We practically never throw anything away!
Customer focus

We practically never throw anything away!

97 percent of returns go back to sales, 3 percent to wholesalers

10/1/2019 By Frank Surholt Reading time: 3 Minutes
Returns are part of the business model for online merchants. The key challenge is to keep them as low as possible. How the Hamburg-based company OTTO manages to do this and handles its returns, why products only have to be destroyed in the one per thousand range and how returns are reduced - all this is revealed in our FAQs.

What happens with returns?

OTTO attaches great importance to processing these returns in an ecologically and economically sustainable manner. In order to achieve this, the Otto Group and our logistics partner Hermes Fulfilment operate a very efficient system to ensure returned goods - as long as they are as good as new - are available for sale again as quickly as possible. All goods are carefully inspected in the Return operations process. The vast majority of the goods, exactly 97 percent, are available for sale again immediately. A small proportion of the goods must be optically processed (e.g. removal of fingerprints from TV screens) and is then also put up for sale. Only a very small percentage of the returns is no longer in mint condition and is then recycled by specialist companies. Textiles are sold by wholesalers selling second-hand goods. In the case of electronics, specialist companies put the devices back into operation or dispose of them sustainably. Only goods in the range of one per thousand need to be thrown away, for example if they have been heavily damaged or soiled during transport.

Why are returns free of charge at OTTO?

Since there are no changing rooms available in online shops, consumers are uncertain about their purchase decisions, especially when it comes to clothing. We therefore provide support through (telephone) consulting services, detailed product photos and size information. And should something not fit, it can be exchanged or returned free of charge. This also applies to furniture and multimedia products, which we collect directly from the customer should there be a complaint. The free return applies to every item in our range and is part of our service.

How does OTTO prevent returns?

OTTO has been working continuously on reducing returns for years. The first step towards avoiding returns is to provide detailed and transparent information on the 3 million articles offered on otto.de.
OTTO goes to great lengths to describe the products in the shop as precisely and thoroughly as possible. An example: A red dress is shown on the so called article detail page as worn by a model from the front and the back, but in addition it is also shown in other separate views. OTTO not only describes the cut in detail in the text, but also provides all the information on the material and washing instructions. Ideally, no customer question should remain unanswered. This also applies to technical devices, including all data and product specifications, often with explanatory video, all connections in close-up, etc.

OTTO has also integrated a helpful hint that appears in the shopping basket during the payment process when the user has selected the same product more than twice. These and other measures help to keep the returns at a steady level. In addition, OTTO focuses on the latest technologies and artificial intelligence - e.g. on the subject of product reviews. More information is available in the answer to the next question.

What relevance do customer evaluations have with the returns rate?

In an internal study carried out in 2016, OTTO found that 2/3 of those surveyed had used the customer rating in the last 12 months to provide advice before buying. Accordingly, customer evaluations are an important factor in the purchasing process. The unique product rating algorithm developed by OTTO filters out the most frequently mentioned aspects of customer reviews. Customers are therefore also able to filter out the most frequently mentioned aspects of products featuring several hundred reviews. In addition, the share of positive, negative or neutral comments about the product by users is also displayed.

OTTO's own solution developed in-house is based on artificial intelligence. More precisely, on an algorithm that uses machine learning models to analyze each review text. The algorithm is supplied with over a million product reviews every night. Aspects for which the algorithm identifies a positive, negative or neutral evaluation are automatically determined from the review texts and these aspects are merged into semantically similar groups. Deep learning, i.e. learning on the basis of artificial neural networks, is used for the procedure.

How high are the return rates at OTTO?

OTTO customers have a very wide product range on offer, from washing machines and smartphones to jeans. By their very nature, the number of returns we receive varies considerably depending on the assortment. Fashion items, for example, are returned much more often than multimedia products or furniture. Especially when it comes to furniture and multimedia articles, the information and purchasing processes of users take considerably longer than with articles from the fashion range. The return rate at OTTO remains at a constant level despite the recent increase in the number of active online customers (7 million in the 18/19 financial year). It is particularly low in the multimedia and home & living (furniture) sectors and lies in the single-digit percentage range.

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