Before you consider fixing sizing, let’s look at how much it actually costs you. StrutFit provides a free online calculator that lets you figure out the true cost of sizing for your business. As we know, most returns are due to sizing, and returns cost more than you think. It’s not just the shipping cost you might be paying, but the staff time, the lost sales, the stock factor, and often the item cannot be resold at the original price owing to damage. We go into the details of these various aspects below. If you want to skip all the theory and get to calculation, feel free to jump straight into our True Cost of Sizing calculator.
Free shipping on returns:
Customers have come to expect this in most parts of the world. 9 out of every 10 customers “highly value” free returns (Dotcom Distribution, 2018). Free returns have been shown to increase sales, but your returns will also increase, resulting in a higher cost. Is the trade-off worth it? Maybe, but this article isn’t about that.
Free shipping on exchanges:
If the customers pay for the return shipping of the item, and the retailer fronts the cost of the replacement item going out (perhaps a different size) - you pay twice the shipping cost for one product. If the retailer pays for the return shipping too, that’s three times the cost. It’s not exactly linear, but it’s evident that exchanging products eats into the margin.
Staff time:
Every product a customer returns will have to be handled and processed. Who’s processing it? Likely your staff, or the 3PLs you pay. Either way, precious time and money is being spent in handling, and you should consider how much this is costing you.
Lost revenue:
The product you’d already sold. The money you’d already banked. Well, that’s gone. You now have to refund the revenue to your customers. What if it had fit them the first time?
Stock factor:
Consider a customer buys some shoes. They’re shipped to them, they try them on, and they don’t fit. Okay, they ship them back - no worries right? Wrong. That process might take 2 weeks, it might take a month. Either way, that’s time that product could have been spent selling - but now won’t. Obsolescence and devaluation occurs given the passage of time — particularly an issue with fashion or seasonal merchandise.
Stock damage:
If the stock is returned and it’s damaged - the product can’t be sold. A Gartner global research study* into the returns practices of 300 multichannel companies across a wide variety of retail sectors indicated that these “companies only resold at full price 48% of the products that consumers returned.” (*You need a Gartner account to see the full report.) There’s no available numbers for this on the footwear sector, but we’re working on it.
The Calculator
Stock factor and stock damage are too complex to account for in a simple calculation, so we’ve left them off our True Cost of Sizing calculator. The calculator takes into account your own returns policy, so to see how much sizing is actually costing your business, head over to http://bit.ly/truecostofsizing
