Episode 19: The Cost of Returns

0:09Hello everyone and welcome to another solo episode of Pretty Busy and when I was thinking about what I want this episode to be about I have really thought about how much you guys are really loving when I kind of deep dive into what we're really looking at internally at odd news going into 2027 and I thought this would be very relatable for founders also early founders that have not hit this year and I thought I would talk about the world of returns whether you are a consumer or whether you are a founder you will very much understand returns whether you're returning product all the time or whether you're receiving returns all the time and it is something that we are massively looking at in 2027 because a lot of founders can benefit from just focusing on reducing their returns rate instead of actually focusing on growth.

1:03So I've learned a lot about customers and really deep diving into who the returning customer is at Oddmuse. So I thought I just want to share that but let's go into what's keeping me pretty and what's keeping me busy number one what is keeping me pretty is the new eula lip butter by rochelle's brand i think it's called like lip blanket sensational go to boots and get one it is it is amazing and i've kind of been going through this moment where all my lip balms have run out in one go i feel like everyone's had a moment where they've got like a million lineage lip masks and all different things going on.

1:42All of them run out in one go. I went and bought the lip blanket. I keep getting it confused. Sensational. What's keeping me busy? 2027, everything that we're planning to do in 2027, I want to go into next year feeling so ready for it because there has never been a January in odd news history where I've known what we're doing in 2027 apart from product. I want the first campaign that goes live in January in 2027 to just be shot next week. Like I just want to be so prepared for this next year because we've got a full team now. Every single kind of gap in the team is filled. The product is amazing.

2:28Really want to start the year as I mean to go on. But let's dive into this episode. Okay, so I'm actually calling this episode today are our best sellers bringing in our best customers which is a kind of harsh reality that our team day really put on the whole business and we really deep dived into who the customer is that buys our dresses who the customer is that buy our knitwear buys our tops and really kind of deep diving into who is the customer that keeps what she buys and who is the customer that comes back. They're the quality customers you want. You want a customer that is going to keep their item, love their item, and you want a customer that's going to stay loyal to the brand.

3:13The dress market as a whole is so competitive, especially when it comes to bridal and bridesmaids. And you've got to think, Oddmuse is even competing with themselves because I will look at a bride's order and she will order nine odd muse white dresses and she will only keep one or two so sometimes our returns figure is driven by the customer not knowing what to buy on site but i think the main thing i'm trying to get across in this section of the episode is the sales figure the gross sales figure really does not tell the whole story and it takes a minute to come around to that i remember when we had our first ever warehouse and we would only process returns on a thursday because we were sending out like a small amount of orders um so it was actually really manageable for it to just all be done in a day on thursday and i remember that day just being hell like a whole weeks of returns going through on shopify sometimes ending the down and minus founders will so relate to that early founders will so relate to those days where your Shopify ends on a minus and guys I know it feels like the end of the world but I promise you it was happening to me every single Thursday for a whole year even beyond that actually and promise you there's there's light at the end of the tunnel and you've just got to keep building but it is returns is just feels like a dagger to the heart in the early years and then in your later years it's actually something that you really need to get on top of because you got bills to pay you got people to pay and the industry average for returns is honestly like I think in the dress market it's like 70 % it's insane so yeah I think the main thing I'm trying to get across for this part of the episode is your gross sales figure does not tell the full story it is the most glamorous number it might be the number that you want to share online it might be the number that you want to share in a podcast but when you're in your trade meeting you need to be looking at net i only want to see now i'm not i'm really not concerned about gross one interesting fact that we found when we was really looking into who is the returning customers is dresses bring her in but then what happens next so dresses represent around 71 percent of the units sold at odd muse but as a category in this industry they are the most competitive style and they are the highest returns whatever brand you are whatever store you are and these account for 77 of our total returns so if we build odd muse out to not just be a dress brand and to have way more of an offering we will keep a lot more sales and what we also have been finding is anyone who does buy a fringe cardigan or a coat from us a jacket our suede jacket anyone who does buy from us they keep it and they come back whereas the dress customer is a lot less loyal because these are just like more viral products there's so many different customer types in our dress customer whereas our knitwear customer our suede jacket customer they're more like one type of an odd muse girl so I think where we're really looking at our product strategy is each season needs to be built out with way more categories like when I'm looking at Q4 for example the product that we've released in Q4 it's way too many dresses when you're looking at the actual product mix and product mix was something that we really used to focus on at ASOS and I think what we're finding now is we can never be that brand where a collection goes live and it's only dresses and that is a crazy position to be in to have that conversation with the team because Audemars has always been a dress brand but our customer is kind of like evolving like she isn't just this dress girl anymore she likes to put together outfits she likes to build outfits she likes to kind of tailor her own style into it she might wear a fringe cardigan out after work with a pair of boots she might wear our culottes for example out with a shirt and some heels which is what I wore last night actually and so I think I've really recognized that this party season is finally where we kind of hang up our boots on only doing party dresses and actually recognizing that our customer now is this kind of future affluent woman she's kind of like early mid in her career and she isn't necessarily like just getting dressed up for a wedding or a party she is going for drinks after work and we need to kind of like tailor that into every season especially the Christmas party season for returns our best season was chic season which has just gone by our q3 and when I look at that season the product mix is perfect and that was kind of completely by accident there were a good range of like going out dresses there was jackets there was knitwear there was like styling options there was pieces that we bought from resort collection that can be styled for like that desk to dinner vibe and I feel like that really now is the bible for every single season and really recognizing that our customer is moving into this party season but it's not a one size fits all party season it's not just kind of preppy party dresses so I've learned a lot this party season I'm very happy with how party was received but we're like two days out from launching it and in my mind I'm like well all we've put ourselves competing with all the other brands that are doing party dresses this season so we probably can expect some returns because she's probably overwhelmed with all the options that she's ordered right what are customers telling us with our returns we're like deep into the data odd muse has never ever looked into data at the level we are now and it's so so interesting to learn about our customers by doing this episode it's for no one to run away and think that there's a big returns problem at odd muse it's more so to communicate the reality of returns when you launch a fashion brand like the returns piece is so vague you have your like competitive bridal customer you have the girl that is just so indecisive with what she wears she orders 100 options and keeps like one of them it's kind of putting all your eggs into one basket right like if you are only a dress brand you're not only competing with yourself you're competing with a huge industry and it's a high pressure events like a perfect dress for a wedding guest outfit a bride a work event like we now put so much pressure on ourselves to have this perfect outfit so I think dresses just come with a lot of pressure so this is a fun fact that I actually learned at our team day or at least when I was like diving into the data after for a fashion brand operating at 30 million pound a year if you just reduce your returns rate by five percent that is an extra 1.55 million in your revenue which is an extra 130 000 pound a month so what i'm really realizing next year is the gross sales are already there like we can continue just do it like we obviously always want to recruit new customers we now know the type of customer that we do want to recruit and we do want to recruit them through different categories because they keep them and they come back they come into store it's the loyal world Muse Girl.

11:01But what I'm realizing is the sales are already there. We just need to make the customer feel so confident in her decision. And we really need to separate each category. So for example, our dresses are the highest returns rate, they're always going to be that way. But that does mean that as an ecommerce brand, we need to work a lot harder with how we're communicating on site. So one of the things that we're going to roll out really gradually is we're going to take like five top sellers at a time so it's not like a huge piece of work but actually shooting every single size model in these dresses which I think all brands should do but it's a huge investment to do that so we'll be doing that very kind of gradually and I think that will unlock a lot of confidence there's also some responsibility that we really need to accept so there's a few dresses that we need to refit our midis this season have been way too long it really kind of cuts out any petite women or any women that do just want a kind of regular length midi we've gone quite long with them because i just as from a design perspective i think like the longer the midi is a bit chica but we also have to put like a commercial mindset so building out our midi dresses with actually some normal length standard length midis are very important that would be leading into actually launching a petite range which we're just not ready for yet we don't have that demand right now like every collection we get very few requests but it's just not enough to roll that out and one thing that I've really shied away from is like being too product led on social I really believe that I want to tell a story on social but in actual fact we have a million followers on Instagram and growth is always lovely and engagement is always lovely but actually using the Instagram as a bit of an information overload and actually showing people where these dresses are sitting on people and actually being like very kind of forward with the product and how it fits I think is going to be a big thing for 2027 it's not necessarily going to be a post that gets us loads of followers and goes viral but it's gonna educate our customer on how the product fits how the product looks the quality of the product like that is one thing that we've really learned with party as well so i think we're gonna go information overload with our dresses because we would much rather the customer feel super confident before purchasing rather than having to order a few size sizes returning them or order loads of different options because she's not quite sure what's going to suit her i really want my customer to feel very very confident the next biggest offender for returns is our trousers and I'm actually very happy that that's it second because one thing I keep telling the product team I am in the product team one thing we're really saying to ourselves is we have to be get better at doing trousers only this year have we got a designer and we're doing like really in-depth like garment well not just only this year but we have an in-house designer now so we probably feel a bit more confident going back into the trouser market again this is a customer that when she does buy she comes back like those girls that are keeping their trousers are coming back for more so we need to recruit those customers but at the moment returns rate on trousers is like 45 which i want to get down to like 30 i know for a fact we could be the best trouser brand ever our simple statements trousers are an og the returns rate on that but any other trousers that we've done this year I don't know they've just been part of a cohort they haven't really it's not like the trousers haven't been as intentional as we started with our simple statements so I'm very very excited actually in q1 next year we have the most gorgeous pinstrap higher waist trousers and the fit is amazing so trousers in 2027 is something that I really really want to focus on because I know that we could be known for just like a great trouser the next is tops 41 % return rate not crazy and again we don't do many tops building this category out I think we'll just reduce the returns rate alone so when we did our merino walls returns were barely any on that which guys it sold out so quickly I didn't get myself one of the brown ones and no one returns them which is a good thing but bittersweet for me and but really just building out tops this year because we actually one of the stats in the team day is we gross like a million pounds with tops this year and we just don't take them seriously enough like we've done a few wall tops we obviously have the halter tops that everyone loves and they're kind of the biggest offender really that's the one style that we need to go into and improve but there's just so much opportunity and I love that trousers and tops sit here because I recognize the problem here I would hate to look at these stats and be like oh why's why why's our trousers and tops got a 40 % return rate like I understand that they sit as such a small category with loads of opportunity but the the kind of options that are on site need building out and it's nice that they're small categories as well like the dresses is a bigger piece but the trousers and tops can be fixed so easily now we get to knitwear 30 return rate perfect that is where you want to be 30 is the sweet spot years and years and years ago our returns rate used to be like 25 across the board but that is because we literally like had no stock and we wasn't the business that we are today and we wasn't reaching as many people as we are today 30 is absolutely where we need to be we need to live into in a reality where things go wrong and sometimes people have to return sometimes people just it isn't what they thought it was going to be like that is absolutely a reality but a 30 returns rate is where my heart is at knowing that dresses is always going to be a little bit more and what we've found about knitwear is this is our quality customer she really invests in her every single day she places like four or five orders from odd muse in one single year she's a quality quality customer that we've acquired and it's the same with the suede jacket so suede jacket had like 30 returns rate and that's really where we're sitting So if we could just get our dresses down, which we have a full strategy for, and really build out trousers and tops as a well thought out category, that alone, even if we do no marketing next year and we barely grow, that alone will unlock so much cash behind the scenes.

18:03So yeah, that's kind of how we're tailoring it into our kind of product strategy and our digital strategy next year. I've got a bit of a hot take on returns because I remember years ago when we actually become quite a big business, moved into a 3PL, we're sending out like 10 ,000 orders a week. So even at a returns rate of 30%, that's a lot of orders coming back. And we had to have a conversation internally about whether we offer free returns or not. And I feel like free returns is such a topic of conversation. I actually think it encourages people to buy things that they're not sure of because if you know that you can just whack a label on there and turn it for free you're going to kind of like treat that as a bit of a try-on session which I think is absolutely fine but when it comes to kind of smaller brands independent brands that aren't really pushing for that gross and they just want you to be very very considerate when you're purchasing that's when it runs into problems So we had to implement a shelving fee because we were spending like nearly tens of thousands every single week with our 3PL just repurposing these returns.

19:16Now, when you do your free returns with your fast fashion brands, it's actually cheaper for them to throw the item away. And that's what they do. That's fact like PLT and stuff like that. They do not re-shelve their returns. They will just throw them away. at odd news we obviously do not do that and would never do that we have like a no waste policy and we have to we have to re-shelf them and it's like costs like anything from like three three to four pound a unit to re-shelf these returns so if you are shopping with an independent brand or a smaller brand or any brand that is charging you a small returns fee i promise you it is because they are choosing the sustainable option and they want to repurpose those returns and I remember when we first implemented that I had loads of people fuming on Trustpilot because it isn't what they're used to with brands like ASOS and stuff like that but it is literally because that is the reality of fashion and that's the cost of returns and that's why I love the stores that you're able to go in try that's why I love up the partners that we're with we're in stores all over the UK because I want you to try on and I want you to keep that item and I would rather you not purchase in the first place if it's not going to be suitable for you so I think there's some education around returns for founders but also for consumers and you know really kind of consider I mean me personally I forget to return everything which isn't good but it's good for the people around me who get a few freebies but yeah there's just a lot to say about returns in 2026 and 2027 if you're really focused on that gross figure make sure that gap between your gross and net isn't widening because I feel like I kind of sweeped it under the rug for years and it's like it's not got to a point where it's like overtaking my business and it's a real concern but it has got to a point where it's like oh we could we what we're gonna do in 2027 we could have done a while ago and we could have like we could have kept that gap the same that like nice 30 sweet spot but we will absolutely get there and I actually feel like I'm gonna go home after this and I'm gonna write out a huge return strategy and and I might put it on my sub stack for you when I my warehouse days when I was doing returns till like 11 p.m at night some of the ways in which people return items I don't know if this is a UK thing or if it's a worldwide thing but once I received in the warehouse a full adenola order as a return we used to get people returned to us from other brands we went through a big stage where everyone was returning all the fake odd muse ads that you get served of my face but they're actually on sheen or whatever we used we had a big pandemic of people buying the real thing and returning the fake thing which was not successful for anyone because our warehouse are smarter than that so there was like a whole week where that was happening and so many people got blacklisted in that week i've had people return things covered in fake tan I've had like it is wild and then these people are just like seasoned professionals like if you say no to them they're gonna leave you like terrible reviews on Trustpilot.

22:51I've had this like crazy American lady once like return something in a horrific condition and she was like ringing me personally on Instagram and sending me like death threats like it was insane. So yeah sometimes

23:10in the wrong but also just be so kind of crazy i feel like when you're a small brand and you're managing your own returns it every like return that comes through like that just feels like such a piss take honestly like i remember like like who the hell was returning leather pants with knickers in them and then arguing with me about it you know so yeah returns are crazy and like there's a very small percentage of people in the returning customer pool that are insane I'd love to hear your most insane customer stories I've got so many I've got wait there was this one lady it was honestly insane she had um like scribbled red pen on the white blazer that she received she sent in photos of it basically was saying that there was blood on this blazer and she was going to like catch this like terrible disease and it was so obviously pen like i think i need to go back to this story like i want to say like something so obvious was in the photo like the red pen and she was literally insane and when we went back with something very obvious that she scribbled on the blazer and she stopped replying so we've had some crazy crazy return stories so yeah it's tough out there guys but do what you gotta do i'm gonna write a whole like returns piece on my sub stack and i hope you enjoyed that episode and i'll see you in the next one