Asos Looks to Separate ‘Good Returns’ From ‘Bad Returns’

Online fashion retailer Asos is focused on returns as it continues its cost-cutting measures.

“While we continue to believe that free returns are a core part of our customer proposition, there are good returns and bad returns,” CEO José Antonio Ramos Calamonte wrote in the company’s year-end earnings report Wednesday (Nov. 1).

He said good returns help land new customers, and lead to bigger basket sizes, while bad returns come from unprofitable customers, “serial returners” or from things that could have been prevented, like inaccurate sizing or inferior quality.

“We will constantly strive to eliminate bad returns through closer scrutiny of returns data to identify high returning products, brands or materials; corrective action to improve the size, fit and quality of our products; and AI forecasting to drive better decision-making,” he added.

The company’s returns plans are part of a broader project to reduce cost and waste in the year ahead. Other tactics include the closure of one of its fulfillment centers and developing further data science and machine learning capabilities.

The efforts follow a year in which Asos recorded a pre-tax loss of $316 million. The company is also forecasting a 5% to 15% drop in sales next year, news that caused its stock to tumble Wednesday morning.

In September, the company reported a 16% drop in U.K. sales, driven by a summer of wet weather in Great Britain.

PYMNTS explored the return fee issue in September, noting that these charges provide retailers with both benefits and disadvantages.

On one hand, these fees can cut back on the frequency of returns, giving retailers the chance to recoup expenses on restocking, refurbishing and reselling returned items.

“However, fees may hurt a retailer’s image, as some customers may perceive return fees as inhospitable or punitive,” PYMNTS wrote in March.

PYMNTS Intelligence found that a third of American consumers think that free online returns — that is, no-cost online returns with printable shipping labels from the retailer — are “very” or “extremely” important.

Meanwhile, a survey by logistics firm Happy Returns found that one-third of companies said they have lost customers since they began charging consumers fees to return items that they bought online.

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