The experiment, under a project called “return-as-a-service”, comes a few months after Myntra instituted a flat “convenience fee” of between Rs 199 and Rs 299 on every order made by customers with a high rate of product returns. These customers usually made twice as many or more product returns as the average customer, a person in the know told ET.
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The firm is now softening its stance on returns and, over the next few weeks, will experiment with a fee of Rs 15-30 per return after these high return-rate customers exhaust a set amount of free returns.
“Myntra feels that the flat charge of Rs 199 to Rs 299 per order may negatively impact user behaviour, not only among these users but also in their wider circle… although this is a small percentage of the overall cohort, it is still a sizable number of people,” the person said.
The “convenience fee” was applicable on 2% to 5% of the platform’s customers base, which stands at roughly 50 million active users. Active users are those who were active on the platform at least once in the previous 12 months, and are different from transacting users.
A spokesperson for Myntra said it keeps experimenting on the platform. “In our endeavour to enhance customers’ shopping experience, we are trying to solve how customers can choose to make more informed shopping decisions and minimise their returns,” the spokesperson said, without giving further details.
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Fashion, compared to segments like smartphones, electronics and appliances, sees a higher rate of return across the ecommerce industry. Between 25% and 30% of apparel products purchased online are returned, industry executives said. This is due to factors such as fitting and size measures being different across brands, or differences in colour, texture, or design between online representations and actual products.Charging a fee for returns, if implemented at a larger scale, would bring down the cost of servicing each order. Logistics is the biggest cost centre for ecommerce firms.
Reducing returns has been one of Myntra’s focuses this year. Besides imposing the fee on customers with high return rates, the company has also been trying to nudge them away from making returns by offering extra discounts if they promise to only exchange products and not make a full return.
Myntra’s experiment with minimising returns also comes ahead of the peak festival season, slated to start in October, when ecommerce platforms in India see the largest chunk of their yearly sales take place. Myntra is among the leaders in the online apparel space, even as it faces rising competition from the likes of Reliance’s Ajio, Tata Group’s Tata Cliq, as well as a plethora of other brands that sell directly to consumers through their websites.
The festive season this year is more critical as it comes amid a broader slowdown in ecommerce sales. On August 10, ET reported, citing data from ecommerce enabler Unicommerce, that the order volume growth of India’s ecommerce industry slowed from 69.4% in FY22 to 26.2% in FY23. Growth in gross merchandise value also slowed to 23.5% in FY23, from 73.6% the previous year.
Curbing return rates is essential for firms to reach profitability, as returns end up adding to logistics costs. Online apparel sellers are already charging premiums to help with covering operational costs — Myntra charges a convenience fee of Rs 15 per order for all customers, while Ajio charges Rs 19 and Nykaa Fashion levies about Rs 29.
