Topic of the Week – Return Rates and Logistics Challenges
The ecommerce landscape is facing a significant challenge in the form of return rates, with 80% of online sellers in the DACH region (Germany, Austria, and Switzerland) expressing little hope for improvement in the next three years. This is a concerning trend, as return rates can have a significant impact on profitability and logistics efficiency. The German EHI Retail Institute's recent survey of 124 online sellers in the DACH region highlights the extent of the problem, with 87.7% of fashion retailers reporting return rates of up to 50%.
Return rates vary significantly by industry, with the fashion sector experiencing the highest rates (up to 50%) and the electronics sector having the lowest rates (up to 10%). This is likely due to the nature of the products being sold, with fashion items often being more subjective and prone to returns. In contrast, electronics are often more functional and less likely to be returned. The furniture sector also reports low return rates, with 93% of online retailers experiencing rates of up to 10%. The toy, book and media industries also show low return rates, suggesting that certain product categories are less prone to returns.
The costs associated with returns are also a significant concern for online sellers. A staggering 27% of online sellers are unsure of their costs for processing returns, making targeted optimisation difficult. This is a major issue, as accurate cost tracking and analysis are essential for making informed decisions about logistics and inventory management. The majority of online sellers (53.3%) estimate that each returned item costs them 10 euros, while 13.9% estimate costs of up to 20 euros. This highlights the need for online sellers to have a clear understanding of their return costs in order to optimise their logistics and inventory management processes.
The use of artificial intelligence (AI) is seen as a potential solution to the return rate problem. 45.5% of online sellers consider using AI to forecast and analyse returns as relevant in the future, while 35% completely distance themselves from AI in this context. However, 17% of online sellers expect return rates to increase in the next three years, which could exacerbate the problem. This highlights the need for online sellers to be proactive in addressing the return rate challenge and exploring new technologies and strategies to improve their logistics and inventory management processes.
To address the return rate challenge, online sellers should prioritise optimising return rates and costs to improve profitability. Implementing AI solutions to forecast and analyse returns could help reduce return rates and improve logistics efficiency. Accurate cost tracking and analysis are essential for targeted optimisation and decision-making. By taking a proactive approach to return rates, online sellers can improve their bottom line and stay competitive in the ecommerce market.
eCommerce Market Stats
See some statistics relating to this week’s topics in the eCommerce market below.
Return stats
- 80% of online sellers in the DACH region do not expect return rates to improve in the next three years.
- 87.7% of fashion retailers report return rates of up to 50%.
- 53.3% of online sellers estimate that each returned item costs them 10 euros.
- 27% of online sellers are unsure of their costs for processing returns.
- 45.5% of online sellers consider using AI to forecast and analyse returns as relevant in the future.
- 17% of online sellers expect return rates to increase in the next three years.
That’s all for this week…
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