Covid-19 News

Chasing the pandemic purchaser’s £: the effect on DCs – Part 4

In this series we first looked at automation and the constraints on scalability, followed by a study of scalability challenges and personnel. Then last week gave consideration to stock control. In this final part we now turn our attentions to the customer journey and the potential for the customer journey to be adversely affected.

A burgeoning of consumer demand for online retail opportunities has created a need for the customer to be able to deal with the business “effortlessly” in a manner most convenient to them. A frictionless customer journey is potentially a significant commercial advantage. That places a huge burden on the DC. One that grows significantly as it is upscaled.

It’s not exactly news that younger buyers have tended to lead the charge to online consumerism because of convenience. However, the pandemic has added to their numbers significant proportion of older buyers for one simple reason… Covid-19.

Whether limited by lockdown restrictions, trying to avoid massive queues or latterly feeling unsafe when venturing into public spaces and stores, more people are shopping online than ever before with the simple objective of avoiding other people. Being able to deal easily with a retailer for many has become a matter of personal safety. As such they are highly motivated to shop online, but are very much expecting levels of service that they are used to when shopping in person, dramatically increasing the need for DCs to get it right 100% of the time.

Of course ordering online presupposes that the goods we have ordered are indeed available and can be delivered or collected, which is not always the case, leading to customer dissatisfaction. Delivery can be a challenge. During the pandemic we have seen such significant growth in online that home delivery networks could not cope with demand. Then people swapped to click and collect as the next best thing. And we are not just talking about essential retail here with the ubiquitous substitutions (often a  source of real annoyance because omission of one product may make others redundant – such as a recipe where ingredients are interdependent – not easy to cook coq au vin when the picker substitutes chicken fillets for chicken thighs!)  Even in the field of fashion, if someone is picking up a green shirt in a size 16 then they don’t want a different size and they don’t want a different colour – especially if they have travelled many miles to make the collection.

When the wrong item is delivered, a substitute rejected or perhaps the customer does not like the item they have chosen and elects to send it back, those returns have to be processed, checked and booked back into stock. And post Covid we have a new step. Quarantining…

As we have said before, local legislation can differ between regions as to the length of time that stock has to be quarantined. However, from a customer journey point of view this may cause delays in them receiving their order because of returned items being placed into stock. Retailers can book returned items in to stock at a time of their choosing. However, if you book items in without examining the goods, perhaps on a returned barcode label basis before going in to quarantine it may be that although your system shows the asset it does not show that the stock item is not available because of quarantine. So you may elect to book items into stock after they have been quarantined, but then you have a lot of unidentified items sitting in your stock quarantine with no idea what is there, which is an invitation for thieves. Plus think of the terror related risks of being able to send packages into a distribution centre without them being checked.

There are also important brand implications around stock and its care. People need to feel certain that you are quarantining as you should be and that it is safe for them to receive goods from you. At the moment the public is susceptible to fake news. People are fearful. And any alleged issue can have serious repercussions, as we have seen during the pandemic with the demise of cash…

Uncertainty regarding the ability of the Covid-19 virus to sustain itself on “things” has created real issues for consumers. The perception of multiple people handling cash as a possible health hazard, aided and abetted by most retailers expressing preferences for card payments and a well-timed increase in the transaction value possible though contactless, was all it took to decimate cash usage, despite their being no scientific evidence to support abandoning cash for health reasons. In fact one expert commented that the only way you could possibly catch Covid-19 from bank notes was if an infected person sneezed into a note and then handed it straight to you. And then coins also came to be regarded with suspicion, despite the general medical consensus that Covid is even less lively to sustain itself on coins than cash, the virus finding some metals, such as brass, toxic.

And yet on the back of public sentiment, together with a total lack of any cogent response from any cash lobby, cash usage has now significantly diminished. We are perhaps 8 years ahead of the downward curve of cash usage now as would have been predicted in just March. And it is all too easy to see how a brand that comes to be seen as sloppy with its quarantining could easily suffer the same fate.

From a customer perspective, returning items by post can be a concern not least because receipt by the retailer of returned goods will usually trigger a refund to a credit card or bank account. So consumers are keen to be sure that the items are received by the retailer and that a prompt refund will be made.

Unfortunately the sheer volume of returned items now heading at DCs can be a challenge. Add to that the issues around Covid-19 and the need for quarantining and decontamination plus the considerations relevant before the pandemic and quickly you have a situation where refunds take longer than a customer would like. The consequences could be that the customer paying by credit card may well have to part with cash they did not expect to have to spend because the refund crosses and end of month calculation with the credit card company. More hassle from the customer’s point of view and pretty soon they are telling everyone on social media that you have had their money for too long. So a real issue is process time and refund speed to avoid damaged reputation.

So if your refunds are delayed, because of the processes you now have to operate, consider making sure that the customer is well informed even if only to say, “we have received your goods and will be unpacking and confirming your refund in the next few days.” Not as good as “the money is in your account” but better than long days of stony silence!

Of course putting goods back into stock can itself be fraught with problems.

As online has expanded the range of products offered has expanded too. This means that in many cases staff will not be familiar with what a product should or should not be like. There is a world of difference in restocking returned items from a limited stock range, such as bottles of champagne. It is a million miles away from the huge offerings of many online retailers with thousands upon thousands of SKUs.

And even if you are able to identify that the correct goods have been returned by the customer, how do you then go about testing them. This could be deciding if the dress had been worn through to complex electronic products that need to be checked before going back into stock. Remember that restocking a damaged product is a double whammy. Not only have you got the cost of restocking, but you have also inevitably built in the cost of having to do so twice… for when it gets returned the second time. PLUS there is the issue of now disappointing two customers. If you have a system that builds disappointment into the process, you are not going to be well thought of by your customers!

One final thought about the risks of online.

Recently a leading fashion retailer explained how they had been duped into sending out hundreds of examples of a new fashion release on the basis of fake credit details at a price below the true listed price on their website. That was bad enough. However, what really stung was when the ORC gang promptly returned hundreds of the items for a full price refund, which was given. The money lost was the least of the retailer’s worries though. The goods returned were in fact fakes.The ORC gang had sold the originals on the black market. But the retailer’s misery did not end there. Apart from the loss represented by the stolen goods, the retailer now had hundreds of fake copies of their own product “somewhere” in its system. And there was a very real chance that they could end up supplying fake goods to a legitimate customer who had fairly paid full price for them…

Dan Hardy is Strategy & Transformation Director at Amberstone Security 
He is appearing at Retail Risk – London L.I.V.E™. Click for more details

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