Retail’s Match Game: In Pursuit of a Happy Returns Equilibrium
Returns can be every retailer’s biggest headache. In a blizzard of customer dissatisfaction, inventory disruption and increased operational costs, retailers worldwide lost $642.6 billion due to returns in 2014, according to research from IHL Group and DynamicAction. This sobering detriment to retail profitability is overwhelmingly fueled by poor product descriptions, unorganized marketing programs and disconnected order fulfillment. However, up to 47 percent of those losses can be rectified and recouped by pinpointing the weaknesses at various levels of the enterprise.
Success in retail is all about expectations. Price, quality, size and delivery expectations are all included. If these are met or exceeded, the customer wins with a great product at an appealing price, exactly when they need it; the retailer wins with a happy customer and some pocket profit and with a good review to boot. If those expectations are missed, and missed consistently, it can be impossible to mend a retailer’s damaged reputation for poor organization and unfulfilled promises, leading to billions of dollars in lost business. The journey to recovery from such losses relies on a retailer’s commitment to rolling up their sleeves, identifying the problems and setting solutions into motion.
Matching Product Descriptions With the Product
In many cases, product descriptions can be overlooked in a retailer’s haste to post items on an e-commerce site to start raking in sales. However, those sales won’t come if customers are in a constant state of disappointment due to a miscommunication on what they presumed they ordered vs. the actual product they receive. Coupled with poor product imagery, it’s a recipe for massive customer discontent. Understanding how an accurate portrayal of a product online can reduce returns related to sizing, fit and style could cut many of these issues off at the pass. Adding easy-to-navigate sizing guides and spending more time building the right product attributes allows for a perfect match between customer perception and the item they receive, thus avoiding a $68.5 billion in loss in revenue.
Matching Marketing Programs With Demand
Knowing why a product has a high return rate is only half the battle. Unless a retailer can put the fix in place, losses are imminent. To minimize financial injuries, marketing teams must be constantly aware of specific item and category performance to have the insights to tailor promotional campaigns accordingly. Marketers dealing with fast-changing promos can often miss the connection between promoted products with issues and negative margins. Monitoring performance data can bring measurable value back to retailers, and saves marketing dollars from going to waste on unpopular or low-rated items.
Matching Delivery Predictions With Actual Delivery Times
On the flip side, some returns have nothing to do with the product at all. Late or missed deliveries are a big no-no in a world where 44 million consumers pay Amazon a premium for two-day shipping. Retailers and brands that have suffered proverbial punches to the “revenue gut” due to failed deliveries understand the importance of prioritizing efficient and effective shipping logistics. By connecting order data with returns data and operations, retailers can locate delivery hiccups and proactively offer alternative shipping options to keep customer satisfaction levels at their highest.
With the power of connected data and actionable analytics, retailers can reclaim their revenue by reducing returns and listening to their customers, the market and operational performance.
John Squire is the president of DynamicAction, a decision intelligence application that analyzes data dependencies across a retailer's organization and presents immediate, detailed actions to drive profitable growth across the business.
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