I thought this was a no-brainer, but here we go:
I have a friend who shops in a way I never even thought was possible. She buys clothing for herself and her two kids online like an increasing number of humans, only when she does it she orders three sizes of everything. She buys the size she thinks she needs and one size larger and one smaller. She might even toss in a variety of colors for those sizes thereby increasing her order size exponentially. Then, after receiving a truckload of boxes (I’ve seen her get as many as 20!), she’ll return most of them containing all the items she doesn’t like or don’t fit. This seemed outrageous to me when I first heard about it. But that was before I learned her secret and realized her approach could be tempered so that it wasn’t so wasteful.
My friend shops at a site that offers free returns; something most online retailers now offer so long as you bring the boxes to a drop-off point yourself. But many online shops including Zalando, her shop of choice here in The Netherlands, will now pick up her superfluous deliveries at her house, for free, and within a 1-hour scheduled window. And she has up to 100 days to do it.
Free returns, in addition to free shipping, is what makes online fashion feasible.
Few go into a fashion store pick one jacket or pair of shoes and buy them.
Fitting rooms and free returns exist for the same reason.
You don’t know if it fits until you have tried it on. And you certainly don’t want to pay for the privilege of trying the clothes on first. (Paying for returns = Paying for trying it on.)
That is why free returns always were and always had to be part of the model for online fashion retailers like Zalando.
And that is why those retailers make it easier and easier to send things back. Because every customer is doing it that way.
If online retailers don’t make the returns free and easy to handle, the customer lifetime value decreases: The customer become ever slightly more reluctant to order again in the future. In turn, make returns easier to handle -> increase customer lifetime value. (Zalando management once mentioned publicly right before the IPO A/B tests that confirmed this common sense assumption.)
So, with Amazon one has to –shudder– print out a list of pieces to put into the parcel to be returned. While Zalando and other fashion online retailers put that piece of paper, and anything else one needs for a return, already ready to go into the parcel. (Checklists! A marvel!) And even going further, Zalando provides free home pickup services in some metropolitan areas.
Zalando says it won’t be offering the free home pickup service forever. Its Dutch website says that the price will eventually be increased to €4.95, for example. Zara and a long list of other retailers also offer free home pickups in countries around the world. In the US, Amazon offers home pickup but charges a $6 “convenience fee” unless the return is due to an error on Amazon’s part. Gap stores offer a free pickup option for returns, but the US Postal Service will charge you $22 if you want to specify a one-hour pickup window outside of your normal mail delivery time. Nike doesn’t offer any home pickup option at all.
Here is my conjecture: Zalando may introduce that price (or they may not), but I doubt that would last long. This not something people want to pay for. (Put a price tag on it and you may just terminate the service already. What’s the point if, say, 1% or less of your customers use it?) A free pickup service for most1 customers makes sense if the economics work out, and they can work out given a high enough order level. (And a smart, combined logistics infrastructure.)
You want people to buy your fashion. So you want them to try it on. It’s that easy. Make it easier, make it as frictionless as possible.
Bonus point: The necessary scale and processes and infrastructure for this to be sustainable, together compose a formidable moat.
- “Pay Later”: Zalando Wants To Crack France With Fitting Service
- Zalando Research Is Shaping the Future of Online Fashion
- By 2020, Zalando Wants to Offer Next-Day Delivery to 75% of All Europeans
- How Zalando Is Transforming Its Main App Into a True Platform With “Zalando Build”
- How and Why Zalando is Making Return Shipments Easier
- Zalando Could Become the Role Model for Winning Against Amazon
- It’s certainly a service that one can’t provide to all customers. ‘Problematic’ customers may lose the privilege (on a per customer basis) of free home pickup, but a price to be paid by every customer will not be the long-term model. ↩