ASOS Account Cancellations: Challenges in Modern Retail Supply Chains and Logistics

The problem with excessive returns

Returns are a major challenge in retail, especially in fashion, where subjective factors like fit, style, and size lead to high return rates. Practices like “wardrobing,” where items are bought, used, and returned as if unused, further exacerbate the issue. While return policies encourage trust and purchases, they also burden retailers with costs like reverse logistics, inventory depreciation, and processing labour. ASOS’s move to limit excessive returns reflects a strategy to maintain profitability and address the strain on its supply chains.

Wider supply chain implications

However, the implications extend beyond ASOS. Handling returned items is expensive and resource-intensive. Returns also contribute to carbon emissions during transportation and repackaging, while unsellable items often end up in landfills, raising environmental concerns. Retailers are increasingly pressured to adopt sustainable practices, such as stricter return policies or customer education on product selection.

What should you be doing?

Clearly, the changes in customer expectations regarding returns are here to stay, and for many customers, it’s the difference between buying your product or going elsewhere. Delivery and returns expectations not being met lead to up to 55% of abandoned carts online (startups.co.uk).

Despite the changes in the market, this doesn’t mean retailers have their hands tied. Below are some of the proactive steps you can take:

Understand your cost to serve (end-to-end)

• Understanding the cost to serve is crucial for optimising a returns operation as it helps identify inefficiencies, manage expenses, and maintain profitability. It enables businesses to balance customer satisfaction with operational sustainability, ensuring resources are allocated effectively while reducing environmental impact and enhancing overall supply chain efficiency.

Assess whether automation could be suitable to support

• As the automation market continues to grow, it is giving rise to more affordable solutions, such as AMRs. Many providers are starting to offer lower-cost solutions and RaaS (robots as a service). When assessing the options, you must first have a clear view of your requirements and the providers that can meet your needs. When engaging with the market, it is essential that you have an automation SME onboard to steer the tender process to ensure you are getting the right solution for your operation.

Minimise returns in the first place by supporting your customers in the shopping process

• Companies could turn to technologies like AI-driven size recommendations or virtual try-on tools to reduce return rates. Giving the customer size, colour, fit, etc, first time minimises the risk of returns.

Outsourcing

• Assess whether you have the right in-house capability to manage returns or whether it could be outsourced. The growth in the returns market has been mirrored by a growing market for specialists, who can manage your returns process. If you choose to assess this opportunity, you need to have a clear baseline to compare the outsourcing options, as well as a clear view of the key benefits and risks associated with outsourcing this activity.

Conclusion

In conclusion, returns aren’t likely to go away anytime soon. We will likely see volumes continue to increase in the market.

Managing returns effectively is not just about addressing logistical challenges but also about fostering trust among customers. By understanding your cost to serve, minimising returns through innovative technologies, and ensuring transparent communication, retailers can take proactive measures to adapt to the evolving online landscape.

These steps not only mitigate the financial and environmental impacts of returns but also position businesses to build stronger customer relationships and maintain a competitive edge in a dynamic and demanding marketplace.

For any support reviewing your returns process, building a cost-to-serve model, or any other supply chain and logistics support, don’t hesitate to contact us.

Reference

https://startups.co.uk/news/shoppers-admit-to-abandoning-shopping-carts/#:~:text=Don’t%20put%20all%20your,with%20the%20site%20(17%25)