Online retailers go hi-tech to size up shoppers and cut returns
By Emma Thomasson
BERLIN (Reuters) - Online retailers are trying to cajole consumers into revealing their vital statistics with new sizing technology tailored to turn back a tide of returned garments that is hurting profits.
Up to half of the clothes bought online are sent back, many due to poor fit, squeezing retailers' margins and creating logistical problems in recovering and re-selling rejected stock.
Clothing is the most popular online shopping category in most of Europe: 45 percent of Brits and 41 percent of German consumers bought online in the last year, Mintel research shows. Germany's Zalando and Britain's ASOS, online-only fashion retailers, grabbed market share by promising a free returns service - that now threatens to undermine long-term profits.
ASOS Chief Executive Nick Robertson said a 1 percent fall in returns would immediately add 10 million pounds ($16 million)to the company's bottom line. ASOS reported attributable net income of 32.9 million pounds for the year to August 31, 2012.
It's not a problem that can simply be solved by charging for returns, retailers say. Businesses would still find it tough to recoup the cost of extra shipping and warehouse fees, damaged goods and difficulty in selling items that may no longer be season-specific - not to mention the intangible impact of unhappy customers.
"If you don't have to return something then clearly that is a better experience than having to return something," Robertson told Reuters, adding the average ASOS returns rate is about 30 percent, taking into account variations between markets.
E-commerce still only accounts for 15 percent of total garment sales. Much of the lag is down to shoppers' reluctance to buy clothes they can't try on. Fits.me, a London-based developer of sizing software, estimates that around 80 percent of all clothes bought in-store pass through a fitting room.
Fits.me is one of several start-ups to have recently sprung up in response to the industry problem, producing software they claim will reduce returns and boost sales by helping shoppers select the correct tailoring. Continued...