Handling the Fallout From the Retailer Returns Freeze
With countrywide COVID-19 guidelines in place, online retail has grown faster than expected. Data from North American retailers shows that online purchasing was up an average of 56 percent over the same period in 2019. Some have even seen a 300 percent increase during the pandemic.
The sharp rise in online shopping is bound to lead to an increase in returns (which has been a consistent problem in the past), yet many retailers are responding to the crisis by implementing a temporary freeze on returns. The move makes sense from a safety perspective because it limits the risk of handling potentially contaminated product and cuts down on face-to-face interactions with store personnel and shipping staff, but it’s bound to be unpopular with consumers. For retailers, that could mean fallout for their brand today and in the future.
Changing Online Behavior
Returns have long been a pain point for retailers. Roughly one in three online shoppers buys with the intent to return, and that number rises sharply among younger demographics. Nearly 60 percent of Generation Z, for example, purchase with the intent to return. Compare that to 65-and-over shoppers, who have that intent 20 percent of the time.
What’s fueled this drastic shift in attitudes is how fast and hassle-free returns have become. Shoppers who buy with the intent to return do so because they understand their returns will be handled quickly and their money refunded immediately.
Suspending returns, while perhaps necessary for public health concerns, will be immensely unpopular. A fact that’s doubly true for millennials, who command $1.4 trillion in buying power and account for some 30 percent of all retail sales. The new return policy may also temporarily shift the shopping behavior of Gen Z, who represents over $143 billion in buying power and spend more than half the money they have available to them.
To retain market share during and after the crisis, retailers need to get ahead of the curve and find new ways to connect customers with the right products and create seamless product experiences, both online and offline.
No Room for Error
With the tightening of return policies, brands have no room for error in their product information. The quickest way to cut down on unnecessary returns is by providing accurate information so consumers know what to expect, especially when there's no easy way to make an exchange or get their money back.
Williams-Sonoma learned this lesson the hard way. The San Francisco-based home goods retailer was hit with complaints that it was falsely describing products as made in America. The company settled with the Federal Trade Commission earlier this year by paying a $1 million fine, but the damage to its brand is more difficult to quantify.
Williams-Sonoma isn’t the only retailer to lose customers over inaccurate product information. However, as consumers are increasingly forced to rely on product information to guide their purchase decisions, accurate, consistent and high-quality data becomes more important than ever.
Preparing for the Fallout — and the Future
Mature e-commerce brands have a competitive advantage in the COVID era, but the pandemic has caught most brands unprepared to handle the growth in online retail and the demands of the digital shelf.
These are the areas brands should prioritize going forward:
Ensure Accurate Product Information
Now is the time to invest in your product content. Ensure it's relevant, consistent and accurate across all brand sites and platforms. Beyond that, make sure your messaging aligns with your supply chain and inventory so you can manage customer expectations.
For example, don’t let low inventory and delayed shipping catch customers off-guard. Otherwise, you risk retention issues later on. Clearly communicate any changes in your return policy and pause any routine messaging that may conflict with new policies.
Make the Journey Personal
When inventory is low or preferred products aren’t available, consumers may be willing to accept an alternative product. Personalize the shopping experience with product recommendations and useful content such as product comparison charts, ratings and reviews.
Another important tactic for connecting customers with the best available product is search engine optimization. This is especially true during a situation like today. Extra effort into your SEO efforts can have a decent impact. When customers can’t find their item of choice, make sure your products can be found.
Learn From Your Returns
Use the return process to engage with customers to better understand what’s behind their decisions. You may discover that it’s time to update, improve or discontinue a particular product. If inaccurate or inconsistent product information is the culprit, correct and update it immediately across all your channels.
Use Agility to Your Advantage
E-commerce is a fast-paced learning laboratory; you can change your content and promotional strategy and measure results in real time. Use this period of high e-commerce activity to test and optimize content, perform digital shelf analytics, and streamline your execution of new digital strategies.
Consumers are ramping up their online shopping and many are trying e-commerce for the first time. Brands that get their customer experience right have an opportunity to win new lifelong customers and increase retention rates among existing ones.
Johan Bostrom is the co-founder and chief strategy officer of InRiver, a provider of SaaS product information management (PIM) solutions.