’ll never sell them. You know, they’re gonna sell on sale. And so that kind of stuff is like really frustrating too.
But I have also noticed, both as a customer and a person working in this industry, that return policies got really, really permissive. You know? Like, I was telling you when we were prepping for this, way back when I was working in retail, we were, in the early days, we were basically encouraged to…
I don’t know, like not accept returns. Like I really, and I guess that’s the best way I could put it to be like, this smells like cigarette smoke or I’m pretty sure you wash this. Or like this is, you know, just any reason we could or any reason we could to just give someone store credit, you know, and over time it was like, whatever, just give people their money, you know. Like no questions asked and.
I think that companies are starting to regret that, you know?
Yes, I totally agree. I mean, honestly, I blame Nordstrom for a lot of that, and I used to work there, so I can say that.
Interesting. Yeah, tell it. Tell me more. Why do you why do you think it started with Nordstrom? I believe it because I think retailers, they all just copy each other. Right. Why not copy Nordstrom? Nordstrom is great. You know.
Yes. Why not copy Nordstrom? I mean, like they’ve of course, since changed a lot of their return policies, I think because of this and because people took advantage of how lenient Nordstrom was with accepting returns. And I mean, oh yes. Well, I think most people who have worked retail, but especially at Nordstrom have heard the story about the Nordstrom store in Anchorage, Alaska, which
Oh, I’ve heard stories. Yeah.
is now closed, sadly, excepting a pair of set of tires from someone because there used to be like a tire store where the Nordstrom was, but they like just gave their money. Yes, this is a true story. I don’t remember when it was. It was like maybe early 2000s, 90s, whenever it was, I don’t know. And they literally just like gave the money to the customer for how much like the tires were, which is an amazing, amazing story because
This is the reason why Nordstrom has established itself as a pioneer and forefront in the customer experience and customer service world. And it’s amazing, but unfortunately I think, um, there were some bad apples in the bunch and they’re the reason why a lot of other companies like REI, Nordstrom, other companies that had very lenient return policies with very loyal customers who didn’t abuse them are now changing their return policies.
Yeah, I think that it’s like really catching up them. And I have heard so many stories over the years about Nordstrom, people bringing in something they bought like a year or two ago and getting their money back or, you know, like all kinds of things that seemed unlikely. But over time, everybody sort of adopted that. Like the return window, you know, was extended.
You know, like if you return something at Target, you don’t even need to show up with the receipt. If you have the card you paid for it with, it’s like fine, you know. So it just got easier and easier to return stuff in person, at least. And, you know, I also think Amazon made, you know, they led the way in free shipping, right, and fast shipping and also just like the easiest online returns where you just like, I mean, even now you can go drop stuff off at like Whole Foods to return something for Amazon. You don’t even need to go to a post office and.
They seem to ask no questions. I.
I want to say, gosh, this was so long ago. It was probably like eight or nine years ago when I was living in LA. I ordered a cat water fountain for my cat because it was very dry there and the vet recommended it. And I was really excited about it, as excited as you could be, okay? But still I was like, this is pretty fancy. Now we’re middle-class, I guess, you know? And I get home and the box isn’t in front of my door, even though I’d gotten a little picture that it was, like inside the apartment building.
And I go outside to the back of the apartment building, someone had gotten in the building and grabbed the box out of in front of my door and taken it out back and ripped it open and stole the cat water fountain. And this was the first time I really experienced anything like that and I also really hadn’t.
returned much stuff in my life, especially like online. And so I was very anxious that I was, you know, this I was out the money of this cat water fountain. And my friend was like, no, literally Amazon doesn’t care. Just tell them. And I was like, really? And I went on chat and I was ready to have like all this evidence. And I was just like, oh, the box was stolen. It was outside. And they were like, OK, cool. We’re sending another one right now. That was it. I was like ready for it to be like a thing.
And it wasn’t. And I think I’m sure Amazon probably has a little bit more parameters around returns now, too. But they really led the way in just being like free returns, easy returns, no questions asked returns for our online orders. And I think those two versions of customer service policy like Nordstrom and Amazon, everybody copied because no one can be original in the retail industry. And also, you know, they have to keep up with one another. And we get to this point where.
I mean, I can say it from like working behind the scenes that in the first few years of my career where most shopping happened IRL and my employer was definitely a little tougher about return policies, at most, like for us a style was a bad style if it had a return rate that was more than like 5%.
And then I moved on to, I remember when I got to ModCloth, everything is online only. And I am looking at the data and I’m like, oh, wow, 15% of your stuff is returned. Like that’s…
That’s wild. And they were like, well, you know, you can’t try stuff on until you get it. And I was like, okay, yeah, that makes sense. And we were never allowed to reorder anything that had a return rate over 20% because that probably meant it had big fit issues. And then I went to Nasty Gal and our return rate was more like 20%. And then as I moved through my career, I just saw it increasing and increasing. And I think it came really to a head just like industry-wide in 2020 when now like,
All shopping happened online because you couldn’t go anywhere. And I started to see retailers freaking out about this. And one that people were talking about a lot was Revolve. Have you ever bought anything from Revolve?
No, but just to talk really quick about Nasty Gal and why I’m not surprised that they had at least a 20% return rate. Okay, so I’m tall, I’m 5’10”, and it’s very difficult to buy dresses or skirts online because, I mean, like, they’re just never long enough. But one time, several years ago, I bought a dress from Nasty Gal. It had a side slit, which was more…
Oh, tell me.
like I should not be seen outside in this slit because um yeah there were definitely a couple of fit issues there so I’m not surprised but I’ve never bought anything from a ball because I think I learned my lesson from Nasty Gal and just didn’t really trust it.
Yep. Sounds about right.
Yeah, yeah. So when I was working at Asti-O, obviously, I was not surprised by a return rate. Some stuff, it would have a 50% return rate, which means when I say return rate and I say 50%, that means 50% half of the units people bought came back to us. That’s really bad. And other things, like t-shirts had a lower return rate, but pants, dresses, skirts, high return rate. And unlike at.
ModCloth where there was like you could not you were not allowed to reorder anything that had a return rate over 20 percent Nasty Gal they were kind of like whatever and I was like guys. This is like bad This is bad strategy if something’s coming back a lot. It means people don’t like it and so I mean one of the main reasons that Nasty Gal went out of business is that they were spending hundreds of dollars On new customer acquisition like I want to say
It was like somewhere between 150 and $200 per customer that came in. The company was spending on ads and Google search and all kinds of stuff to bring them in. So they’ve already spent like we’ll just make it easy and say $200 to get a customer to buy something. The customer would come onto the site, spend $100 maybe. So Nasty Gal still hasn’t made that money back. But that’s not abnormal because the expectation would be that the customer would.
get their order, love it so much, keep coming back to shop, and that $200 would be exceeded in the not so distant future, right? They’d make it all back. But instead what would happen is the customer would come and spend $100, they’d return half of that order, if not the whole thing, and then they would never shop there again. So then Nasty Gal was out the money of all the ads that had spent money on to acquire that customer, the cost of shipping to that customer.
you know, any other like return processing fees. Like it was it was just bad. It was like that’s how you run out of money. Right. Like that’s how places go out of business. And that was like something that I really carried with me for the rest of my time working in fashion. Like we have to be smart about returns. We really, really should not be buying stuff that gets returned a lot. And so imagine my surprise. So I.
Okay, I’ll rewind. I started to read stuff about Revolve in 2020, 21, that era, that Revolve was in a bit of a crisis because of returns. And I think a lot of analysts were like, this is troubling, but it’s also the pandemic and people aren’t shopping, IRL and Revolve is online only. I had only ever bought one thing from Revolve and I will tell you, I did return it because it was clearly defective when I received it. Like it had been returned by someone else or something.
But the zipper was broken, like completely broken out. So I don’t know how it got shipped to me in the first place, but I never bought anything from them ever again. And I was maybe not surprised by that experience because when I was at Nasty Gal, it was like Revolve was our rival, like our classier rival or something. I don’t know, because they had more name brands than us. But it was kind of the same stuff. And so.
I had been reading, like, OK, Revolve is really bleeding money on returns. They’re kind of blaming influencers or what have you. And I told you about that, too. Well, this year, so we’re talking like three years after this conversation about Revolve’s return problems really beginning, Revolve revealed in August in an earnings call that their return rate this year, 60%.
That is absolutely the most ridiculous thing I’ve ever heard, but also not surprised.
I know. So once again, that means 60% of the stuff people buy from Revolve gets returned. For every 100 items Revolve ships out, 60 of them come back. More than half. This is wild. Now to put that in context, the return rate for apparel as a whole is about 24%. So
Almost three times, not quite, but exceptionally higher. And just in general, like the average retail return rate, you put all categories in their skincare, home goods, you name it. That’s like 16 and a half percent. So apparel is always higher and it makes sense. But Revolve is in this like next level space. I mean, I don’t know how people aren’t like just burning it down and starting over. This is like really.
shocking. And I was reading this article from Sourcing Journal about this announcement. Basically, Revolve is already kind of having like a bad year. Their sales are down to last year. And in the second quarter of this year, so that would have probably been May through July, wait, did I do that right? February, March, April, May through July, Revolve did
about $275 million in sales. And they only, their only income from that, meaning when they took out returns and other shipping and logistics expenses, salaries, that kind of stuff, cost of goods sold, they were only left with like $7 million. So to go from 275 million to $7 million left,
That’s bad. That’s really, really bad. Yeah. So they are in a really bad place. And what was interesting is, you know, in the past, when Revolve would talk about these things, they and I’m sure they have analysts who are looking at this in every possible way. In the past, they really said that they felt that a big chunk of this was influencers or perhaps aspiring influencers.
placing huge orders, getting it all, maybe taking some photos in it and then returning it all. And so they were cracking down on that kind of behavior. But now they’re saying, actually, there’s no like single cause, it’s just everything. It’s that people aren’t liking the fit or the styles, they’re disappointed when they get it, they’re buying stuff that they don’t really want. People are buying stuff just to wear it and return it. I mean, it’s just like everything that has gone awry. But I gotta say, like just
more than half of the stuff you sell being returned is like, this is how companies go out of business. It’s giving me Nasty Gal vibes, you know? Yeah, right? And they are like, you know, I don’t log into LinkedIn very often because it’s really annoying. It really tries my patience. But every time I do, like one of the top posts will be something about like, we’re going to redefine how returns work in the industry or like periodically.
It’s giving nasty gal.
weird startups that are working in that space will reach out to me about being on the podcast. And I’m like, well, are you going to pay me because you have the money, right? And then they’re like, never mind. But like they there’s so much conversation about this. And so it’s like, OK, well, we’re going to do like virtual dressing rooms where you can try stuff on and see yourself or we’re going to change the way we give measurements on the site or like.
It’s all this stuff that maybe could put a dent in it, but it’s also like, I think the problem is that there’s no consistency and fit. Photos make things look way better than they are. For example, Nasty Gal, that’s what we did there. We had incredible photography and then you’d get the package and you’d be like, what is this garbage? You know? I mean, I was a customer of Nasty Gal before I started working there and the first box I got from them, I was like.
I can’t believe I bought this. I’m embarrassed, like how bad it is, you know? But it looks so good on the model. And you know, like that’s what retail is doing, you know? Classic, right? And so I also think maybe we need to go back to shopping IRL more often. I think that’s probably a big part of it, too. Where were we? So OK, why don’t we talk about?
the different ways that retailers handle returns, because I feel like Revolve hasn’t really figured it out. So, you know, if you go return something in a store, it’s pretty straightforward, right? Like you bring it back and I would say in 99% of cases, they put it back on the shelf for someone else to buy, but you know, I’m on all these subreddits that I don’t have any business being on because I just like reading about what people do.
One subreddit that fascinates me when it comes to returns is Target. I don’t know if you’ve ever heard anything about Targets return policies. There’s this like with the children’s clothing, have you heard about this? The cat and jack guarantee or whatever?
Yes, I have.
Yeah, it’s pretty, I think it’s a really cool idea. But of course, as you know, some people do take advantage of it, unfortunately.
So basically, like if you buy cat and Jack clothes and you’re unhappy with them, you can bring them back. And I think you get like a year or longer. It’s it’s some like really extended period of time. And you can bring them back and get a full refund or swap them for new ones. It seems to make people think that it’s actually some sort of like sustainability exchange program. But it’s not. Because if you bring your worn cat and Jack.
clothing back to Target, it gets thrown out or donated. It’s not like they resell it to someone else. And people talk on the Target subreddit about people showing up with a whole IKEA shopping bag of Cat and Jack clothes that are a year or two or three old that they want to return for money. And they have to do it. And it’s like, someone was like, anytime I see an IKEA bag walking in the door and I’m stationed at the customer service desk, I go on break.
Because I’m really out of it.
Oh no, yeah, that just makes me feel so sad because I wish there was a way to respectfully tell people who do that, here’s what actually happens when you do this. And it’s just, how do you recover from that as a company and make people actually respect the policy? But I don’t know, I’m not Target. I don’t have billions of dollars.
Yeah, I don’t I mean you can’t it’s kind of like once you’ve let people I Don’t even like let the genie out of the bottle so to speak. How do you go back? right, but as we’re gonna talk about like more retailers are tightening up on things because of this kind of stuff, but I Actually, someone messaged me on Instagram a couple weeks ago and was like hey Can you tell me about the sustainability of the like target cat and Jack?
program and I was like, wait, why? Why am I getting this message? Then I was like, oh, well, you’re lucky that I am a creep on the internet because I actually can tell you about it. I was like, it means that stuff just gets donated or thrown in the trash. The end. It’s not like some sustainability program, but I think some people sort of spin it as that. I don’t know if Target is, but it’s not clothing rental. It’s not hand-me-downs. It’s returns.
Um, and I don’t know. I read a whole bunch of stuff this weekend about how like targets business is really bad right now Like really bad How could they possibly turn back their return policy right now, you know? What would they do?
It’s kind of like Nordstrom. At some point there is a limit and they just need to deal with the backlash and people will get over it. That’s honestly what I think.
Yeah, yeah, I think so too, but they just have to be like unafraid, you know? So, OK, so that’s it. But generally in a store, if you return it and it’s not broken or gross, someone else can come and buy it. Right. But online is way more different and mysterious. Right. So do you think that when you were working for the skincare company, that customers who return stuff thought that those items would be resold to someone else?
It’s very mysterious.
Honestly, that’s hard for me to say because I would hope not because can you imagine being a customer buying a skincare item? Just like you changed your mind after you placed the order, but the company couldn’t cancel the order. So you just receive it and then you’re like, I don’t want this anymore. I’m going to return it. I would not as a customer want to risk purchasing an item that was returned because what if
it was tampered with or you know something like that so um but honestly not everyone thinks like that so I have no idea.
And I also wonder, I guess this is like my follow-up question. I don’t have an answer. I’m just like thinking aloud right here. If customers did know, because sometimes you would be surprised. People are not thinking this intensely about it. If the customer did know that anything they returned was going to be thrown out, I mean, for obvious health reasons, it makes perfect sense to me, would they maybe give returning that item a second thought?
You know, like maybe I actually do like this enough to use it or give it to a friend or, you know, or something like that. Right. Like.
Yeah, that’s really why I liked the green returns feature because the communication that was given to the customer when they returned something and they were approved for a green return was, thank you is something along the lines of, thank you for your purchase. You don’t have to return the item. Feel free to gift it to a friend or whatever. And they may or may not give that item a second try because honestly, the number of times I’ve had a customer email me
not me, but when I worked at the skincare company email and say, this skincare item didn’t work out for me because I’m also, because this is like an exfoliating product using like, um, it’s like an AHA, BHA exfoliating product. We might ask them, well, what else are you using in your routine? We’ll be like, oh, I’m using two different retinols. I’m using this product night and day. Like I’m like, this is like not the products.
fault, like you need to not be exfoliating your skin so much. So, um, hopefully they’ll understand that I need to fix my routine and maybe come back to this product at a different date because I have experienced that before myself. Honestly, sometimes when I buy a skincare product and it doesn’t work for my skin, I don’t even return it because I don’t want the product being thrown away and it just might sit on my shelf for a couple of weeks and I’ll give another try.
and then it works for my skin and honestly who knows why that is. So yeah it really it’s a it’s a it’s a mystery that’s for sure.
Yeah, yeah, and I think that because, you know, before online shopping or if you do return something IRL now, you know that if you return something and it’s in good condition, it’s going to be available for someone else to buy. You assume that when you’re returning something online that will happen as well. I do think people, because I’ve seen.
People show up in the Ulta subreddit when someone’s like, man, someone returned like $1,000 worth of hair care today here at All Is, and I’m out here by the dumpster breaking it all, you know, spraying all this stuff out of the bottle and stuff before I put it in the dumpster. People are always shocked that stuff can’t be resold. I mean, I’m not, right? But I do think that like we all think there’s this happy ending, but…
You know, we can all say, OK, now that I think about it, it makes sense that like food and personal care products, like those you wouldn’t resell. Right. Clothing, it’s too bad. Right. But it’s the same story with a lot of everything else that we return. And I think that’s the part that people don’t know that might make them change things up a little bit, because the only way this like returns crisis gets fixed.
Yeah, it’s too bad.
is if either retailers tighten up on return policy, which will force a change in consumer behavior and also leave people with a lot of stuff that they never use, or if we just change how we buy stuff in the first place, I think it’s like a combination there that would maybe fix this problem. But the reality is that right now, more and more retailers are just like taking the returns and never processing them, passing them off to someone else, right?
A lot of this stuff, it doesn’t necessarily get thrown out. Some of it does. Some of it gets donated. Some of it gets sold off to resellers. That’s like such a thing now is like buying pallets of returns. And it’s like a roll of the dice. Right. Or like I was telling you, we went to a place here in Austin that is Amazon returns.
and they’re just buying them by the pallet and they dump them in a bin. And oftentimes they’re still in their original shipping packaging so you don’t even know what it is. And we’ve gone there a couple of times because for me it is so fascinating to see what people are buying from Amazon and returning because you really can buy anything on Amazon, right? It’s kind of wild. And it’ll be weird to like go to this place and see the same stuff over and over again.
Yes, it’s true.
Like, so many phone cases, so many phone cases. So many phone cases. So many like colored light bulbs, that’s another thing I’ve seen a lot of there. Random, just like the weirdest stuff. Like, I don’t know, lots of weird like holiday decorations, birthday party stuff. It’s…
Oh my gosh, so many phone cases. Why is it phone cases?
Like 99% of it is not useful, unfortunately, which makes it even sadder. The phone cases and the phone accoutrements and the cords and the charging things and the bricks and the so much of that kind of stuff, it’s just wild to me. But then also like a lot of baby stuff, you know? And like weird random like home goods stuff, lots of really ugly throw pillows and shower curtains that I think
probably looked really good on the website and then someone got them and we’re like really, really disappointed. And you know, if no one buys them from the bin drop place, then I’m sure they go to the landfill because no one wants them. Because this place here in Austin, on the first day the stuff gets dropped in, it’s like $10, the next day it’s $7, then it’s $5, then it’s $3, and the last day it’s $1. Whatever’s left they take out and then they fill up all the bins and start over for the next week.
So that stuff that couldn’t even sell for $1 is definitely going in the trash. And when you’re there and you see all the phone cases, you’re like, those phone cases are going in the trash for sure. There’s so many. But that’s not an unusual story because it is cheaper for these brands to either write this stuff off and throw it in the trash or donate it or sell it off for pennies on the dollar to these jobbers.
than it is to process the returns. And it’s even cheaper beyond that to just tell you to keep it and give your money back. Right? That’s the cheapest for sure. But you know, it just, no one, it doesn’t go back and get bought by someone else is what I’m saying. There was an undercover CBC, like Canadian Broadcasting Company expose that happened, I don’t know, 2020, 2021, around that time.
Yes, that’s the cheapest.
where they bought a bunch of stuff on Amazon and they put little like air tags or something in it. Remember that, right? And like, then they returned it all and they followed the journey and some stuff went around and around and around in trucks until finally ending up the landfill. Like it passed the landfill like 20 times before ending up there. And other stuff was sold off in pallets, other stuff was donated. Things were just sitting in warehouses unprocessed or in the same truck for months on end. And…
Yes, I remember this.
Thanks for watching!
For me, that was really eye opening, too. I think I also I don’t think I realized really until we went to the bin drop place here in Austin, how much stuff people were buying on Amazon that no one actually wanted because it was so terrible.
Yeah, it makes me feel a little unwell thinking about it.
It does. Yeah. Like I the whole time I was there, I felt I felt kind of nauseous. Like just this is this is weird. Like this is this makes me sad about the world. But I think the average person, if they knew that odds are really high that what they return is going to end up in the trash or dumped at the Goodwill or something, they might rethink what they buy.
Yeah, it is sad.
maybe make less risky purchases, maybe not buy weird Amazon brand stuff on Amazon. Because the odds are high it’s not going to be good and it’s going to be trash. I don’t know. I think the companies want people to feel bad for them. And I can’t because if they made better stuff, probably less of it would be returned. But I also am like, man, we got to stop buying so much stuff that we’re not serious about. You know? It’s like a bad cycle.
So, all right, let me see where we are. Okay, so we talked about how there was a time when a lot of returns were being done with Google Sheets. But obviously that ship has long sailed and everybody has way too many returns to possibly be tracking that. Although I will tell you, when I worked at ModCloth and we were doing like $100 million in sales, our warehouse management system was a spreadsheet, not a system.
So where there’s a will, there’s always a way, I guess. But more and more companies have arisen who deal with this return problem. And they offer this service that ultimately probably does save these retailers money. So I thought you could tell us a little bit about how they work.
Yeah, of course. So I started at Returnly at a really good year because I think it was right before the explosion of these return softwares. And since then, we’ve seen just more and more of them pop up. So because it is so expensive to build and maintain an in-house return solution, we are seeing more and more
of these return solutions platforms, as I said, there are a few major players, Loop, Narvar, Happy Returns, and Return Logic. So, I guess I also wanna mention really quick, I wanna be clear, this is not an ad or endorsement for any of the companies I’m mentioning, so. Yes, they’re big names. So for companies like Loop, Narvar, and Return Logic,
But those are the big names. I recognize all of them. You know? Yeah.
Customers create the return or exchange via an online portal and are issued a return label to send back the return to the merchant’s warehouse. I’m sure most of us are familiar with this process. Happy returns is a little different in that customers can generate a return label online or drop off their return at a return bar in their area. Returns are then batched and separately sent to the merchant’s warehouse for processing. Now these companies are actually receiving and processing the returns.
That’s still on the merchant to action. So there’s this middleman and that’s the returns platform. Softwares are super easy to set up, especially for Shopify merchants who can download the return app of their liking directly from the Shopify app store. So it’s a great solution for SMBs and large businesses alike. Companies like Good American, Everlane, Rory, just like some really big names use these softwares and they generate so many.
return labels. It is actually insane.
Oh, I bet. So when the company that I was working for finally was like, we got to stop tracking our returns in a spreadsheet. They they chose one a different service, one called Newgistics, which I mean, they yeah, they’re another big one out there, right? I think at least for some time they were doing the returns for Nordstrom. I don’t know if they were now, but back then they were. I remember them like selling it to us that way, like, well, we got Nordstrom. And we were like, oh, well, that must be great. But, if I recall the way it worked for them to handle our returns, it was how they made their money, I guess I’ll say, is one, they obviously charged us for every return they processed. But even though like they didn’t return the stuff to inventory or anything like that, you know, they kind of accumulated it at all. They also.
Basically, we paid them for the shipping, the return shipping on the returns, but they made a profit off of that because they had negotiated an even lower price from the USPS. So
They took a markup on it. And so that’s like really where most of the money was coming in from them. And if you use them as your three PL to do your outbound shipping to customers, that was also where a lot of their profit came into play. And it makes sense. Right. But when I hear about that kind of stuff, I’m like, wow. So they negotiate even lower rates with the USPS or UPS or FedEx, whoever the carriers are. And that pressure for lower shipping prices,
onto both consumers who go out and ship their own packages and pay higher rates to cover, right? And all the workers who work within those companies, or I guess the USPS is not a company, it’s an, I don’t know, what would you call it? An organization? I’m not really sure, but all of those employees experience that downward pressure on pricing, in terms of their pay and benefits and scheduling and all that stuff, right? So these returns have a bigger effect than just…
just the environmental impact. It’s a complicated thing.
It really is.
Um, so we talked about how more and more retailers are saying like, hey, don’t worry, you don’t need to send it back. And I’ve seen some pretty egregious stories. Like I saw one online like a year ago. Someone bought a sofa online. I’m not really sure where maybe I’d maybe like overstocked.com or something like that. And when they got the sofa, it was it had a stain on it. And they said, OK, well, we want to return the sofa. And they said, no problem, we’re going to send you a new sofa. But.
You have to keep that sofa and do something with it. And that’s where you’re like, oh, that sucks, you know? It feels like being punished for someone else’s mistake. Why would a retailer say, no, go ahead and keep the sofa. Like, what are the advantages to that?
Well, I mean, so I think in a case like the sofa, it’s more advantageous for the retailer to say that than it is for the customer to keep that sofa. Like if I’m being told to keep a skincare product that didn’t really work for my skin, obviously it’s not as much of a burden as a sofa. What do you even do in that case? I don’t even know.
I don’t even know. It gives me anxiety thinking about honestly hearing that story was like note to self Never buy a sofa online. This is way too stressful Right
Oh my gosh, I have a story for another time about buying a sofa from Walmart. That was literally the worst experience buying online ever. But I won’t get into that right now because we’re not talking about Walmart. So, um, it’s, so it’s really great for merchants to tell a customer, you don’t have to send something back because then they don’t have to pay for return shipping. You’re offering free returns.
The labor of receiving and processing the return and then obviously managing the return inventory, which we’ve talked about, it’s a huge pain. It’s a big time and money saver. And for customers, it’s a really great experience for them, except if you’re returning a sofa, I guess. Yes, it does. I don’t even know what happened there, but I would love to know what the end result was.
I know, doesn’t that give you anxiety?
I know, I feel sad for them, because you gotta move it back outside, you gotta find someone to take it. Anyway, just unfair situation. Yeah.
really unfair. So, but let’s say I’m returning a skincare product. I then don’t have to go through the hassle of packaging return, printing a label, especially if I don’t have a printer, like who has them these days?
Oh my gosh, I know, right?
I know. And then actually going to the post office and mailing the return. So I will say an unfortunate downside to policies like this are the people who have figured out how to gain the system. So I don’t know if we want to go into the specifics of that now or later.
Yeah, let’s talk a little bit about it because I do think, you know, like I’ve seen, I feel like we’re kind of gonna see a return to older return policies. I guess that was a pun, but by accident. But you know, I was saying how like early in my career, it was kind of like, do whatever you can to not get people to return stuff. Like, you know. in real life, like question every decision, only give them two weeks and they have to have their receipt and they have to have an ID and they have to have the card that they made the payment with. These are all policies that I have dealt with firsthand and you know even that first, I don’t know, like six months I was working at Nasty Gal. It was really interesting. Our return rate was still really high but we…
One way we were kind of artificially sort of suppressing it was that we made returns really hard. We didn’t have pre-printed shipping labels. We didn’t even have a portal where you could print out the label. You literally had to take the item yourself to the post office, UPS, wherever, and pay to have it shipped on your own dime. So a lot of people are going to be like, never mind, that’s too much work, you know, or I don’t have time. That’s like so inconvenient.
But we were feeling that pressure. Like we did a consumer insights survey, because obviously we’re like, oh my god, we spent all this money to get these customers and then they never come back. And one thing that came up a lot was like, the returns are too hard, it feels too risky. So we felt that pressure to start offering free returns. It wasn’t even free returns. What we did was like, now we paid for some sort of plugin, probably Narvar or something, where you could generate the label right there, print it out and send it, right? So we started doing that, but you’d still be charged.
like 750 or whatever, and immediately their returns just like spiked. It was like someone flipped a switch and it was like, oh shit, what have we done? But, you know, then we see more and more people saying like, OK, now returns are free. Now you get your money the moment the USPS picks up the item and the tracking goes through, you know, like anything they can to make it easier. But over time, I mean, I am sure retailers kind of had to know this.
people were gonna game the system. And I just wonder if like you have to say like, well, how many people game the system before it becomes a problem? Now I think we’re gonna see this return to think, this return to stricter return policies because I think it’s not even, it’s not even like just the people gaming the system, but also just people living their lives. But I do wonder like what, how common is gaming the return system?
Um, you know, I don’t want to go into too many details just because I don’t want this to come off in a bad way and have somebody then take advantage of like it and accidentally open that door for them. But I will say any company with a policy this lenient or like a green returns like feature that returns platforms offering.
All these companies will have some sort of internal check to make sure customers aren’t abusing it. This is also the case with like any of the like friend referral companies, like FriendBuy. I don’t know if you’ve heard of them, but it’s like you refer your friend and then they get a discount, you get a discount kind of a thing. All these companies have their own internal way to make sure they aren’t being abused, which is great. So, but that of course.
people still figure a way around that.
Right, right. I mean, it’s got to be harder with more and more of our data being readily available to anyone who wants it. But I do remember at some point hearing like, oh, well, Nordstrom, even Nordstrom with its infamously lenient return policy, did sort of track internally people who reached a certain threshold of returns and kind of throttle them a little bit. I know that that’s what like Revolve has been threatening.
But I kind of wondered, like, do a lot of retailers do that? They must.
They must, they have to. I mean, otherwise, well, I mean, of course, the threshold is really high for a lot of these retailers, but yeah, they have to. Otherwise they just be losing too much money.
Yeah, I mean, the legend, as I have heard it in Portland, is that the Nordstrom and the Lloyd Center closed because they were receiving more returns every day of stolen merchandise stolen from other Nordstroms in the area than they were actual sales. So they were going like negative every single day. And like it just wasn’t manageable anymore.
You know, like it was just all loss every single day. That’s the legend word on the street. I heard it from someone who worked there. I don’t know how reliable it is, but it does make sense because, you know, there also there’s like a lot more theft now, you know. But it does it does make you wonder, like when will companies finally say like enough is enough? I still don’t think that like the vast majority of returns are.
people trying to game the system. I think it is just like disappointing product and over consumption.
Yeah, I agree with that. But, you know, I think with all things, most things actually will eventually get to a place where things are a little bit more even and there isn’t a need to be like super lenient or super strict and merchants will find a good middle ground and they’ll just do what works for them. And that’s why we are seeing
all of these changes with return policies, like the past two years, just all of these changes with return policies when I was working at Returnly, especially I think in the post pandemic era, merchants saw these huge, huge increases in their sales. And then of course, as we’re entering these uncertain economic times, they need to be more strict with.
what they’re accepting and how often and from who. So I did actually wanna go back to just talking about how easy it is to accept returns because there’s this kind of exciting thing that I read the other day that I just wanna talk about really quick, which I think is really cool. So I mentioned Happy Returns, which is that return bar company, I think Everlane uses them. So.
Yeah, tell us about it. Okay.
PayPal acquired happy returns in May 2021. And I just read a couple of weeks ago that UPS announced they are buying happy returns, which is really exciting. I know it’s kind of a big deal. Like not very often am I like, wow, that’s a smart business decision. I know. So I think it’ll make happy returns more enticing to prospective merchants as customers want more like printerless returns.
Yeah, that’s really smart.
easier returns and you know, I don’t know the specifics of the deal, obviously, but um, and UPS’s next plans with happy returns, but I think it was a really smart move for UPS, especially in advance of the busiest return season. So hopefully that, um, makes it easier for customers to be able to actually return their items instead of just being like, Oh, I don’t have a printer. I’m too busy to like.
go to the FedEx or UPS store to print a label and ship it. And like, I lost the packaging and oh my gosh, there’s too much going on. Like, hopefully this just makes it easier for them and they can actually get their money back. So that’s pretty exciting.
is exciting. You know, here’s the thing like to think about is that if retailers make it too hard to do returns, what we just see is more stuff that people don’t want getting dumped at thrift stores too, right, or going in the trash. So like, it’s not good. We don’t like solve the problem by just like
not letting people do returns anymore. This is a problem that has so many causes and so many effects. I know we often, I mean, it’s just human nature. We want this really cut and dry. This is the solution. It’s straightforward. And in this case, it’s just not. And it is such a problem of our times. It’s wrapped up in all of these issues all at once.
And there’s no easy solution, but I do think making returns easier for people can at least ensure that perhaps these items will find their way to someone who will want them and use them rather than just sitting in the corner. I mean, I read this statistic back, I think this was in 2020, where the average person had like
I know four or five or six garments in their closet at any given moment that had the tags still on it and had never been worn because of things like this. And so that’s not great either. I see so much stuff at every thrift store that has literally never been worn because the tags are still on it. I see a lot of Shein with the tags still on. And I actually tried on a Shein dress at the thrift store a few weeks ago. I was like, this is pretty cute. Maybe I’ll get this. And like,
The measurements in the chest and waist and everything were right for me, but I couldn’t get my arm through the armhole above my elbow. Like it was just so poorly designed. I know. And like that sucks. It was probably too hard for that person to return it. So there it was tags on at the Texas thrift. And like literally who will ever be able to wear that? You know, unless it’s a child. I know. I wish I hadn’t.
Oh my gosh.
I wish I had an answer. Yeah, unless it’s an actual child.
It would have to be an actual child. Yeah, exactly. So, yeah, I mean, it’s such a complicated thing. So one question that I have heard a lot over the years when it comes to returns is, and this has changed in certain depending on what platform a retailer uses, is why don’t you get your money back right away? Right? Like, why can it take a while? So I’m sure that when you were …when you’re working with customers, you have heard this a lot. I our customer service person at the startup, she said that like this was nine out of 10 emails was like, why, when am I getting my money? You know?
Yes, or just like the only content in the email is, where’s my money? That’s it. Love it.
Yeah, love it. Love it. Get down. Just get down to business. Yeah, exactly. So why does it I mean, I know why, but like, why don’t you explain to everyone else why you might not get your money back right away?
Yes, we’re not wasting any time. Where’s my money?
I know, I really wish I had a simple answer for this, but I don’t. Well, as we know, because we’ve probably all shopped online at some point, online retailers have such vastly different return and refund policies. And as I mentioned earlier, one of the most common requests we had at returnly was for merchants wanting to shorten their return eligibility window, lengthen the timeframe in which a refund is issued after return is delivered and so on. So.
Let’s just review the process here. If you’re returning something by mail, the return package may get lost in the mail, returned to sender, the label was damaged, et cetera. So those can all be factors for why it’s taking so long to get your money back other than the return policies. So those are factors outside of the control of the merchant. Um, I would say the benefit for merchants.
wanting to lengthen the timeframe in which a refund is issued after the return is delivered so that they can make sure the product that you returned actually meets their return policy. So that is why it might take 10 days after it was delivered is because they are really wanting to make sure it’s resellable. So that was more common, I would say, with SMBs and the larger merchants because a lot of the time with the larger merchants, they just wanted the refund to be issued.
as soon as the return was scanned. So let’s just say you returned the thing by mail and the return package was lost. Well, then that is a big issue for you. So just a PSA, always make sure you remove or cover up old labels if you’re reusing a box. And yes.
Seriously, I have learned this one the hard way, okay? It’s life hack right here.
Life hack, I’m revealing all of the secrets and retain the tracking number for your return so you can look at updates because I really believe that it is the responsibility of the customer to make sure that their return is actually being delivered and is in route because the merchant isn’t going to track that for you.
They only have so much insight. Like I would have the same amount of tracking available to me as the customer does. So, um, that’s just always the best practice. And then this is a fun one. I have been told by USPS representative that they will destroy packages if a package is deemed undeliverable for whatever reason. So like if there’s insufficient postage on the return.
and they can’t get in touch with the customer or the merchant, they’ll just destroy it because it’s easier and cheaper for them. So that’s also why you didn’t get your refund. And then a PSA for online retailers, please, please make sure your product rates are accurate. I know it’s a pain to update these, but USPS especially is known to return to sender, hold a package or charge a customer to cover additional postage if the original parcel weight and postage calculate was insufficient. So that it’s just a really bad experience to the customer. And then you obviously also risk having the package destroyed. And if you were planning on reselling that merchandise that was returned, we’ve lost out on that too. So yeah, all of it’s really not as a simple answer. There’s a lot of different things, but, um, so don’t.
expect to have the same experience at every retailer you shop at. I wish it was easy and simple, but we just really need to make sure our packages are being delivered. And we also need to be doing our own due diligence to make sure the package that we’re sending back meets the return policies of the merchant because if the tags are removed and you wore it a bunch of times and it’s stained, well, you’re probably not going to get your refund back.
So yeah, that’s what I have to say about that.
Yeah, I think that these are all true things. You know, a lot of retailers at this point have figured out that people want to know where their money is. Right. Like, I think like if companies that have the cash flow to do this are giving people their money back the moment the tracking is received. But, you know, if you of course, I think this is so smart.
They knew people would game that system and just ship empty boxes or whatever. So they do open the box eventually. And if there’s nothing in there, they take the money back from you. Like it, they’ve got, they’ve got stuff going on. They’re figuring it out. Um, but I’m sure everybody who works with customers was relieved when more and more technology existed to just give people their money back. I can’t imagine just answering those emails all day.
I will say, if you’re somebody who regularly, for whatever reason, abuses a return policy and you’re the person who’s sending back empty boxes or you’ve figured out how to game the system for those green returns types of features, you’re going to be blocked from returning or even purchasing from that merchant.
I don’t think we want that to happen. So it’s better to just be honest, I think, but we live in an imperfect world.
Yeah, we sure do. OK, well, you were talking about, you know, working at Returnly, and I wondered, I know Returnly is not around anymore. What happened?
Yeah, well, there’s only so much I can say. So I’ll just say that returning was acquired by a firm. A firm is a buy now pay later company, similar to Afterpay. They were acquired in May, 2021. So right around the time that PayPal acquired Happy Returns. And then in July of this year, a firm announced they would be
divesting in returnly to focus on a firm’s core BNPL business and wind down operations as of October, 2023. So that was just over a month ago now. So a firm actually then entered a strategic partnership with Loop, returnly’s biggest competitor at the time to transition those interested in merchants to Loop’s platform. So that’s what I was doing for most of 2023, but.
I think it’s really interesting to see how return softwares have evolved over the years and we’ll see what the future holds. But yeah, that’s what happened to Returnly, RIP.
I mean, I think we’re going to see even more of this kind of reorganization of that industry. To think about how much it has grown, even in like five years, is wild. Two years, you think?
I would say two years is, I would say like, well, within the last two years I think is when I’ve seen the most growth. Five years I think is your spot on with when it really started to catch on.
Because retailers were like, oh, this is a mess. What are we going to do? How many more emails are we going to get every day saying, where’s my money? Oh, I’m sure. I’m sure. But I do think 2020 was probably a major turning point just with everybody shopping online. And especially thinking like.
Yes, it’s a mess!
Well, they still get those.
online shopping. I’m just retail as a general, like in general, the when the pandemic began in March, like really like when we went into shutdown mode.
Every retailer out there thought like that was it. Everything was going to be horrible for the rest of the year. And they canceled all their orders. You know, they were just like a panic mode. And the retailers who didn’t do that, you know, like Amazon, because they didn’t have to. Most of that stuff is third party or Shein. They blew up because it turned out people ended up shopping even more because they were bored and depressed. Right. And of course, by the end of the year,
All that stuff starts coming back and it’s like, wait, they’re gonna send it back to us? And I think that really was a big turning point for all of these companies. Like, wow, returns are bigger than ever. And once again, 60% of the stuff bought from Revolve this year has been returned. That is…
That’s definitely on the outer bounds of the highest return rates. But a lot of companies have seen themselves creeping that way. Even just to think that on average about a quarter of clothing that is bought online is returned. So one out of every four garments. That’s a lot too. That’s like not a little drop in the bucket. I think that we probably have reached this point where retailers realize they’ve got to figure something out because suddenly it’s a lot harder to make money.
Or at least I hope they figure something out. It’ll be interesting to see what happens because I think the industry as a whole has been really stuck on how to be more sustainable and ethical while still selling people lots of clothes. And we know that’s not really a thing that works. So I wonder, they’re probably also similarly trying to say how can we manage returns better while still not losing a cent in sales? And I think…
those things are intrinsically connected, you know? Like there has to be a change, right?
Yeah, I totally agree. I totally agree. It’s just really interesting to me how like returns have become just this separate industry and I honestly never would have imagined it. And like I had mentioned, we’re seeing all these new returns platforms pop up, but we’re also seeing ones that are more focused on logistics like happy returns, as we can see with the UPS acquisition.
And then also there’s a couple other ones that are coming up that are more focused on logistics as well. So, I don’t know, we’ll see. Um, I definitely hope that merchants can learn from all of this and figure out a way to make things more sustainable. But honestly, I’m so torn on those policies like green returns that returnally have because with the online shopping return experiences.
becoming so much more seamless. They’re designed to get you to buy more, but also, hopefully, easier returns will encourage people to actually return their items. But yeah, we’ll see, I think is a good way to put it.
Is it good? Yeah. I mean, I would have never thought that I would be saying to you today that like companies, there are brands out there where 60% of their stuff is coming back, you know? So we’re already just seeing this constant shift in what it means to sell stuff to people right now. And it is, I do think it’s really interesting that UPS bought Happy Returns. I could see.
a lot more of that sort of consolidation happening because, you know, like I was saying earlier, a company like, say, Newgistix makes its money servicing returns by marking up the shipping, right? And so imagine if UPS could keep all of that and still charge the same prices to the companies. It could actually be, in a weird way, better for the people who work for UPS, you know? Like maybe that’s where…
That’s a good point. I never really thought of it that way.
these platforms belong. I don’t know.
It does make sense. It does make sense because then also it makes it way easier for customers to actually return the product and it’s just a way better experience for them. I mean, so much of returns is just the customer experience and how can we make the experience better and how can we improve it and then actually retain that customer and spend less on acquiring new customers. So I think it’s, it’s great overall. Um, and.
I just, I want these returns companies to succeed because I think there’s a lot of potential, especially for those green returns type features where, like, for example, Loop, they have a similar one where merchants, I believe they can choose to send certain items to like donation centers or back to their own warehouse or…
or somewhere else. I didn’t really, I wasn’t really able to find out much about that because so much of it is behind closed doors. But I know, well, maybe I just need to go work for Lube and figure that out.
It’s all shrouded in mystery.
Yeah, and report back. Seriously, sometimes, I mean, like, even if I go to a restaurant and there’s something that I really like, I’m like, should I just get like a job here for a week so I can learn the recipe? I think about this stuff all the time. Yeah. Well, Emily, I wanted to thank you so much for spending time with us today and sharing your experience and expertise. And I think that, hopefully, we did pull back a little bit of the shroud of mystery about returns.
Right? That’s exactly how I feel.
Thank you. I really hope we did as well. I hope people had some things to learn and, um, I mean, I think like I had mentioned, there’s a lot of potential and a lot of area for improvement for everyone involved, and I really hope customers feel more, will feel more empowered and more educated on what they need to do to actually make sure they get their money and.
how merchants can make it better for customers. And yeah, thank you.
Thanks to Emily for sharing her time and expertise with us! I just want to add that I have seen photos of her Yorkie, Toffee, and he is indeed beyond adorable!
So let’s talk about how we can reduce our own return behavior. And like I said in the intro, I was once a returnaholic, definitely returning AT LEAST 25% of the stuff I bought, but probably way more because it was all so disappointing and poorly fitting. When I learned the truth about how the return system really works, I stopped that to the best of my ability. For me, that meant two big things: no more impulse shopping and no shopping from brands that consistently shipped me disappointing product that somehow in no way actually resembled the photos on the website.
A big part of returns is not our fault at all. It’s bad product with misleading photos and product copy. It’s bad size charts. It’s brands knowingly selling us bad stuff. But there are a few things we can do to reduce our own return behavior. And you know what? Every bit helps when we are all doing it together.
Okay, so back in 2022–more than a year ago at this point–I did a post on Instagram about returns, how they really work, and how we can do better as individuals. And I’ll be honest, the response was not great. Quite a few people called me fatphobic, specifically because I suggested trying to shop IRL as often as possible so you can try things on (very difficult when most retailers only offer plus sizes online) and for special events, to consider borrowing clothing from a friend. That’s the thing about social media–and why I still find my heart racing every time I open Instagram–you never know when you’re going to absolutely fuck it up and hurt someone, even when you set out with the best intentions. So I haven’t posted about returns since then because I’ve been thinking about how to do better for more than a year now.
So here’s my attempt at a new list, with a lot of caveats:
- First off, if you have the privilege, time, and access of being able to shop IRL, do it. Listen, one of my least favorite places on earth is any fitting room in just about every store. They completely destroy my self esteem. But when I look back at many of the things I have returned over the years, there’s no way I would have bought them if I had seen them IRL in the first place.
- Obviously that is not an option for everyone, every time…but when you can, do it. I know lots of people like to shop with others when they are trying stuff on…I kinda prefer it to be a solo trip.
- Next, read content and care information when you are shopping online. Finding that information on a product page might take a little bit of extra clicking–somehow it’s often in a hidden accordion, probably because 100% polyester doesn’t sound very “premium.” But I will tell you…I’ve definitely returned a lot of stuff because it looked like one fabric in the photos, and then upon receiving it, I realized that it was an unbreathable, itchy, or uncomfortable synthetic fabric. If a brand is not sharing that info, I would say avoid them because that’s sketchy.
- So what about size charts? Listen, I always try to use them. I measure similar garments, I measure my body, blah blah blah…it just isn’t always right. Sometimes it is, but not consistently, even when I shop from the same brand regularly. Try your best here, but know that it isn’t foolproof and it’s not your fault. And it’s certainly not your body that is the problem.
- Next, if a brand is consistently disappointing you, just break up with them. They don’t deserve your trust (or money) any more.
- And lastly, don’t impulse shop just because it’s a big sale day or you’re sad or having a bad day at work or in bed with the flu. I have done all of these things…and those behaviors almost always lead to a lot of returns.
At the end of the day, sometimes we are going to return stuff. This system doesn’t set us up for success. I mean, we’re dealing with low quality product and high quality product photos. It’s confusing for sure!
However, now that we know the true cost of returns, of course we have to do what we can to change that. Shopping less leads to less returns. And if we’re all doing that at once, not only can we make a major impact in terms of the environmental and social impact of all of those returns, we might actually force the industry to start making better stuff. Let’s see what we can do together!