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New research suggests buy now pay later schemes will lead to returns tsunami

A quarter of retailers are expected to adopt try before you buy schemes by 2019 in a move which could see a tripling of returns costs, according to a new report. The likes of ASOS, Topman and Schuh are already adopting such schemes.

The report, by Brightpearl, canvassed 200 retailers and 4,000 consumers and found that three quarters (76%) would ‘definitely’ or ‘maybe’ purchase more items if offered a try-before-you-buy option with shoppers ordering on average three extra items each month.

However, the study showed that 87% would return up to seven purchases – with research showing that 85% of consumers expect retailers to provide returns for free.

The idea of free or cheap returns is also encouraging customers to deliberately over order with more than 40% of retailers having seen a marked increase in ‘intentional returns’ over the past twelve months,  according to the research.

The study showed that half of retailers (51%) say margins are being heavily impacted by handling returns and 72% believe the problem will only get worse thanks to try before you buy.

17% of global retailers have already adopted the try-before-you-buy model. By 2019, more than a quarter will offer this type of service to customers.

However more than two-thirds of retailers (69%) are not deploying any technology solutions to process returns, according to the study. This is despite the complexity of managing returns, with the average returned purchase passing through seven people before it’s listed for resale.

Derek O’Carroll, CEO of Brightpearl said: “For consumers, try-before-you-buy is a positive trend, removing another barrier to purchase.  The good news for retailers is that this will almost certainly lead to an uplift in sales. “However, this trend could spell disaster for retail business owners if they do not prepare by having the right framework and solutions in place to manage returns. Consumers will buy more, but retailers must be ready for a potential flood of returns. With shoppers indicating that they could return an extra three items a month on average, it could spell an unmanageable tsunami of returns for some merchants.”

The full report is available for download at https://info.brightpearl.com/returns-tsunami-for-retail.

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