Sale or return?

In an age when consumer habits are constantly evolving, the need to adapt and flex for the voracious shopper has never been more vital. Retail experts could give chapter and verse on frictionless shopping, unrivalled customer experience and how to achieve a seamless checkout process, but there’s one piece of the puzzle to increased profits and higher margins that always seems to be neglected – returns.

 

Last month we joined ReBOUND Returns for its Revolution Conference. Hailed as the UK’s first conference dedicated entirely to retail returns, the event shone an exclusive light on the much-debated topic – one that we’re only too happy to wax lyrical about. After all, our stance is very much about making returns customer-centric, efficient and not driven entirely by cost.

 

The stats certainly seem to stack in the favour of returns. According to figures from Accenture, having an effective returns process can increase profits during the first six months of implementation by between 22 and 46 per cent, with the top five per cent of returners making up nearly a third of retailers’ most profitable customers. So why is it often managed out of a business? Why are decisions on returns and reverse logistics based purely on cost and not on the behaviour and habits of those willing spenders?

 

Not that we needed reminding, but e-commerce and social commerce are the new driving force in retail. Ten to 12 per cent of global products are now purchased online – it’s a market without boundaries, with 25 to 27 per cent year-on-year growth in cross-border e-commerce. It’s a vast and fruitful sector, but one that leads to consumers behaving differently and demanding an entirely new service to that offered on the high street. We liken impulse (and multiple) purchases via Facebook and Instagram to the window shopping of old. People no longer browse, try on, consider and buy; they see, click and purchase several items in the knowledge that at least some of them will be returned. The industry has defined this as ‘bracketing’ – multi-size ordering, while returning other sizes.

 

With technology and savvy shoppers combining, it was surprising to hear at the conference that 30 per cent of e-commerce websites don’t have a returns page. In our experience, the most forward-thinking companies are those that are contradicting the theory that returns are a plague attacking profit margins. They’re moving away from making policy and sales decisions that limit customer purchasing and instead are investing in reverse logistics and embracing returns as they address margin dilution.

 

It’s hardly surprising that satisfaction levels amongst retailers are 20 per cent higher when it comes to delivery of goods, compared to returns. But if we want to translate the ‘frictionless checkout process equals higher conversion’ mantra into those items coming back into the business, then retailers must adopt a more progressive approach. This might include extending the 28-day period for returning an item; adopting longer cooling-off periods; but most crucially opting for speed and a streamlined process at both ends to enable greater transparency on stock movement, increased quality control, and quicker resales.

 

Yes, delivery is a very mature market, with significant resource and personnel to manage it; the same cannot be said for returns. The reality is that it’s becoming an increasing part of online retail. Now is the time to embrace it; incentivise customers to do so, if necessary; engender loyalty; and create innovative approaches to returns that mirror the effort and investment afforded to sales. Sale or return? It shouldn’t be one over the other. In a modern retail world, they are mutually exclusive.

 

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