How a Large Fashion Retailer Uncovered the Real Drivers Behind Product Returns

Analyzing product return reasons 

In 2022, consumers in the USA were predicted to return more than $761 billion worth of clothing. This figure represented approximately 20.8% of all online purchases, leading to significant logistical and financial challenges for retail and e-commerce businesses.

​​"It was time for us to uncover the reasons behind our increasing return rate," says Senior Director of Customer Insights & Analytics. "We wanted to understand if factors like fit, customer experience, the shifting landscape post-COVID, or behavioral shifts were the driving force behind our product returns."

"As we examined the comments in our returns data, we realized there was a wealth of insights waiting to be explored. Our data science team initiated a one-time project that provided valuable insights, but this prompted us to ask: Can we expand on this? That's how we started to search for a text analytics solution."

The company teamed up with Chattermill to delve into their return survey data and uncover the exact reasons behind product returns - a challenging task for an extensive inventory with over 1000 SKUs. Their goal for 2023 was to reduce their e-commerce return rate by 200 BPS and significantly boost their profitability per order. 

Transforming product returns into profits

Within the first few weeks of working with Chattermill, the team was able to discover valuable insights that answered the most critical business questions. 

Soon after that, the team discovered similar examples that led to significant improvements in a matter of weeks. With the right tools and partners, the business started to turn losses into potential gains.

"Another best-selling dress, played a crucial role in our mission to refine the returns process. Despite its initial appeal - its flattering style and affordable price - it unexpectedly experienced a high return rate. It took us six months to flag it as a high-return item, and by then, we not only ordered more but also produced it in other colors."

"Through our internal quantitative and qualitative analysis, we discovered that the front panel length was the culprit. By analyzing customer feedback, Chattermill helped us easily identify the issue that led to high product returns, enabling us to swiftly address it. The adjustments we've made not only enhanced the product but also improved customer satisfaction, resulting in a 10% reduction in the return rate for this item."

"Had we integrated Chattermill into our internal processes earlier, we could have detected and appropriately actioned on the issue within just 30-45 days, potentially saving thousands of sales." 

Before ordering the next batch of clothing, the team managed to improve designs, leading to enhanced product quality. They also added fit tips on product pages to help customers with sizing and style choices. As a result, 50% of styles with fit tips saw a significant reduction in return rates, with an average drop of 380 BPS.