Return rates of online orders are an issue for many sellers. In the online fashion sector in the DACH countries, 87.7 percent of sellers report return rates of up to 50 percent. Around 80 percent of online sellers in the region do not expect that return rates will improve in the next three years.
These data come from a recent survey from German EHI Retail Institute. This institute frequently publishes research about ecommerce in Germany. In the summer of this year, 124 well-known online sellers in Germany, Austria and Switzerland (the DACH countries) were surveyed online. According to EHI, around a quarter of the surveyed online retailers generate more than one billion euros in annual revenue.
‘Costs associated with returns remain high’
The research shows that return rates are influenced by product category. For example, the fashion industry has the highest return rates. “In the textile trade, one in eight retailers receives more than half of their orders back, which puts pressure on their profitability. This is because the costs associated with returns remain high. The potential of AI applications and automation could certainly be better utilized”, said Niklas Stanislawski, Project Manager Logistics at EHI and writer of the report.
In the online electronics industry, 85.7% of sellers have return rates of up to 10%
In fashion, 87.7 percent of online retailers say that their return rate is up to 50 percent. For another 12.2 percent, the return rate is even higher. Meanwhile, in the electronics sector, the majority of sellers (85.7 percent) have return rates of up to 10 percent. Overall, return rates in this industry do not reach higher than 35 percent.
A large majority (around 93 percent) of online sellers of furniture also report return rates of up to 10 percent. Rarely, return rates in this industry are higher. The toy and books and media industries also show low return rates.
27% are unsure of their costs for processing returns
Costs of returns also vary in the countries. More than half of the online sellers in the survey (53.3 percent) say that each returned item costs them 10 euros. Another 13.9 percent calculate costs of up to 20 euros. However, 27 percent said that they are not able to specify their processing costs. This makes targeted optimization difficult.
45% think using AI to forecast and analyze returns will be relevant in the future
Many online sellers (34.4 percent) process return data (like the reason for returning the item) manually. Only 29.5 percent record return reasons fully automatically. And while 45.5 percent consider using AI to forecast and analyze returns as relevant in the future, 35 percent say that they completely distance themselves from it.
17% think return rates will increase
The researchers think that using AI could help online sellers reduce return rates in the future. However, a large majority of the surveyed sellers (80 percent) do not expect any improvement over the next three years. And 17 percent even anticipate that return rates will increase.
