How Bracketing Impacts Profits and the Planet: What Retailers can do
This article was originally published here in Reverse Logistics Magazine, Edition 127.
If you’re like a lot of consumers, you get your shopping done online and on the fly; at the kitchen table, on the couch, or (let’s admit it) in the middle of the workday. Even if you’re purchasing from a tried-and-true brand, you still want to order a few colors or sizes for yourself and try them out.
You can always return the pieces you don’t want. Right?
It’s called bracketing
“Bracketing” is when a shopper buys multiple sizes, colors or styles of a product with the intent to return most of the purchased items. Not surprisingly, this practice is very common in the apparel industry. About 60% of online shoppers say they bracket their buys.
Most consumers don’t think twice about bracketing, but retailers are certainly thinking about it. It’s causing massive logistical problems for brands and a waste problem for the planet.
The profitability impact
When a product return is initiated by the consumer, the costs start piling up for the retailer: Shipping the item back to the facility, inspecting it, grading it, processing it, then determining whether it can be resold as-is, sent to a third-party marketplace, or even tossed in the trash. Returns made to retail stores are generally less costly to process, but they still eat up valuable employee time and resources.
Returns are having a big impact on retailers’ profitability. According to a ReverseLogix study, 80% of respondents reported their return costs as “significant to severe.” And it’s getting worse: Appriss Retail reports that return rates are growing faster than revenue rates for 91% of retailers.
The sustainability impact
The massive amount of waste from apparel returns has been well documented: CNBC reported that retailers throw out up to 25% of returns. Gartner estimates return shipping transportation is the equivalent of +3 million car emissions each year, and that, globally, 80% of discarded textiles are sent to the landfill or incinerator.
Consumers care about sustainability, and retailers are starting to invest in making product returns more automated and efficient – even minimizing returns in the first place.
A dual approach to reduce bracketing
While product returns can’t be eliminated entirely, the habits around bracketing can be addressed in a few ways.
Help the shopper make better decisions
If your eCommerce site has poor descriptions or images, an uncertain shopper will be more likely to order a variety of styles. If your sizing information is vague or hard to find, the shopper will be more likely to order several sizes.
Minimally, information like product descriptions, reviews, and images of the clothing worn by various body types should be available on your eCommerce site. To take it a step further, consider offering virtual dressing rooms to help users better visualize wearing the clothing.
Consumers could also be better educated about what happens to the item they return: For example, the volume of climate change emissions that are attributed to their return, or the pounds of waste from the extra packaging. Sixty percent of shoppers cite sustainability as an essential consideration when they buy, so educating them on their purchase and their post-purchase behavior can help steer them to more economical and sustainable decisions.
Automate and streamline your returns operations
Returns are inevitable, but poor returns management isn’t. In another ReverseLogix survey, only 24% of respondents use automation in their returns process. There’s a huge opportunity for retailers to implement technology like a returns management system (RMS), which orchestrates the entire lifecycle of a return from initiation to disposition.
An RMS is a cloud-based, SaaS solution that delivers two major functions: 1) Manages a return from start to finish; and 2) Centralizes and analyzes returns-related data.
The workflows of an RMS can be configured to a brand’s processes and requirements, including the ability to set rules and policies for partners so that returns are accepted and inspected uniformly across your network. Employees can work faster when guided through every step.
Unlike a point solution for returns management, an RMS gathers data from other critical supply chain software like OMS, WMS and TMS, and centralizes it for easy viewing, reporting, and decision making. For example, you can see data by facility, identifying where issues are slowing things down.
Ensuring more efficient returns operations is better for your bottom line and for the planet. A recent survey found that two-thirds of executives say a sustainable supply chain is a competitive differentiator. So make sure your customers know how you are addressing the environmental challenges of product returns.
Recommerce options for bracketing
We can’t talk about bracketing strategies without talking about recommerce, which has exploded in recent years. Even high-end brands are selling their used products on third-party or owned marketplace sites, which is good business and good stewardship: The secondhand fashion market is expected to grow 127% by 2026, and 80% of Gen Z has bought pre-owned goods. Analysts estimate a 25% reduction in carbon emissions from buying used clothing instead of new.
With greater customer interest in purchasing used items, brands can recoup value on clothing that would otherwise be deeply discounted or thrown out. It’s even a way to build new customer audiences, as many younger consumers shop nearly exclusively for used apparel and footwear because of the lower price point, higher quality, and subsequent social credentials.
Should you charge a fee for bracketing?
A majority of consumers check a retailer’s return policy before making a purchase, and most say they’re more likely to shop with a company that offers free returns.
But, that scenario is becoming less common. Fashion and footwear retailers have begun applying fees to mailed-in returns, averaging $6.67 according to Gartner (most companies don’t charge for returns made in-store).
Adding return fees can risk angering customers, especially if the return is due to quality issues or a retailer error. Ideally, retailers would use customer and historical data from an RMS to consider applying a bracketing fee: By analyzing past behavior, or the number of sizes and styles ordered, consumers could face a fee to incentivize them to, at the very least, reduce the number of sizes and styles they are buying. Similarly, analyzing a customer’s eCommerce shopping cart contents could identify a buyer who is intentionally bracketing. A pop-up message could warn them of potential return fees and help reduce returns or at least recoup some of the cost. Pairing this with information about the environmental impact of their purchase could also be helpful.
Consumers should bear some responsibility for bracketing’s impacts. However, it starts with retailers ensuring that the shopping experience is as helpful as possible, and that return operations prioritize efficiency and resale rather than the trash can.
The ROI of optimizing reverse logistics
Bracketing is an unfortunate byproduct of the easy, frictionless eCommerce experience. Investing in returns management automation solutions, as well as educating consumers on their purchases, can reduce the impacts on profits and planet, while helping consumers make the right purchase, the first time.
