Paid returns? Retail is responding with these innovations

Fashion retailer Zara charges return fees

Earlier this year, the fashion retailer Zara started charging fees in some countries for customers to return items ordered online. By deducting a 1.95-euro shipping cost from an order’s refunded amount, the company is taking a clear stance against climate-killing returns. Free returns are still possible in Zara stores in order to promote a more environmentally friendly return method.

Before Zara’s decision, the Japanese clothing retailer Uniqlo had also already introduced return fees. Standard free returns in e-commerce have been a recurring topic of debate for years now. One problem is that they are expensive for the companies offering them. In addition to quality assurance for returned items, the postage and transport costs come into play as a major cost factor. However, the environmental aspect also plays a big role, with more and more companies embracing sustainability, including in the fashion industry. The return rate here is particularly high, leading industry giants such as Zara to respond by implementing paid returns. That is not the only strategy, though.

Tackling the root of the problem: AR, nudging, and other techniques

Instead of introducing return fees, some companies – startups included – are trying to address the causes of returns. One company leading the way here is Snapchat. As a provider of augmented reality (AR) applications, the company is increasingly appealing to online retailers.

With the help of AR, customers can try on clothes digitally in order to avoid ordering and returning products that are either wrong or don’t fit or suit them. Fashion e-commerce in particular can benefit from the enormous potential offered by AR applications, which could soon become the norm and revolutionize the industry in light of its high return rates.

There are also initiatives like the one from the startup Keepoala, which allows companies to reward customers for changing their shopping behavior and reducing the number of returns. The app developed by Keepoala awards points for products that customers keep, which are visible to the environmentally conscious community and can also be exchanged for vouchers or bonuses. This approach of rewarding sustainable habits is called “nudging.”

No chance of success for paid returns?

Big e-commerce players have already spoken out against the introduction of return fees. Amazon, Zalando, and Otto are among those defending free returns. They would rather stick to their existing model and not burden customers with fees. Instead, they address the environmental aspect through alternative models. Otto, for example, uses CO2 certificates to offset its emissions.

Implementing paid returns – easier said than done

Companies that decide to charge return fees often face new challenges in terms of payment processing and logistics. For that reason, the shipping platform Sendcloud and the payment service provider Mollie have joined forces to simplify the process. They want to offer automated processing of paid returns and thus lighten the load for e-commerce companies. They hope to break through in the e-commerce market if the trend of paid returns catches on.

The future of return fees is still unknown

The e-commerce industry is being shaken up by paid returns. Some major fashion retailers are opting for the model and must implement organizational measures to make it work for them. Other players on the market are emphatically sticking to existing processes and rejecting the shift. They may be able to use AR innovations to solve the problem of returns through technological means instead. One thing is for sure: e-commerce is undergoing a transformation, and offers huge potential for innovative ideas that could change the industry for good.