The Covid-19 pandemic has brought the plight of the UK high street into sharp relief. But it’s been in decline for more than a decade.
As a researcher in logistics and supply chain management, I’ve learned that the rise of e-commerce has caused big problems for many shops. Delivering products out and having them returned is costly, inconvenient and inefficient. This can be particularly damaging for independents.
With Covid-19 making online shopping a necessity, my research in this area is more relevant than ever. So what’s the problem with returns — and what can be done to improve them?
Let's use an example of a fashion retailer. When people buy clothes online, they might buy up to six variants of one item — say, three T-shirt sizes in two colours.
This is understandable. For one thing, trying on clothes in-store has been prohibited for most of 2020, so people need to order more sizes and colours. Also, buying more often means free delivery, so it makes sense to order extra and return them later.
This poses a number of financial and logistical problems for retailers. If they’ve offered free delivery and returns, then it costs approximately £4 each way. That means an £8 loss can be made from a single item. And that’s before courier, admin, repair and repackaging costs are taken into account, not to mention replacement stock.
For smaller businesses, where margins are tight and there's little extra cash to account for losses like this, returns can be a big problem. But in a competitive marketplace, where 70% of consumers won’t buy from a retailer if they don’t offer free returns, there’s little choice but to keep customers on side.