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The Returns Opportunity

The Returns Opportunity
Thursday February 27 2020

As the retail industry comes out of another stressful returns period, can there really be anything positive to come of it? Tim Hay-Edie of Virtualstock says yes

Returns can be especially costly to retailers of extended range products, but multichannel retailers can turn the returns challenge into an opportunity.

After reporting those poor “Golden” Quarter retail sales, CEOs are now reviewing the January returns figures. It’s grim. And the crippling cost of returns will be cited along with statements like, “returns are a cost of doing business”....

Multichannel retailers offering an extended product range - either through dropship or a marketplace - find returns especially challenging. These retailers want to emulate Amazon’s endless aisle, but they are not ecommerce pure plays; and it is the multichannel ecosystem that is the real jungle. Let me explain.

Customers of multichannel retailers have the same expectations in terms of service and outcome, but with the supplier at an arm’s length, the returns reverse logistics journey is vastly more complex.

The original order is relatively straight forward: assuming there is stock availability, the customer places the order on the retailer’s website; the retailer recognises the product is not stocked-in (i.e. is extended range); so, the order is passed to the related supplier to fulfil direct to the customer. So far so good.

Process wrinkles

Wrinkles in the process begin to appear when Customer Service is involved. The customer calls Customer Service about their order – perhaps because on the website the returns policy for their extended range product is vague. Customer Service needs access to the order status, delivery status, the supplier’s return SLA, the product return journey, etc. Without this level of detail easily available, mistakes can be made, the customer let down, or quite likely the retailer will pay financially and reputationally - irrespective of who is at fault.

Wrinkles can quickly become tears in the Customer Service cover if the customer tries to return an extended range product through the retailer’s store network. This relies on the order and SKU being recognised by the in-store POS. If not, then at best the store colleague can only credit the customer for the return and put the item in a “cage” for later processing.

Unless the order providence is clear, the likelihood of the item being processed correctly and becoming re-sellable is minimal. More likely the supplier will invoice for the delivered order, while the customer has been refunded for the return. The retailer pays twice  – this is before you count up costs related to shipping, Customer Service time, and damage to the retailer’s reputation. How many sales are required to recoup one returns blunder? The root cause is a broken process and poor systems integration.

It may well be that many retailers fail to fully embrace extended range channels because when they run a trial, or POC, they make such a mess of returns that the full roll-out gets canned or postponed.

Fundamental truths

So, what to do? Can the multichannel returns challenge ever become an omnichannel utopia where customers can purchase and return items seamlessly? As ecommerce pure plays apparently do? Or, for traditional retailers, is the mix of extended range and core range a case of a square pegs never fitting in round holes?

Before we become truly despondent let’s take a step back and consider 3 fundamental truths:

  1. Returns are inevitable
  2. Returns are a hassle both for customers as well as retailers
  3. Returns have a cost to retailers that customers prefer not to pay

Sound reasonable? These truths apply to all retailers. So as a multichannel retailer let’s consider a strategy that leverages the benefits of your extended range, combined with the benefits of your store network - that doesn’t give your CEO returns reflux:

Set Customer Expectations:

Make it Easy for the Customer and Easy for You:

Make Return to Store your “Free” Returns Option:

Customer experience

So, in conclusion, we may need to accept that “returns are a cost of doing business”, but we should do everything in our power to reduce that cost without negatively impacting the customer experience.

The ability of a multichannel business to fix the returns process is the opportunity. The outcome is to give customers a joined-up sales and return experience, by leveraging your store network, to benefit both your core and extended product ranges. This will keep customers loyal, and all your stakeholders happy - whether it be finance, operations, the supplier, the contact centre, store colleagues, or that anxious CEO.

Tagged as: Returns | extended range | multichannel | retailers | ecommerce | Virtualstock

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