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Let us paint you a picture: your target customer is placing an order from the comfort of their home. It contains not one, but multiple items of the same category. They think to themselves; if something doesn’t fit they can keep what does, and always send the rest back. This practice is more common in eCommerce and is called bracketing.
Nearly 60% of online shoppers bracket, which may make it seem like a harmless enough impulse. But bracketing presents a headache in millions of dollars to retailers. The global reverse logistics in 2022 touched ~665B USD, and this is projected to skyrocket by 43.4% in the next 5 years, which is why retailers are examining ways to reduce returns, frauds and waste In the interim.
Let’s take a closer look at bracketing and examine steps to control it within the vast and complex landscape of returns management.
What is Bracketing?
Bracketing or buy-and-try refers to the practice of shoppers bringing the trial room to their doorstep (literally). Typically, buyers will buy multiple sizes, colors and styles of one product with the intention of returning some or most of the purchased items. Bracketing appeals to most customers because most marketplaces like Amazon pay for return postage and offer doorstep collection, which saves them a trip to the store. This too has been pruned with Amazon issuing refunds and requesting customers to keep the item.
Bracketing is prevalent for brands and stores that offer free returns because of the low risks. It has boomed since the pandemic, rising from 58% in 2021 to 63% in 2022. With the potential to turn into a logistics ordeal, some retailers have begun charging their customers return fees to accept returns. In fact, in an attempt to curb bracketing, both H&M and L.L Bean have tested out a return fee in limited markets 2 years ago and currently charge ~ $6-$7 for mailed returns. L.L Bean further decided to recoup their losses by revising returns policies such that members holding Bean Mastercards can make use of free returns while non-members will have to pay.
Notice a pattern?
The category that sees the highest return rates is clothing with returns standing at 48% in 2023 in India, and shoes trailing closely behind at 33%. Online returns take up 20% more space and labor to process than in-store returns, according to an Optoro report. This is partly why some retailers waive off fees for items brought back to store, because it carries lesser costs and can be returned to shelves a lot faster than goods returned online, again subject to condition and quality.
The Impact of Bracketing
Profitability
According to Vogue Business, bracketing accounted for ~15-17% of all returns in 2022. An increase in bracketing implies a high returns rate which dents a retailer’s logistics expenses.From the moment the return is initiated, the retailer has to bear the cost of getting the item back to the facility, scanning and marking it against resale suitability, disposal or inventory restoration.
For eCommerce retailers, delivery costs are included in the item price which makes up between 10-15% of the price,but the returns work out to be 66% of the original price when you factor in the handling, labor and storage charges.
Inventory
Bracketing increases the number of items making their way back to fulfillment centers, which impacts existing inventory levels by cutting into the space available for storage. For one, there’s no guarantee that the items received can be resold to fulfill a parallel order, which increases the cost of labor and space in the interim for such companies.
Secondly, what happens when a fulfillment center’s capacity maxes out? The goods have to be rerouted to another center or warehouse with more space, which adds delays to the fulfillment timeline.Put simply, different products have different space requirements which have to be rearranged to fit into the existing space such that they’re identifiable and distinct from existing inventory.
Sustainability
In 2019, a CNBC report revealed that retailers discard or dispose of 25% of returned items. For the remaining 75% that doesn’t end up being binned, the condition of the returned item,location and date all influence the next step regarding its repurposing. In some cases, the returns can be salvaged through upcycling or recycling measures. But even in this 25%, the carbon footprint leaves a sizable hole on the planet, with experts estimating that the 238K tons of carbon emissions from returns equal 60,000 car emissions annually.
With eCommerce returns found to generate 2.5Mn tons of waste, more retailers are using automated returns management platforms and educating their consumers on the environmental damage arising from increased returns. For example, data from our returns management analytics dashboard reveals that an esteemed D2C brand saved 12.36Kg of CO2 by introducing quality-compliance checks in real-time to the automated returns reconciliation processes. The scans helped expedite inspection and ensured that the inventory levels were updated only with products deemed feasible for reselling, helping to save ~43Cr in revenue.
Measures to Reduce Bracketing
Bracketing can be either deliberate or unintentional, which makes identifying it in returns slightly challenging to prove. That being said, there are steps retailers can take to minimize it, especially during holidays and events.
- Automate Returns Reconciliation
Did you know that only 24% of companies automate the returns process? This right here, is a huge opportunity for retailers to
- Manage the returns process from initiation to inventory updation.
- Collate returns data from sources such as feedback engines, mails and website reviews to understand and rank causes from most to least.
A returns reconciliation software contains a returns panel that indicates which channel sees the highest product inflow, with drilldowns based on geography, customer profile, recency and SKU code. With EasyReco, return claims can be verified against what warehouses receive, catching and correcting discrepancies. For example, a leading footwear customer recovered ~INR 32 Lacs in inflated returns charges and settled ~INR 50 Lacs in returns claims, thanks to extensive reports confirming the status, condition and nature of returns. The best part about automating the reconciliation process is that the volume of returns can be minimized by recognizing returns triggers and assigning accountability for missing and untraceable returns.
- Aid Purchase-decision making
In the U.S alone, 27% of shoppers ordered the same product in different sizes with the intent to return them back due to the absence of try-on options. Brands can mitigate this by introducing 3D try-ons and virtual trial rooms which allow customers to preview how they would look in a particular size.Lenskart is a prime example of this, allowing customers to view glasses and see the fit and power from different angles. Other inspiring examples are Meesho Live, which encourages video shopping and connects customers with personal shoppers and merchandisers for pre-buying recommendations.
In clothing, different brands classify a certain size in different ways which impacts the fit. For example, a small in Europe would be a medium in the U.S. This can confuse shoppers and cause them to order the wrong size. In such events, it is helpful to include detailed product descriptions and different sizing charts in the catalog so that customers can compare standards against what they already own before making a new purchase.
While consumers do drive up bracketing, retailers can invest in technology that uses data to prioritize return efficiency over binning products.
- Provide sustainability-protection information
Make consumers aware that not every purchase qualifies for return and send educational material on your sustainability measures, such as switching to biodegradable packaging, EV-vehicular fleet etc. As more consumers gain awareness on how returns generate waste, impact climate change or drive up emissions, retailers can steer them towards adopting more sustainable practices in the consideration stage itself.
Some brands have resorted to marking down prices of returned items and reselling them as “Refurbished” or “second hand” goods. This makes them more affordable and appealing to price-conscious consumers, helping to recoup some losses incurred during the returns process and preventing the trash bin from overflowing.
- Incentivize BORIS
Buy Online, Return In-Store, or BORIS encourages a healthier balance between online shopping and offline returns. It can even persuade a customer to stay back and look around for alternatives in-store, driving purchase. For example, Paypal’s Happy Returns program connects 5000+ partner offline outlets that accept returns. Alternatively, you can provide customers with location or pincode specific drop off points that allow bulk shipment rather than pay delivery agents fuel and labor expenses to go to different individual addresses for item collection.
- Draft clear and detailed returns policies
While returns policies should be customer-first, it should also outline the conditions to permit returns. A retailer’s first instinct is to levy a return charge to discourage the return altogether. But what if the cause for return turns out to be damage and quality-related? You’ll end up angering customers who are unlikely to return to your store or recommend you to their network which is lost sales potential.
Collect feedback at omni channel touchpoints, such as a survey link via email that asks your customers why some of them bracketed their purchases. Reasons such as “incomplete information” or “wrong product description” gives you specifics to work with and the opportunity to turn things around. It can also help you reframe your returns policies and make the information available across your sales channels so that a customer remains aware. Importing this feedback into a returns management software creates a history to look back on and categorize returns by reason and season, thereby helping you to determine if levying a returns fee is worth the risk.
Retailers can also deploy recommendation engines to narrow down purchase decisions based on previous behavior and inventory availability to ensure stock-on hand matches expectation. Additionally, consider plugging in a pop-up that reminds customers of potential return fees to make them think twice before abusing the free returns policy.
In Conclusion
There’s a reason returns are called a necessary evil, and that is because at its core, it is a learning opportunity to remedy high returns by investigating and determining if the reasons makes the cut. It helps you understand human psychology and adapt to evolving demand without leaving a yawning gap in your revenue.
There are several factors contributing to bracketing, including the age of a shopper. In this regard, Gen Z leads the way, with 1 in every 4 customers purportedly bracketing frequently in a single quarter. Other factors include flexible return policies which retailers are now revamping in the attempt to curb return spends and bracketing. Through the power of automated RMS, educational messaging and brands turning into sustainability advocates, a great chunk of suspicious bracketing can come down, making the returns process fair and transparent for buyers and sellers alike.
