opinion

Commentary

Time To Stop The Online Retail Return Bloodbath

The trend to two-way free shipping offered by digitally focused retailers is creating increasingly significant revenue losses. And, amidst the chatter about omnichannel marketing, digital folks seem to be missing the boat when it comes to effectively integrating bricks-and-mortar retail concepts. 

An investment banker colleague recently mentioned that online retailer Bombfell had received $1 million in venture capital funding. As I understand the business model, a personal stylist selects items and ships them at no cost to you. You return what you don’t want to keep, also without shipping charges. On the heels of that chat, I read about women’s online retailer MM.LaFleur, which employs a similar model. 

Given that the return rate for online apparel purchases is 20%, and that for more expensive items return rates can hit 50%, according to Forrester Research, why are growing numbers of retailers chasing this “bento box” strategy? While the bricks-and-mortar element seems to be completely missing from Bombfell, in the case of MM.LaFleur, a showroom is mentioned on their website but it is not well integrated. 

Even press darling Warby Parker, which began its life online, has been lured into this “bento box” world with their new TV advertised promotion of “5 pairs 5 days” with free shipping both ways. Really? With all the retail stores they have recently opened, and the customer value in actually trying on glasses, it seems to make more sense to invest in in-store events instead of free shipping. The customer gets more value from visiting the store to see the products first-hand and try on actually try on glasses rather than make their selection from the virtual world. Warby has done a fantastic job creating brand imagery and executing in store, so why not drive the customer to live their brand experience? 

A recent Wall Street Journal article mentioned that Macy’s is experimenting with a similar model with swimwear where they display one item of every style to simplify inventory. Sales reps then use an iPad app to get the correct size for the customer, seemingly a less than perfect solution that seems to have been created to serve the store rather the customer’s interest.

Otherwise, one of every size in every style would be available for try-on. This approach mistakenly employs omnichannel to serve the retailer’s needs, which reminds me of the automated answering systems that have replaced human contact in the name of customer care. Such programs were created to enhance company efficiency and reduce costs, rather than enhance the customer experience. 

I also checked in on Indochino, a Canadian company that, similar to Bonobos, employs the showroom concept to fit men’s custom suitings. In the last few years, they have increased the number of showrooms, which proves the concept. However, on their website they promote a plan to measure oneself using an online guide and a free tape measure they mail to customers. This oxymoronic approach directly contradicts their custom-tailored business model, which delivers a professional personal experience in the showroom. Secondly, they woo upscale customers who demand service. And, third, tailoring is a technical craft. Why would I want to measure myself? This misguided approach is but another example of trying to be all things to all people. Indochino already offers a wonderful service so why not use the website as a focused lead generator for their showrooms? 

In terms of path to purchase and customer service, “omnichannel” should be considered not just from a bricks-and-mortar to online perspective but also from online to bricks and mortar. Companies born online are faced with the same omnichannel challenges to integrate bricks and mortar that legacy retailers face in integrating online. Those that will win in the future of fashion retail will be believers in a more efficient integrated business model and will stick to their guns when promoting it.

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