Zalando may have found a new trick to limit the number of returns: an oversized tag should prevent people from wearing the clothes and then sending them back. Returns will only be accepted if the tag is still attached.
'Wardrobing' is a real problem
Major e-commerce companies are notoriously relaxed in their return policies: they want to create good will in their customers and convince them of the ease of online shopping. That is why they seem to accept and pay back almost all returned items without question.
Some consumers take advantage of that. In the fashion industry, this is called 'wardrobing': wearing an outfit to one or more events and then sending it back. Used returns are a considerable problem in e-commerce, not only for Zalando but also in other branches like for example Dutch Bol.com, as was recently shown in an undercover report.
“Do not remove this tag”
Zalando has found a new solution to this now: a tag of 10 by 15 cm, stating "do not remove this tag" in large letters, warning that items cannot be exchanged without it attached. It is unclear whether Zalando will be using the tag for all of its items. The tag is likely mostly intended for more expensive items that can be used for wardrobing.
"Zalando is under pressure and is looking for new, subtle ways to boost its profit margin. These oversized tags are one such measure. They also opened some physical stores in Germany to get rid of overstock," Jorg Snoeck (RetailDetail founder and co-author of The Future of Shopping) explains in Belgian newspaper HLN.
Paying for delivery and returns?
The German fashion platform has been feeling the pressure to finally make a sustainable profit. Zalando has been struggling with high costs, but the returns are an essential part of that. The company admits to a return percentage of 50%, but Snoeck believes that figure is actually even higher, being completely unsustainable in the long run.
"The next step could be to make people pay for returns," says Snoeck. Or for the delivery itself: in Italy, Zalando has been experimenting with delivery costs for orders below 24.90 euros. "Zalando is testing those tactics on a small scale and if they seem to be working, they will be rolled out in other places. It is possible that we too will have to pay to receive or send back orders in the future."