RETURN RATES: Good news about returns

Mar 01, 2000 10:30 PM  By

Improved packing and quality control pay off for a number of mailers

It looks like mailers had a double dose of good cheer from holiday ’99. On top of strong sales, most of the catalogers contacted at press time weren’t getting hammered with returns.

In fact, general merchandise mailer Spiegel, consumer electronics marketer Crutchfield, apparel and home furnishings cataloger Knight’s Ltd., and the children’s unit of multititle mailer Foster & Gallagher say that returns are down this year from last year.

At the $65 million children’s division of Foster & Gallagher, “we had fewer returns than any year in the past five,” says Sydney Klevatt, president of the Peoria, IL-based cataloger’s children’s, e-commerce, and health products groups. Klevatt says the return rate for the children’s division is less than 5%, below industry estimates for toy catalog returns of 5%-7%.

Foster & Gallagher’s 95% in-stock rate throughout the season no doubt kept its return rate low. So did its effort to ship goods within a day after the order was placed. Observers say that if the time between when gifts are ordered and when they are received is longer than the customers expect, many shoppers will rush out to buy a backup gift in case the mail order present doesn’t arrive. Then once the mail order gift is delivered, they often return it.

Apparel’s a killer

In general, gifts are more likely to be returned than self-purchases, which is why the post-holiday season is the returns crunch time for catalog operations folks. According to operations consultant Curt Barry, president of Richmond, VA-based F. Curtis Barry & Co., apparel boasts the highest return rates – about 30%, compared to 2%-5% for general hard goods and gifts, such as books and CDs – because of sizing problems and color preferences. Even within the apparel category, returns vary, with fitted fashion apparel return rates more than double those for casual apparel.

Nonetheless, a number of apparel mailers, such as $131 million Knight’s Ltd., are managing to reduce return rates. “Some of our apparel titles, such as Knight’s Ltd. and City Spirit, have seen a slight decrease in returns the last year or two because we’ve made some operational improvements,” says Steve Kessler, vice president of operations at the St. Louis-based mailer.

For instance, Kessler says, “we now have a woman on staff who acts as a `spec technician,’ checking incoming merchandise for the right dimensions for each size.” For the company, dresses have the highest return rates, at about 30% and higher. Some separates, such as sweaters and blouses, can also have return rates above 30%, while footwear returns are slightly lower, ranging from 20%-25%.

Reducing returns

Thoroughly describing sizes and accurately depicting colors – two of the most common reasons for apparel returns – in catalog creative may help reduce returns. “Our return rates are down compared to last year,” says Spiegel spokeswoman Debbie Koopman. Though she won’t reveal return rates, Koopman says that the Downers Grove, IL-based mailer has taken several steps to reduce returns, such as “presenting more detailed copy and sizing information in the catalog. Because of that we saw a substantial improvement with returns.”

Kurt Goodwin, vice president of operations at Charlottesville, VA-based Crutchfield, also attributes his company’s lower returns this season in part to its catalog creative. With its intensive editorial and instructional copy, Crutchfield is “educating customers on our products when they are ordering to make sure they get what they want,” Goodwin says.

But “we also look at returns and examine why items are being returned,” Goodwin says. For instance, if too many audio speakers that are drop-shipped from the manufacturer are being returned due to damages, “we’ll go to our manufacturer and suggest that it should use a better corrugated package, or add more foam or corners in the boxes, so that the speakers don’t get mashed in transit to the customer.”

Goodwin says he also puts stringent controls on Crutchfield’s own shipping procedures – especially important given that many of its electronics products are fragile or easily damaged. “We analyze our packages to make sure our packaging is the best it can be. We want to make sure that the goods we ship are packed with the right dunnage or the right corrugated,” he says.

As a customer of United Parcel Service, Crutchfield takes advantage of UPS’s packing lab. This free service from the Atlanta-based carrier puts packages through a battery of stress and drop tests to determine how sturdy they are. “I don’t think many catalogers take advantage of the packing lab, but it should become part of their way of doing business,” Goodwin says. “It makes a huge difference to anybody who makes his living in the shipping business.”