How a Large Fashion Retailer Uncovered the Real Drivers Behind Product Returns
How a Large Fashion Retailer Uncovered the Real Drivers Behind Product Returns
Analysis of product return reasons speed increased by 6x!
Styles that saw a reduction in return rates 50%!
About the company
The journey of this large, North American e-commerce retailer began in 2009 with a small Los Angeles storefront selling vintage clothing. They rapidly expanded into creating their own line of women's clothing and accessories, with a strong focus on sustainability and the aim to become entirely circular by 2030. Today, the company employs over 500 people, runs a robust e-commerce business and operates in 40 store locations, including New York, Miami, Dallas, Boston, and San Francisco.
"Looking at one of our top-selling dresses, we discovered some customers expressed dissatisfaction with the non-adjustable straps, which were too long. As a top-selling item, the revenue from avoiding even half of these returns would cover the entire year's cost of using the platform, so we were able to show the return on investment for using Chattermill very quickly."
Analyzing product return reasons
In 2022, consumers in the USA were predicted to return more than $761 billion worth of clothing. This figure represented approximately 20.8% of all online purchases, leading to significant logistical and financial challenges for retail and e-commerce businesses.
“It was time for us to uncover the reasons behind our increasing return rate,” says Senior Director of Customer Insights & Analytics. "We wanted to understand if factors like fit, customer experience, the shifting landscape post-COVID, or behavioral shifts were the driving force behind our product returns."
The company teamed up with Chattermill to delve into their return survey data and uncover the exact reasons behind product returns - a challenging task for an extensive inventory with over 1000 SKUs. Their goal for 2023 was to reduce their e-commerce return rate by 200 BPS and significantly boost their profitability per order.
Transforming product returns into profits
Within the first few weeks of working with Chattermill, the team was able to discover valuable insights that answered the most critical business questions.
Soon after that, the team discovered similar examples that led to significant improvements in a matter of weeks.
“Another best-selling dress played a crucial role in our mission to refine the returns process. Despite its initial appeal - its flattering style and affordable price - it unexpectedly experienced a high return rate. It took us six months to flag it as a high-return item, and by then, we not only ordered more but also produced it in other colors.”
“Through our internal quantitative and qualitative analysis, we discovered that the front panel length was the culprit. By analyzing customer feedback, Chattermill helped us easily identify the issue that led to high product returns, enabling us to swiftly address it. The adjustments we've made not only enhanced the product but also improved customer satisfaction, resulting in a 10% reduction in the return rate for this item.”
Elevating the shopping experience and improving NPS
The team focuses on their largest New York store, which had consistently low NPS scores during the summer season.
“At the time, our flagship store in New York had an NPS score of -13. Through the insights gained from qualitative feedback in Chattermill, we discovered that customers were facing extended waiting times for their items in the fitting rooms, as shopping assistants had to physically retrieve the products. To address this issue, we made the decision to increase the number of staff and introduce additional shifts to ensure better line management.”
As a result, the NPS score has significantly improved, reaching a rating of 40, emphasizing the importance of not only product quality but also the overall shopping experience.
Redefining retail with insights
By delving into the voice of the customer, the company managed to identify reasons for their product returns and made relevant adjustments, demonstrating a compelling return on investment. This collaboration with Chattermill allowed the team to turn product returns into profits, reduce the returns rate by 380 BPS on average per SKU, decrease the time it takes to understand return reasons from 6 months to 30 days, and in some stores, improve their NPS by 53 points.