Wardrobing: The Emerging Challenge for Retailers Worldwide”.

The global e-commerce market is expected to reach $6.3 trillion in 2024. This number is expected to continue growing over the next few years (15.6 % YoY increase, as per AltIndex), But along with the e-commerce industry growth, the phenomenon of wardrobing is also increasing which has become a headache for retailers across the world. Wardrobing involves, the deceptive practice of purchasing an item to use it once or twice and return it for a full refund. In this post, we will take an in-depth look at this global trend, its impacts, and strategies adopted by the retailers.

Emergence of Wardrobing

Wardrobing started with the fashion industry, where consumers may purchase clothing, accessories, or even high-end items such as evening gowns or designer suits for a special occasion, only to return them after use. The same has spread across other sectors, including electronics, cosmetics, gift items and furniture. Increasing online sales, has further exacerbated the issue of wardrobing, as consumers can easily purchase items with the intention of returning them without even stepping foot in a physical store. Additionally, the anonymity in the online shopping platforms makes it easier for individuals to engage in deceptive practices without fear of repercussions.

Global Wardrobing statistics

Each time a return is initiated by a customer, it triggers an unseen reverse supply chain known as the returns logistics industry, valued at $627 billion, which is higher than the GDP of many countries in the world. Wardrobing is most common among Americans and less common among Japanese. Younger generations aged between 18 and 35 were found to be mostly involved in the same.

While specific statistics on wardrobing across countries may vary, these insights highlight the global nature of the issue and the challenges it poses for retailers and manufacturers worldwide.

Why People engage in Wardrobing

Not all consumers contribute equally to this issue, there are several reasons why people engage in wardrobing,

• Desire for temporary ownership: People may purchase items for specific events or occasions, such as weddings, parties, or vacations, with the intention of returning them after use. This allows them to enjoy the benefits of owning the item temporarily without the financial commitment.
• Changing Fashion Trend: Wardrobing is often driven by the desire to keep up with changing fashion trends without incurring the full cost of purchasing new items. By buying and returning clothing or accessories, individuals can rotate their wardrobe more frequently and experiment with different styles without overspending.
• Financial Constraints: For some, wardrobing may be a result of financial constraints or budget limitations. By returning items after use, they can effectively “borrow” clothing or accessories without having to make a permanent investment.
• Convenience: The rise of e-commerce and the prevalence of time-bound free return policies have made it easier than ever for people to engage in wardrobing. Online shopping allows individuals to browse a wide selection of items from the comfort of their own homes and return them hassle-free if they are not satisfied.
• Social pressure: Social media and peer influence can also play a role in encouraging wardrobing behaviour. With the pressure to maintain a certain image or appearance on platforms like Instagram, some individuals may feel compelled to constantly update their wardrobe with new and trendy items, even if it means returning them after use.
• Lack of awareness: Some people may engage without fully understanding the impact it has on retailers and the industry. They may not realise that excessive returns can contribute to higher costs for retailers, lead to inventory waste, and ultimately result in higher prices for all consumers.

Implication of Wardrobing

Wardrobing not only poses financial challenges for retailers but also for customers as well. Each time a return is initiated, it triggers an unseen reverse supply chain known as the return logistics industry, valued at $627 billion, which is higher than the GDP of many countries in the world. Its primary function is to process returns, determining what can be salvaged and what becomes waste. This process can be challenging. For instance, the returned pair of shoes, although unused, now has an open box and untied laces, requiring someone to repackage them. Sometimes, companies lack the technology or time to handle returns efficiently, leading to added complexities. This consumer behaviour not only impacts the retailer but the customer as well.

Implication on retailers

• Financial Loss: Wardrobing results in financial losses and profitability for retailers due to the costs associated with processing returns, restocking inventory, and potential markdowns on returned items.
• Operational Cost: Managing returns and processing refunds can be time-consuming and labour-intensive for retailers. Wardrobing increases the volume of returns, leading to additional strain on resources and operational inefficiencies.
• Inventory Management: Wardrobing can disrupt inventory management and forecasting efforts for retailers. It may result in inaccurate inventory counts and stockouts of popular items, leading to missed sales opportunities and dissatisfied customers.
• Loss of Brand Reputation: Most of the products are sold through some or another e-commerce website. Frequent returns and instances of wardrobing can damage a retailer’s brand reputation and credibility. Customers may perceive the retailer as being lenient with its return policy or providing low-quality merchandise, leading to negative word-of-mouth, a decline in customer trust, and lower ratings.
• Environmental waste: Returned items may not always be resalable and may end up being disposed of in landfills. A report shows that by 2030, we may end up discarding more than 134 million metric tonnes of textiles a year.

Implication on Customers

• Higher Price of the Products: Retailers have started including the cost of wardrobing, such as return logistics, restocking fees, or increased operational expenses, by raising prices for all customers regardless of their involvement in wardrobing.
• Shopping experience: Wardrobing has a negative experience for customers. For products that are frequently returned, this results in a longer wait time for refunds and exchanges.
• Product availability: Wardrobing contributes to a decrease in product availability for other customers. When items are purchased with the intent to return them after temporary use, they may not be available for purchase by other customers who genuinely need them.
• Decreased trust in retailers: Customers may lose trust in retailers if they perceive that the return policy is being abused by others engaging in wardrobing. This can affect customer purchasing behaviour and loyalty.

What are Retailers doing to avoid Wardrobing  

• Cash on delivery: Some retailers have stopped Cash on delivery options for some customers or for some locations (backed by data analysis), where wardrobing is very common.
• Stricter Return Policy
  • Offer a shorter return period (e.g., 14 days vs. 28 days).
  • Stricter norms for product returns Products can only be returned with tags still attached.
  • Clear return policy: no tag, no return (may provide exchange); no return form, no refund.
  • limitations on the number of returns allowed per customer.
• Product Tags: For clothing, having a swing tag in a visible place makes it difficult to wear without removing the tag first.
• Thorough Inspections:
  • Returning to the customer service desk only to specifically trained staff who closely examine items for any signs of use.
  • Moving ahead, now-days well-known e-commerce retailers like Amazon, Flipkart, Meesho Myntra, etc. have started inspections of the products.
• If returns are sent via post, customers fill out a return form with personal details (e.g., postcode) to process the return request. The return form also provides information about the consequences of fraudulent returns.

https://www.sciencedirect.com/science/article/pii/S0969698922002387

• Restocking Fees: Some retailers have started imposing restocking fees on returned items, particularly on high-value or special-order items, making wardrobing less financially appealing to consumers.
• Detailed Product Descriptions and High-Quality Imagery: Retailers and manufacturers invest in providing detailed product descriptions and high-quality imagery to help consumers make more informed purchasing decisions. By accurately depicting the size, fit, and appearance of items.
• Virtual Try-On and Sizing Tools: Virtual try-on and sizing tools allow customers to visualise how clothing and accessories will look on them before making a purchase. By providing interactive features that simulate the try-on experience, retailers and manufacturers can help reduce the incidence of wardrobing.
• Stringent quality control measures: Manufacturers implement stringent quality control measures to ensure that items meet the highest standards before being shipped to retailers, thereby discouraging wardrobing.
• Customer Education: Retailers and manufacturers have started educating consumers about the impact of wardrobing on their businesses and the broader industry. This may include communicating the costs associated with processing returns, restocking inventory, and combating fraud, as well as the environmental implications of excessive returns.
• Data Analysis: Utilising data analytics to track serial returners and target those returns by implementing return constraints
• Rental and Subscription Services: Some retailers have started offering rental or subscription services for certain items or products, allowing customers to access high-quality products for a limited period without the commitment of purchasing.

As e-commerce continues to grow and consumer behaviour keeps evolving, addressing the challenges of wardrobing will be an important consideration and challenge for retailers and industry stakeholders. To stay a step ahead of wardrobing, industry players must continuously innovate and adapt their return policies and customer management strategies. In conclusion, wardrobing is a global issue that requires an international, concerted effort. By understanding the challenge at a granular level and implementing strategic countermeasures, retailers can begin to turn the tide against this costly practice and reduce environmental waste.