E-commerce struggles with return rates

Written by| Ho Furong

Edit| Wu Xianzhi

"When I started Taobao in 2013, the average return rate of women's clothing was less than 15%, and many stores that did well had a return rate of less than 8%. But now the average return rate of Taobao women's clothing category is already about 40%-45%, and the average return rate of live streaming goods is more than 60%. ”

Miao Miao is a clothing merchant, who has been engaged in the clothing business for many years, and she deeply feels that the return rate of e-commerce is increasing year by year. She also said that in recent years, the trend of e-commerce return rate has become more and more obvious, and the magnitude is increasing.

"Returns" are a consumer safeguard for e-commerce purchases. It is normal for consumers to return goods due to objective reasons such as improper clothes purchased by consumers during e-commerce shopping, product quality problems, and so on.

But in recent years, more and more external factors are driving up the return rate of the e-commerce industry.

Platform merchants, as the direct responsible persons for consumer returns, are suffering from a high return rate.

As the above-mentioned clothing merchant said: "Returns caused by exact problems such as quality and size, we can work our own products to improve quality and accurate size to reduce the return rate." But now most of the seven-day returns without reason are beyond our merchants' control. "For example, changes in consumer shopping habits, lower logistics thresholds, and iterations of e-commerce decision-making models are accelerating this phenomenon.

For merchants, the increase in return rates caused by external factors has become uncontrollable.

The maturity of the online "fitting room"

The other side of the increasingly frequent return and exchange of e-commerce goods is the full improvement of e-commerce infrastructure, which is also the result of e-commerce platforms constantly reducing consumers' vigilance for online shopping.

An e-commerce industry insider said: "Now there are more and more e-commerce returns and exchanges, the most fundamental reason is that consumers are returning and replacing goods more and more conveniently, and the time and money costs paid by users for returns are low enough." ”

On the one hand, the popularity of express delivery indirectly increases the return rate. Ten years ago, e-commerce express was still stuck in "one-week delivery" or even "half-month delivery", and today, the key word in the industry is "half-day delivery" and even "hourly delivery". C-end shipping is becoming more and more convenient, which in turn lowers the threshold for consumers to return and exchange.

The domestic express delivery industry has been deeply integrated with e-commerce, and even moved towards the development stage of customized services for e-commerce platforms. For example, door-to-door pickup of returns and exchanges has almost become the standard on various e-commerce platforms, and consumers can return goods without leaving home.

In addition, the introduction of freight insurance policy directly reduces the cost of user returns and exchanges. For merchants, opening freight insurance is a means to increase store volume, especially for categories such as clothing, which is directly linked to sales.

"We have freight insurance, you can buy it back and try it with confidence" and other sayings are already standard marketing slogans for online store merchants. On the premise of freight insurance, consumers are encouraged to buy back and "give it a try", which also directly buries the hidden danger of increasing the number of store returns.

Taking Taobao Tmall as an example, services such as fake one compensation four, return freight insurance, fast refund, door-to-door pick-up and return, and seven-day no-reason return have basically become the standard for sellers. These services are the embodiment of the platform's continuous improvement of consumer services and guarantees after the in-depth development of e-commerce.

As the above-mentioned e-commerce industry insider said: "It cannot be unilaterally said that the return and exchange rules of the platform have led to the increase in the return rate of the industry, but it is undeniable that these return and exchange policies that benefit consumers have significantly improved the convenience of consumer returns." ”

At the same time, from the perspective of the macro development of e-commerce, the industry is becoming more and more volatile, and the platform's consumer-based services will only increase but not decrease, which also indirectly cultivates a stronger shopping mentality of consumers.

According to a Xiaohongshu blogger, many small clothing bloggers in the early stage in order to save costs, they are bought back and then sent back, because there is a "seven-day no reason to return", there will be almost no loss.

Lin Lin is an in-depth online shopping enthusiast, and her daily needs of shoes, clothing, jewelry, skin care products, etc. have been contracted by Taobao Tmall. According to her, she has basically developed the shopping habit of "placing multiple orders at once, and then choosing the most satisfactory after receiving the goods".

"Especially when buying clothes, I only buy freight insurance. Many times it is difficult to choose just by looking at pictures, so I generally place multiple orders, leave satisfactory ones, and return the others. Lin Lin said.

"Now a lot of consumers buy things online, it's like playing." The above-mentioned clothing merchant Miao Miao sighed. When online shopping becomes a common thing, consumers' caution in purchasing decisions also decreases, and it will also indirectly raise the arrogance of some low-quality buyers and wool parties.

"In addition, from the perspective of the platform, for a long time, they paid more attention to the growth of GMV than the net transaction, and it is difficult to reduce the return rate under this trend." Lin Lin said.

Six years ago, Ali did not disclose GMV data in its financial report for the first time, and last year it no longer announced the specific GMV of Double 11, and no longer focused solely on the growth of volume is one of the signs that Alibaba's e-commerce has entered a mature stage. In the early years of Miaomiao's entry into Tao, Tao-based e-commerce in the growth stage will inevitably benefit consumers in order to boost GMV, which is the same as today's Douyin and Kuaishou frequently emphasize "freight insurance, seven-day no reason return, damage return" in the live broadcast room.

According to public data, from 2012 to 2021, China's express delivery business volume climbed from 5.7 billion pieces to 108.3 billion, an increase of 18 times. The continuous improvement of e-commerce infrastructure has promoted the expansion of online shopping, and the industry return rate is directly proportional to it.

Passionate shopping drives up return rates

In the case of the overall increase in the scale of e-commerce, the return rate is getting higher and higher and more irreversible. "But live streaming is accelerating this trend." An operator of a live streaming e-commerce said.

The return rate of live streaming e-commerce is generally higher than that of traditional e-commerce platforms. This is closely related to the consumer decision-making attributes of live streaming e-commerce, as well as various factors such as industry maturity and standardization.

Live streaming is more inclined to impulse consumption, and consumers are more likely to regret after placing an order. The above-mentioned live broadcast operators said that compared with shelf e-commerce, the live broadcast format is more interactive and entertaining, and consumers are easily influenced by the words and atmosphere of the anchor, resulting in impulse purchases. Consumers who do not have sufficient thought and comparison when placing an order may regret the purchase and apply for a return afterwards.

At the same time, promotional methods such as performance-style haggling, hunger marketing, and routine order holding have long been commonplace, and anchors have created an atmosphere of "if you don't sell, you will lose" through various exaggerated and routine words, and consumers are guided to place orders without having time to think too much.

He also said that the return rate of live streaming e-commerce is also related to the platform's traffic recommendation logic. Taking Douyin interest recommendation as an example, if the user browses or orders a certain product for a long time in the live broadcast room of a certain anchor, then Douyin will continue to recommend similar live broadcast rooms to users, if the user sees that the product in the live broadcast room of others is cheaper, then many people will choose to refund and place a new order.

Generally speaking, compared with the unified display of shelf e-commerce, live streaming e-commerce weakens the price comparison link of the platform. However, Douyin's interest recommendation model indirectly reinforces this feature, and Douyin recommends similar live broadcast rooms to users, and the same or similar products have the opportunity to compare prices in different live broadcast rooms. In addition, the pricing of live streaming products is linked to the fan level of each streamer, and the price gap of the same product between different live broadcasts is itself very large.

"However, there are also differences in the return rate of different types of live streams. Generally, consumers who broadcast self-broadcast have a higher degree of reliability, and the return rate is lower than the average return rate of live broadcast goods; In addition, the talent brings goods according to the fan preference is divided into product type and anchor type, many vertical bloggers prefer product type, while celebrities and so on belong to the anchor type, and the general anchor type has a higher return rate than the product type. The above-mentioned live broadcast operator said.

The style, professionalism, and team selection ability of different anchors directly affect the transaction in the live broadcast room, and its return rate is inevitably closely related to the personal characteristics of the anchor.

In addition, "counterfeiting" in the live streaming industry is another major reason for the increase in the return rate.

The above-mentioned operators said that on the one hand, in order to make a good-looking data for their anchors, many institutions buy water army brush orders everywhere; On the other hand, there are false sales, such as jewelry, which is a typical representative of the platform's high return rate, and the return rate of many jewelry live broadcast rooms is as high as 90%. "There are even supply chains that specifically produce fake appraisal certificates for them in batches, and the unit price is less than one yuan per unit."

The standardization of the live streaming industry is still in the process of continuous improvement, and non-compliance phenomena such as false publicity and counterfeiting are also inevitable during the period of reckless growth of the industry.

In addition to live streaming e-commerce, more and more frequent e-commerce promotions also belong to the category of passionate shopping, and promotions and full discounts are increasing the return rate of e-commerce.

Almost all consumers who have participated in e-commerce promotions have relevant experiences. In order to achieve the full reduction standard, consumers make up orders through some unnecessary products, and then return them, which has become a common operation of users.

At the same time, the e-commerce promotion itself inadvertently stimulates consumers' irrational shopping psychology, crazy shopping during the promotion, crazy returns after receiving the goods are all true portrayals. Every year after Double 11, it is the peak period for e-commerce returns.

In addition, a daily household merchant said that many merchants like them with low overall unit prices usually do not open freight insurance, so the overall return rate of this category is low. Due to the low unit price of the goods themselves, there is a phenomenon that the goods are not as expensive as the freight, and the willingness of consumers to return is low. Therefore, the most common way for such businesses to deal with consumers' dissatisfaction with goods is to apologize with a better attitude, and then compensate with red envelopes.

"However, during promotions such as Double 11, the Tmall platform forces merchants to open freight insurance, which will also lead to a significant increase in the return rate of stores during the shopping festival." The above-mentioned daily household merchants said.

The prevalence of content e-commerce and the increasing frequency of shopping festivals are actually a microcosm of the e-commerce industry entering the stock growth stage. The growth of the industry based on GMV, AAC and other amounts has come to an end, and it has turned around the stock to stimulate the potential shopping desire of users, so under this general trend, the phenomenon of impulse consumption driven by platforms and merchants will only become more and more common.

High return rates eat into merchants

"There is a critical point in the impact of the return rate on factors such as store profits, transaction volume, and word of mouth, and if the return rate exceeds the tolerance of the store, it will affect normal operations." Miao Miao, the above-mentioned clothing business, said.

First of all, in terms of cost, if there are too many returns and exchanges, the direct increase is the cost of express delivery. "Most merchants have opened freight insurance, and the freight insurance of the platform cooperates with insurance companies, and the rate of merchant freight insurance is linked to the return rate, and the return rate is increased, and the corresponding freight insurance cost will also rise." Courier and freight insurance increase in tandem with the increase in return rates.

"If the industry's return rate continues to rise, the next step will be for a large number of merchants to cancel freight insurance and free shipping, or directly increase prices to cover the cost of returns." When the return rate exceeds the merchant's affordability, it will eventually destroy the service level of the industry and violate the interests of consumers.

In addition, inventory, face sheets, packaging, labor, etc. will incur some additional expenses, and even affect the store DSR score. When the return rate and negative review rate increase, the system will reduce the weight of the store, affecting traffic recommendation and user selection. "If the rating is low, you can't get on many activities on the platform, which will have a chain reaction." Miao Miao said frankly.

For the platform, the high return rate will present a stereotype of poor product quality and poor service to the outside world, and users will have a sense of distrust of the platform, which will lead to the loss of users and merchants.

At present, Douyin e-commerce and Kuaishou e-commerce are still facing such problems, which is why the platform vigorously introduces brands and encourages brands to self-broadcast. Through brand endorsement, the overall reputation of the platform is enhanced.

The above-mentioned e-commerce person said: "As a platform, they are definitely not happy to see the return rate of the platform increase." In addition to affecting the overall reputation of the platform, the high return rate is also related to the platform's revenue, and the cost of general merchants in terms of returns and replacements has increased, so the budget for advertising, platform activities and other aspects will be more conservative. ”

At a time when the overall competitive environment of e-commerce is becoming more and more intense, the general trend of platforms becoming more "biased" in favor of consumers is irreversible. Nowadays, Pinduoduo's "refund only and no return" that troubles merchants is actually a manifestation of the platform's bias towards consumers.

In this process, in order to attract users to create a more relaxed and convenient shopping environment, merchants have to bear the cost of benefiting consumers after enjoying the platform's user dividends.

It seems difficult to define who is right and who is wrong. However, as the rule-maker, it is important for the platform to grasp this "degree". As merchants, all they can do is to continuously improve their products, improve services, and enhance the overall core competitiveness.

(All interviewees in the article are pseudonyms)