Retailers at risk of over-stating their Christmas sales due to return rates, warns Fits.me

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Higher rates of returns associated with online sales, combined with a probable – but unknown – record proportion of online sales, will put retailers at risk of providing misleading estimates of their ‘net Christmas’, according to virtual fitting room provider Fits.me.

Heikki Haldre, co-founder and chief executive of virtual fitting room provider Fits.me, said: “There is always a rush in January to proclaim Christmas a success or a failure – even official bodies like the ONS publish provisional December figures by mid-January. This strikes me as simply too soon to guarantee any kind of accuracy; in borderline cases there is a risk that shareholders may be led to believe Christmas sales were up, when in fact net Christmas sales were down.

“Why? Because, in every sector, the return rates associated with online sales are higher than return rates for offline sales. For clothing, the rate is an average of five times higher – 25% online versus 5%. This means that even an average retailer, now seeing online sales accounting for 22.5% of sales compared with 19.7% last year, will need to sell 0.62% more garments in order to ensure the same net – that is to say post-returns – sales,” he said.

In January 2013, the ONS estimated that, compared with December 2011, the quantity of goods bought (all retailing seasonally adjusted sales volumes) in December 2012 had increased by 0.3%. So, while 0.62% may seem a small percentage, it would be more than enough to turn an apparent increase in retail sales into a damaging decrease if similar trading conditions are experienced in December 2013.

Fits.me provides virtual fitting room solutions for clothing retailers that help to deliver an online buying experience similar to the offline experience – specifically by enabling shoppers to try on clothes “virtually” before they buy. This largely eliminates the biggest single reason (fit) why shoppers later return garments bought online, contributing to a significant reduction in overall garment return rates, the company said.