The High Cost of Damaged Products – Returnalyze Returns Analytics

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Damaged or defective products reduce customer lifetime value and impact a business’s bottom line by millions of dollars. Discover the high cost of damaged products and learn how returns data can identify issues and inform targeted solutions.

 

In an ideal world, a product moves swiftly through manufacturing, packaging, and shipping so it can be put into the hands of happy customers. Unfortunately, even when every detail is carefully monitored, consumers can still end up with damaged or defective products. This can cause a poor consumer experience that damages customer loyalty, diminishes customer lifetime value, and negatively impacts a brand’s reputation. In the end, the cost can far outweigh that of the initial damaged product.

Even when a customer returns an undamaged product, the cost can be steep. The Atlantic put it this way, “Add up the labor to pick, pack, and dispatch the item; the freight both coming and going; the labor to receive and sort the now-returned item; the cardboard and plastic for packaging; and the sorting facility’s overhead, and the seller has already lost money.” For damaged or defective items, the costs can be even greater.

Obviously, it’s always the goal to avoid negative consumer experiences. However, businesses that promptly respond to damage claims can build customer loyalty and more easily protect their bottom line.

The Cost of Damaged and Defective Products Adds Up Quickly

From initial product development all the way to shipping, there are many ways that a product can be damaged. Sometimes a design flaw will result in a defect, storage humidity can impact textile quality, or packaging may not offer adequate protection during shipping. Whatever the case, damages can and do happen…and some scenarios are incredibly costly.

 

In the long run, the most expensive aspect of damaged products is the negative impact on customer lifetime value.

 

Imagine that a product was accidentally damaged during shipping. The consumer will contact customer service, they might be required to return the damaged product, and then a replacement will be shipped to them. Assuming this is a random occurrence not likely to happen again, the costs are relatively simple to determine. However, if this shipping method regularly results in damaged products, it may be necessary to find an alternative shipping carrier. It’s also possible that the packaging is at fault, and new packaging materials need to be sourced.

Now, let’s take it a step further. Imagine that customer service is receiving a significant number of damage claims regarding one particular SKU. Perhaps it’s a shoe with an unstable heel or a piece of clothing with frayed material or a broken zipper. Simply replacing the product may not be enough since multiple damage claims have been filed. Whether the product needs a complete redesign or new materials, that means more research, prototyping, and then potentially even new marketing for a relaunch.

Plus, it’s important to consider what happens when damaged or defective products are returned.

The Sustainability Impact of Returned Damaged Products

On top of the additional shipping supplies and freight that increase overall carbon footprint, the actual damaged items create a sustainability issue. Fast Company even states, “Every year, U.S. companies spend an estimated $50 billion on product returns. At the same time, those returned goods are responsible for massive landfill waste and 27 million tons of carbon dioxide emissions annually.”

 

One of the simplest reasons some businesses destroy products is to avoid the cost of storing unsellable products. For damaged items that cannot be resold, recycled, or repurposed, warehouse costs will rarely be recouped

 

While some damaged or defective products may be donated, fixed, or repurposed, many products aren’t designed to be disassembled. That makes it nearly impossible to repurpose them. Additionally, many organizations won’t accept donations of damaged goods, and some industries lack adequate recycling procedures. Ultimately, damaged products are often discarded or destroyed.

Even without taking damage into consideration, product destruction is a relatively common practice in the fashion industry. Vogue Business says, “In truth, all brands have unsellable products to deal with, whether it’s unsold inventory, damaged goods or customer returns — and the industry has not yet created enough solutions for dealing with them effectively.”

The factors that lead to product destruction are complex though. One of the simplest reasons some businesses destroy products is to avoid the cost of storing unsellable products. For damaged items that cannot be resold, recycled, or repurposed, warehouse costs will rarely be recouped. However, it’s also a matter of brand reputation. Whether a product is damaged, recalled, outdated, or simply end-of-life, getting these products out of circulation is essential to avoid reputation damage.

 

Impact of Damaged Products on Customer Lifetime Value and Reputation

In the long run, the most expensive aspect of damaged products is the negative impact on customer lifetime value. One study found “An overwhelming 73% of participants indicated that they would be unlikely to purchase from the company again after receiving a damaged item.”

While loyal customers may be more willing to repurchase after receiving one damaged item, customers who receive damaged products in their first purchase are much less likely to do so. What can be even more damaging is if the customer experience is so poor that they leave a negative review or post about it on social media.

In the end, not only can a damaged product reduce the lifetime value of one customer, but it can also make customer acquisition that much harder. However, it’s important to understand that all interactions, even those involving a damaged or defective product, can be opportunities for building trust.

When a brand promptly responds to a negative experience, this communicates to customers that their concerns matter and that they can trust a brand to resolve issues. In the end, scenarios like these are a way for brands to nurture customer relationships, improve loyalty, and resolve product issues that could otherwise lead to millions of dollars in cost.

The key to resolving these issues is to identify the source of the damage so the correct solution can be implemented.

Returns Data Can Pinpoint Damage Details and Inform Solutions

For larger retailers, damages can impact their bottom line by millions of dollars, so determining the cause of damage is necessary. That’s why returns data is so vital.

In-depth return analytics helps businesses determine whether damage is the result of textile sourcing, manufacturing, design, etc. When this data is expertly leveraged, damaged products and damage return rates are reduced, customer lifetime value increases, operating costs can be saved, and so much more.

The Returnalyze Intelligent Dashboard provides more than just data though. Businesses can cross-reference datasets to verify specific issues, and access also comes with essential step-by-step guidance and expert data analysis. So, on top of essential data, Returnalyze experts will help analyze the data to develop targeted, data-driven solutions.

If you’d like to see how our intelligent dashboard can help you leverage return season data, schedule a demo or contact our team today.

Why Detailed Sizing Charts Matter – Returnalyze Returns Analytics

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Discover how leveraging returns data helps retailers identify sizing issues and develop sizing chart solutions that enhance consumer experiences and increase customer lifetime value.

 

Surprisingly, retailers that offer clothing, apparel, and footwear often don’t include detailed sizing charts. Whether it’s a complete lack of information, incorrect sizing information, or using the wrong sizing guide, these issues lead to higher returns and negative consumer experiences.

While this is often a simple oversight, it can cost businesses millions in the long run. In Akeneo’s 2022 Global B2C survey, they found that “62% of consumers said they would abandon a planned purchase if they discovered product information was flawed or inconsistent, and two-thirds of shoppers said they’d cease buying from a brand if they lost trust following a bad product information experience.”

Fortunately, customer signals from returns data can help retailers determine what’s driving sizing chart issues while crafting solutions that boost loyalty, reduce returns, and increase sales.

Detailed Sizing Charts Reduce Returns and Increase Sales

Sizing is often the main reason consumers shop in-store instead of online, and it’s not surprising considering that sizing issues are one of the largest contributors to consumer returns. For retailers that only have digital product listings, this is clearly a problem. Fortunately, the solution is simple—make detailed sizing information accessible and easy to understand.

When sizing information allows consumers to select the correct item without needing to swap it for an alternative, it creates a much more positive experience. This lets them know they can trust the information provided, which makes future purchases more likely. In turn, this leads to trust, loyalty, and higher customer lifetime value.

Accurate Sizing Information Promotes Brand Advocacy

When consumers regularly have positive experiences, it naturally promotes brand advocacy. Sometimes that means simple word-of-mouth referrals between a consumer’s friends and family. However, it can also lead to influencer shoutouts, social sales, and more.

With the rise of influencer marketing and social sales, customer advocacy has become more powerful and complex. Virtual try-on content, for example, is popular for content creators who cater to specific sizes or communities.

“The speed with which consumers can share information about sizing means that both positive and negative experiences will quickly go public or even viral.”

 

For example, TikTok is becoming a go-to platform for consumers looking for sizing information. In try-on haul videos, content creators of all shapes and sizes try on clothing so their audience can see what certain items will look like on specific body types. They’ll deep dive into the fit, stretch, and overall quality to help their audience determine whether the items will work for them.

Bottom line? The speed with which consumers can share information about sizing means that both positive and negative experiences will quickly go public or even viral. Regardless of whether this content is user-generated or created from an influencer partnership, the impact on sales can be significant.

 

Detailed Sizing Charts Minimize Size-Related Bracketing

Some consumers are so accustomed to sizing issues that they regularly resort to bracketing. This is when an online shopper purchases multiple sizes and variations of an item, selects their favorites to keep, and then returns the rest to the retailer. This shopping behavior ensures that a consumer will receive their ideal product the first time, rather than returning a version that didn’t work and risk it being unavailable later.

Returnalyze has observed that consumers who over-purchase often end up keeping more than one item due to a desire to own multiple colors or styles of a similar product. However, consumers who bracket for sizing purposes are much less likely to keep multiple sizes of the same product. So, retailers may experience minimal returns due to customers bracketing for color or style, but will see many returns from consumers who bracket for sizing purposes. However, providing more detailed sizing information leads to fewer returns from size-related bracketing.

Additionally, returns data provides much-needed insights into which types of products are being returned and why. For example, imagine a luxury shoe retailer offers both high-heel and kitten-heel for a product. This retailer may discover that their customers are bracketing for heel height and almost always returning the kitten heel. Returns data can help the retailer determine if the sizing information is creating a disconnect between the actual fit and the customers’ expectations.

Sizing Chart Solutions

For consumers, sizing charts are often a bit of a guessing game. That means a brand or retailer’s job is to make finding and explaining that information as simple as possible in order to reduce sizing issues.

Here are a few of the most common ways to improve sizing information for consumers. In addition to simply making sizing information easier to find, these will ensure that consumers have a more positive experience:

  • Don’t solely rely on a universal size guide. These are often too general and lack the specificity required to make an informed buying decision.
  • If a brand regularly runs large or small, include a brand-specific sizing chart.
  • International retailers should include size guides specific to the country they’re selling in.
  • The size guide on a product page should be specific to that item.
  • Retailers that sell more than one brand must ensure the sizing chart on a product page corresponds to that specific brand.
  • Provide sizing clarity on unisex items.
  • Ensure that size conversion charts are accurate and simple to understand.
  • Inform consumers when a product feature, such as material or heel height, will impact size and/or fit.
  • The sizing chart on each product page must be easy to find.

 

Minimize Sizing Issues with Returns Data from Returnalyze

At Returnalyze, our platform provides essential data to help businesses understand returns drivers, including managing unwanted returns from sizing issues. With this information, we’ll help you develop solutions that will reduce sizing issues, reduce sizing-related returns, and increase customer satisfaction. Contact our team and take control of your returns today.

If you’d like to see how our intelligent dashboard can help you leverage return season data, schedule a demo or contact our team today.