Business Insider published an article this week discussing Urban Outfitters returns problem. Despite their growth in revenues and ecommerce sales, results were flat compared with the same time last year.
Company CFO Francis Conforti explained that “if it were not for direct-to-consumer returns at stores which we currently charge against store sales, our store sales comp would have been low-single-digit positive”.
Industry experts and analysts commented that this was an unusual result, however research by the Clear Returns team highlights that this is becoming an increasingly common problem for retailers in todays multi-channel world.
1. Unique and potentially risky product selection
Urban Outfitters has always had an eclectic product mix yet this may backfire in an online setting. Shoppers may be more inclined to make risky purchases in the safety of their own home but this will have a serious impact on returns, leaving Urban Outfitters to deal with piles of unpopular stock and the loss of margin associated with it.
2. Mismatch between product quality and price
Readers commented on the mismatch between price and quality with the store’s items. Considering Urban Outfitters are known for buying items at flea markets are customising them for sale in store this comes as no surprise. Why would consumers pay the large mark-ups on items they could buy cheaply at market stalls?
3. Misleading online product descriptions and images
This is an issue Clear Returns have come across in their own research, where simple description or image errors online lead to thousands of pounds worth of losses when items are returned.
4. Online buyers returning in-store
For multi-channel retailers dealing with online returns in-store can be a headache. The majority of retailers will ship these items back to their warehouses for re-packaging and re-shipping, so by the time they get back on sale they are likely discounted meaning margin is squeezed.