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

Analysis of product return reasons speed increased by

Styles that saw a reduction in return rates

50%

One of their largest stores NPS increased by

53pts

About the company

The journey of this large, North American e-commerce retailer began in 2009 with a small Los Angeles storefront selling vintage clothing. They rapidly expanded into creating their own line of women's clothing and accessories, with a strong focus on sustainability and the aim to become entirely circular by 2030. Today, the company employs over 500 people, runs a robust e-commerce business and operates in 40 store locations, including New York, Miami, Dallas, Boston, and San Francisco.

"Looking at one of our top-selling dresses, we discovered some customers expressed dissatisfaction with the non-adjustable straps, which were too long. As a top-selling item, the revenue from avoiding even half of these returns would cover the entire year's cost of using the platform, so we were able to show the return on investment for using Chattermill very quickly."

Senior Director

Customer Insights & Analytics

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.

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Elevating the shopping experience and improving NPS

The team leverages Chattermill to enhance their in-store shopping experience. The team focused on their largest New York store, which had consistently low NPS scores during the summer season.

"At the time, our flagship store in New York had an NPS score of -13. Through the insights gained from qualitative feedback in Chattermill, we discovered that customers were facing extended waiting times for their items in the fitting rooms, as shopping assistants had to physically retrieve the products. This store was multi-leveled, requiring staff to navigate between floors, which added to the wait times. To address this issue, we made the decision to increase the number of staff and introduce additional shifts to ensure better line management."

As a result, the NPS score has significantly improved, reaching a rating of 40, emphasizing the importance of not only product quality but also the overall shopping experience.

Redefining retail with insights

By delving into the voice of the customer, the company managed to identify reasons for their product returns and made relevant adjustments, demonstrating a compelling return on investment.

This collaboration with Chattermill allowed the team to turn product returns into profits, reduce the returns rate by 380 BPS on average per SKU, decrease the time it takes to understand return reasons from 6 months to 30 days, and in some stores, improve their NPS by 53 points, providing valuable insights that drove experience-led growth for the business.

"A few years back, our growth relied heavily on acquiring customers, guided by our intuition. There came a pivotal moment when we recognized the need to shift our focus towards nurturing customer loyalty and crafting exceptional experiences. Our approach required greater structure to collect, listen and respond to meaningful customer feedback and Chattermill plays a huge part in that. As we discovered, acquiring new customers is a costly endeavour, while retaining them carries its own unique value."

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