Here Come the Post-Holiday Returns
It’s time to brace for the inevitable holiday shopping aftermath: returns. Currently, returns are a $760 billion challenge. You can feel this in your own business. Returns are a genuine cost in time, money, infrastructure and opportunity. At the same time, your customers have learned to love flexibility. The challenge for retailers is finding ways to minimize the impact without creating a strategic disadvantage in the customer experience.
You may have changed your return policy to be more restrictive and help control costs, but did your competitors follow you? Is your policy now a reason for your customers to shop somewhere else?
A solution is to look at the challenge of returns from both sides: ensure your policy is reasonable and competitive, but also find ways to manage the cost.
Here are some suggestions following the holiday season:
Balance Your Return Policy With Customer Expectations and Competitive Insight
Consumers said that free shipping (96 percent) and free returns (76 percent) are essential to them when shopping online, according to PowerReviews. Be aware if your competitors charge for returns, shorten the window or add restrictions. Minimizing the cost of returns isn't beneficial if it drives customers elsewhere and lowers sales. Ensure you consider the impact more broadly. Otherwise, you could save a nickel and lose a dollar of revenue.
Integrate Omnichannel Options for the Best Shopping and Returns Experience
The pandemic changed many norms, including consumers’ desire for quick and easy online shopping. Understanding recent shopping behavior, most larger retail outlets have implemented more convenient options for their customers, including the opportunity to buy online and pick up in-store (BOPIS) or pick it up or drop it off (PUDO). This started as a nice-to-have concept but is now essential to large retail stores.
Consequently, returns tend to be higher when consumers buy online because it's easy to toss items into a virtual basket — not knowing if they will even keep the product or send it back. In fact, at least 30 percent of all products ordered online are returned compared to 8.89 percent in brick-and-mortar stores.
Research shows that 62 percent of consumers are more likely to shop online if they can return their purchase to a physical store. This makes it more convenient for your customers and saves you money on shipping it back. Does your business not have physical stores? Partner or align with another retailer or national chain as a drop-off point. In many cases, the shipping costs outweigh the product costs, so tackle each side separately.
Think Differently: Focus on Recovery Instead of Cost
Your competitors are restricting return policies and focusing only on costs. What if you could improve the recovery on your returns? What if you could generate revenue in a way that also helps your sustainability goals?
Most returned goods are turned over to liquidators and resellers with no tracking metrics, disposed of as trash in landfills or even burned. Even if you can get some returns back in stock, that's a small amount of your problem.
Think differently: find ways to maximize recovery as an offset to funding a better return policy for your customers. With more flexibility in the shopping experience, you could take market share from your competitors while minimizing the impact of returns.
You can do this by partnering with a reverse logistics company that protects your brand, manages the process, and makes your returns a revenue stream. Look for partners that offer transparency in the recovery process. Ask about what will happen to your returns, whom they sell to, and how they protect your brand. If done right, returns management should maximize recovery through a sustainable approach that supports your ESG goals.
This is Not Only Possible But Also the Way Forward
The problem of returns can become a can't-miss opportunity strategically and to your bottom line. Sustainability is the solution that enhances your returns and keeps your customers happy! Returns can be managed sustainability and improve your company's profitability, creating a win-win. Channel Control Merchants’ consumer survey report shows that 40 percent of customers are more likely to shop at stores that sustainably manage returns, which is a bonus for your company.
Returns will always be an inevitable part of the shopping experience. How you manage them can make your company even stronger. Don't settle for simply restricting your policy and losing customers. Maximize your recovery sustainably and you'll make returns a strategic advantage.
Chris Homewood is the CEO of Channel Control Merchants (CCM), a fully transparent solution for returns management and excess inventory that extends its partners' ESG efforts.
Chris Homewood is the CEO of Channel Control Merchants (CCM), a fully transparent solution for returns management and excess inventory that extends its partners' ESG efforts. CCM maximizes recovery by creating a closed loop that is a total solution for returns and unproductive inventory down to the consumer. The company's network of retail stores gives products from leading retailers and manufacturers a second chance, selling them quickly and directly to real everyday people. Learn more at ccmllc.com.