Online Retailers at Risk of “Returns Tsunami” with TBYB Scheme

Howdy !

Try before you buy (TBYB) is fast becoming an eCommerce trend that must be considered with caution.

It’s a scheme in which online shoppers can order dozens of items to try on, return those that they don’t want to keep, and then receive a refund even though the online retailer whom they bought from hasn’t processed the returns yet.

Though good news for consumers, TBYB poses a serious threat to a seller’s profit according to a new study from omnichannel retail management firm Brightpearl.

Their findings, which were obtained from 200 retailers and 4,000 consumers polled in the US and the UK, showed that online shoppers would purchase five extra items each month if they were offered the try-before-you-buy option.

However, 87% of them revealed that they would return up to seven purchases. As if this isn’t enough to cripple the bottom line of a business, 85% of shoppers surveyed said they expect retailers to provide free returns.  

That kind of mindset and expectations are affecting online retailers in a really bad way.

40% of online businesses saw a significant increase in “intentional returns” in the past year as consumers ordered too many items knowing returns are either free or cheap.   

Are you driving down a one-way street?

We may have put repeated emphasis on the importance of providing the needs and wants of your customers to ensure the success of your eCommerce business.

However, that doesn’t mean you should receive a mountain of returns with open arms and face the substantial cost on your own.

TBYB may be popular among giant online stores who started it, such as Amazon’s Prime Wardrobe, Asos, and Topshop among others, but if you’re not ready to follow suit, it’s going to eat into your profit margin.

Although it could potentially increase sales, Derek O’Carroll, CEO at Brightpearl, explained:

“Try before you buy is an interesting model, with obvious benefits to consumers and businesses, but it’s something retailers must view with caution. The impact on return rates could cause devastation for online retailers who are already seeing their margins being squeezed considerably.”

Brightpearl’s survey further revealed that 17.5% of online retailers have already adopted the TBYB scheme, and more than a quarter of them are expected to offer something similar to their customers by next year.

Are you all fired up with this growing eCommerce trend? Let us know your thoughts in the comments down below.

As always, to your continued success,

Dave & Matt

 

1 reply
  1. Susan Ellery
    Susan Ellery says:

    This would potentially be a killer for the small Ebay/Amazon seller as we all know that, regardless what the marketplace spin doctors would say, price is king!
    The only way to balance it out is if ALL sellers increased prices to accomodate the returns. But all it takes is one seller to buck that trend and it would all revert to a free for all quite quickly!

    Reply

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