By Jim Lewis, CEO Enhanced Retail Solutions LLC

Returns. It’s part of the retail experience. An easy return policy is a must to build trust and loyalty with the consumer. Exceeding customer expectations can provide great benefit to the retailer, but there are costs.  The actual cost of returns is a hazy area in most organizations. I recall as a buyer focusing mostly on unit returns and not what the dollar cost impact was for my department. We analyzed what sold at what price (net sales). But that conceals the magnitude and real cost of returns. We could have missed out on a huge opportunity to improve the profitability of our business and understand the customer better.

The Case for Measuring Returns

There are many reasons for returning. Buyer’s remorse, poor quality, found at a better price, wrong color and poor fit are generally the most common. Many retailers approach returns as a cost of doing business. However, if returns typically represent 15-30% of net sales, just think about how much money they are leaving on the table. Online retailers like Amazon use return data to nudge customers to make better informed purchases. They can read customer experiences, understand garment fit and product attributes better. This also prompts suppliers to improve their products and descriptions in their listings. A large department store we work with will cut drop ship items from their assortment if they get less than 4 stars.

Can Returns be Managed?

For the apparel industry, fit related returns are approximately 50% of returns and can be managed. I am not an expert on returns, but I know someone who is! Bruce Terry, President and Co-Founder of Bodidata says, “Fit returns can be reduced by ensuring a customer understands how each item will fit their unique body before they purchase an item and why alternative, larger or smaller sizes would not be a better fit. By ensuring customers understand the quality of fit, before purchase, unnecessary returns can be reduced”.

Bodidata is a technology company focused on reducing Retail and Ecommerce returns in the apparel industry. Their size matching solution reduces size related returns by >90%. Bodidata offers every available measurement option offered in the marketplace for use in retail stores or by customers for ecommerce purchases. This includes their patented Kora® handheld scanner , the only 3D body scanner that measures the body surface beneath the clothing of a fully clothed individual wearing their street clothing.

The Benefits

When I first met Bruce a few years ago, I was very intrigued by what Bodidata was doing. I knew it could save ERS clients a lot of money and improve the consumer experience. As consumers, when we find a brand that fits us well, we become loyal to that brand. If we know which size in each brand works for us, we will be more apt to make more purchases.

Retailers pay a big price for consumers that buy the same item in 2 different sizes and then return one. Not an efficient use of inventory by any means. As someone who started their career working on the sales floor, I know first-hand how much handling is done with returns. The physical, financial and time resources are high and take away from selling profitably.

To learn more about how you can reduce returns, we invite you to download Bodidata’s Retail Benefit Analysis and ROI Calculator here.

Special thanks to Bruce Terry, Co-Founder of Bodidata for sharing this valuable information with ERS.