By Meyar Sheik, Kibo
Due to the speed at which technology changes in our digital age, the shopping journey is markedly different from it was just a few years ago. For example, given the circuitous nature of the shopping journey, retailers no longer view online abandoned carts as a dead end, but rather a frequent pit stop between research and a final purchase. With this more holistic perspective, retailers can work to reengage customers through a variety of touch points, which enforces the retailer’s unified commerce approach.
Ecommerce continues to introduce new shopping activities and more complex overall customer journeys, including shopper interactions that cross multiple retail channels. To thrive in this paradigm, we need to consider returns in the same way that we now see abandoned carts – as a normal part of the customer life cycle – and to invest, plan and message accordingly.
In the past, retailers have tried to avoid returns, for obvious reasons: not only do customers take back the money they initially spent, but retailers require extra in-store staff and back office resources to process returns, coming at an additional cost to the company. Typically, only half of returned merchandise can be resold, according to data from Optoro.
There’s also strong evidence that the rise of online shopping has played a role in boosting the percentage of retail returns. For example, UPS found that some 20 percent of online returns are due to shoppers having ordered multiple sizes of the same item to try on at home, while NRF estimates that 32 percent of all returns are related to “wardrobing” – the practice of wearing or using an item once, then returning it undamaged.
To stem the rising tide, some retailers have tried to cap the number of orders customers can send back, even going so far as to “flag” consumers who make frequent returns.
While it’s reasonable to target standout serial offenders, in most cases a better strategy is to embrace returns as an increasingly common phase of the customer life cycle, even inviting them as a way to reengage with a shopper. This allows retailers to give as much attention to reverse logistics as they do to customer acquisition tactics.
To win the returns game, retailers need to put all the tools into place in order to create robust reverse logistics capabilities that are paired with key personalization tactics. By doing so, retailers will realize key benefits such as:
The percentage of returns is higher than average following the holidays. According to data from B-Stock Solutions, approximately 11 percent-13 percent of holiday purchases are returned. Delivering a superior returns experience amidst the holiday bustle is an opportunity for merchants to differentiate their brands and transform disappointed gift recipients into new customers.
A thoroughly integrated returns processes can help retailers identify regional and seasonal demand for inventory and adjust accordingly. Store-to-store fulfillment capabilities can help make the most of saleable returned merchandise by enabling swift shipment to the outlet where it’s needed most.
Returned items are valuable data points to feed personalized recommendations and messaging, starting with suggestions to replace the items with different styles or sizes. Merchants also can make use of data about online-to-offline returns to localize future in-store offers.
Experimenting With New Models
Perfecting reverse logistics enables brands to consider rental and “try before you buy” options. After all, viewed through another lens, services like Stitch Fix or Amazon Wardrobe simply assume the return, rather than assuming the sale.
Meet BORIS! (Buy Online, Return In Store)
For retailers with existing store operations, adding a buy online, return in store (BORIS) option not only enhances customer service, but also provides an opportunity to recommend, replace or offer discounted merchandise in the store where the return is occurring, still meeting a need for that customer. If the retailer already tracks the customer’s shopping history and has an accurate view of in-store inventory, those offers and recommendations can be further individualized, turning the returns process into a personalized upsell.
A successful return is likely to win repeat business, not end the customer relationship altogether. Some 73 percent of shoppers say the returns experience affects their likelihood to shop again with the seller, UPS found, while a study from Narvar found 95 percent of consumers are willing to buy again from a retailer offering a positive returns experience. Therefore, as the busiest time of the year approaches, it’s time for retailers to stop looking at returns as a dead end in the consumer journey and start maximizing the returns process in order to gain a loyal customer.
Meyar Sheik is President and Chief Commerce Officer at Kibo.