Returns have long been a headache for fashion brands, especially as it’s become common practice for shoppers to order two or three times the amount they need and return the rest. This not only disrupts inventory but also results in a massive amount of returned products that often don’t get resold. Many of these items end up in recycling, liquidation channels, or gathering dust in distribution centers.

As brands look to reduce the waste and cost associated with high return rates, they are finding new ways to address this issue. In addition to developing new strategies for how to deal with returns once they are received, there’s also significant momentum to prevent returns in the first place. From offering incentives for keeping unwanted items to final sale discounts, innovative solutions are emerging that benefit both brands and shoppers. Let’s explore some of these strategies and the questions they raise about the future of returns.

Balancing Innovation and Risk: The Pros and Cons of Return Reduction Strategies

Incentivizing Shoppers to Keep Their Purchases

One strategy gaining popularity is offering customers credit to keep items they’re unsure about returning. ThredUp, for example, provides store credit as an incentive for customers to retain items they might otherwise return. This option isn’t available for every initiated return but is used strategically to manage inventory in their direct-to-consumer (DTC) business. For instance, if you order a $70 pair of jeans that doesn’t fit quite right, ThredUp might offer you $32 in store credit to keep them. While this approach can reduce returns, there’s a risk that shoppers might exploit the system by initiating returns solely to receive a credit.

Return Assurance Services for Consumers and Brands

Another emerging model involves return assurance services like Seel, which allow shoppers to pay an upfront fee for the option to return items later if they choose. Seel then manages the returned items, reselling them through alternative unbranded channels such as boutiques and eBay. This approach lessens the burden on brands while boosting consumer confidence in their purchases. However, a potential drawback is the lack of visibility for brands into the post-purchase journey of a product and its final selling price. Many designer and luxury brands prefer to maintain visibility on pricing and channel strategy to protect their reputation and ensure a positive customer experience.

Discounts for Final Sale Items

Some brands are adopting a straightforward approach by offering significant discounts on items in exchange for making them non-returnable. For example, Lulu’s has implemented this model, where shoppers can receive substantial discounts, but once they agree to the deal, the item is final sale. This strategy could be particularly effective for high-ticket items like furniture or luxury goods, though it raises concerns about its impact on brand perception and long-term resale value.

High Return Costs for Consumers

An increasingly common strategy involves sharing the cost of returns with the consumer. This can take various forms but most often requires shoppers to pay for return shipping—typically $7-15 for apparel, footwear, and accessories—and sometimes even a restocking fee. The risk for brands is that this approach could negatively impact direct-to-consumer (DTC) sales, as shoppers might opt to purchase the same product from a wholesale partner like Amazon or a department store with less restrictive return policies.

Key Questions These Solutions Raise

While these new approaches are promising, they also bring up important considerations for brands:

• How will consumers react to these new policies? 
• Will shoppers embrace these new strategies, or could they turn away from brands using third-party return prevention services if they have a bad experience? 
• What happens to the items consumers keep? There’s potential for shoppers to feel overwhelmed by accumulating unwanted items.
• Will these strategies have a meaningful impact on resale channels, especially peer-to-peer?
• What are the long-term effects on brand value? 
• For higher-end brands, could leaving unwanted products with consumers dilute their market value or increase peer-to-peer sales? 

Branded Resale: A Multi-Faceted Approach to Return Reduction 

It’s clear that brands experimenting with return reduction are having the most success when they adopt a multi-pronged strategy. Tailoring solutions to specific customer segments, product categories, or geographic regions allows companies to reduce return rates without sacrificing the customer experience.

At Trove, we’re excited to be part of the solution with our solutions for branded trade-in and peer-to-peer (P2P) resale.Both can be an important facet of a brand’s strategy to reduce returns. Resale allows consumers to pass along unwanted items while fostering a circular economy and building brand loyalty. 

In the fast-evolving landscape of post-purchase innovation, brands have a unique opportunity to create a more sustainable future. 

Ready to Tackle Returns?

If you’re interested in learning how Trove can help your brand manage returns, reach out to us today. Together, we can build a circular solution that benefits both your brand and the environment.