How do you deal with an unprecedented level of returns whilst protecting your staff and the customer journey?
Brand reputation is possibly the single most important asset in making online sales.
Reputation means consumers can buy with confidence knowing that the retailer will keep the implicit and explicit promises made during the buying process.
The ease of dealing – the frictionless nature of the transaction – is all about making it easy for the customer to buy. And there is little doubt that buy they will…
Retail trends show that each year online has grown, and that was expected to continue anyway. However, with demand being stoked even further by doubts growing about when the lockdown will end, online retail is poised for its biggest online sales period in the industry’s history.
However, there is a flip side to sales… And that is “returns.”
The customer journey includes the “returns experience”
When we talk about the customer journey, naturally much attention is to the journey on the way into a purchase. How do we make it easy for the customer to do business with us. However, what about where having made a purchase the transaction “goes wrong.”
Perhaps the goods, bought unseen from a website, do not match expectations. Perhaps in the New Year, with the prospect of a significant economic downturn, what seemed like a good idea at the beginning of December seems like an unaffordable luxury, as high credit card bills arrive and fears of economic downturn start to be realised. Or perhaps the gift did not meet with the recipient’s approval and is to be returned.
Of course historically “returns” has been a small part of retail businesses compared to sales. And in days gone by high street retailers could brag that when visiting a store to obtain a refund, 83% of customers spent the same or a greater amount than they had been refunded before leaving! But all that has changed.
Returns could easily exceed 50% of online sales
Returns are now for the many not the few!
Obviously a lot depends on the type of retail you are involved in. And I am sure that clothing retailers are going to be much worse affected with returns than, say, a furniture manufacture. Supposition on my part, but the degree of consideration given to the purchase of a new sofa and the subsequent six week wait is a different proposition to the impulse purchase of some new clothing.
Nevertheless in previous times we have seen customers returning 50% of all items purchased. And with the pressures on consumers during lockdown to do more shopping online than ever before, plus the seasonal increase in consumer activity, all the stars are aligning for an absolute tsunami of goods to overwhelm unprepared retailers early in the New Year.
Of course the customer journey does not stop with the sale. It is the total experience. And at a time when retailers are struggling to make the sales part of the business as compelling as possible, it is worrying to consider that all of that good work – that goodwill – can very, very quickly be dissipated by a poor returns experience. But it can, it does and it will…
So it is vital that customers have as good a returns experience as they did a purchasing experience. And with unprecedented levels of returns expected, retailers need to get on top of key areas.
One thing you will need… is space!
When it comes to returns there is one thing you are going to need a lot of… space.
If you work on the basis that your customers might be returning 50% plus of everything they bought online in December during the first two weeks of January, the size of the challenge to quarantine returned goods becomes clear.
The story begins with a customer returning goods. That might be by post or courier, or it might be by returning the goods in store. Of course, the customer is keen for a refund. As far as they are concerned they have returned the goods. However, establishing the safe receipt and full inspection of the goods might easily not happen for the next five days, and all of the time the customer is wondering where their refund has got to – perhaps even having to pay for the items on their monthly credit card bill with the credit falling the following month… and you will be blamed. So the point at which you make the refund is critical, as is the need to record that item coming in to stock – even if it is still unpacked and quarantined.
Some retailers are said to be ignoring quarantining legislation
Stock quarantine is a major headache. Whilst some retailers are assiduously operating a 72 hour quarantine period followed by disinfecting all items, anecdotally I am aware that yet others are simply replacing stock in their stores immediately upon receipt. They are playing a risky game. As we have said reputation is everything. A retailer caught not quarantining their stock as they should risks having their reputation destroyed.
With the nation on a current national threat level of “severe” when an attack is “highly likely,” DCs have to be certain that they are not offering a soft target to terrorists by receiving thousands of unopened, unexamined boxes into their supply chains or quarantine areas every day. Some of these receiving areas will be part of the main building, some will be temporary in car parks or adjoining property. Will lorries be targeted to cause havoc on major roads? In any event the opportunity for damage to people and property is obvious.
With a UK threat level of “severe,” storing vast quantities of unopened packages from disparate senders is a security risk
Packages returned to Distribution Centres unopened for quarantine purposes are a security risk.
Apart from the possibility of terror attack, there is the cumulative value of thousands of packages with items yet to be checked. Does your system record that stock as in quarantined pending inspection?
Many retailers do not have capacity to distinguish between available stock and quarantined stock on their systems. Recording the return as available stock before being inspected risks undermining stock accuracy and so the customer journey. So instead some retailers elect not to record the arrival of those returns until they are checked and put back into stock. That means many hundreds of thousands of pounds worth of goods are left in limbo, unaccounted for, whilst they quarantine. That is a major security headache.
How you unpack the goods and who is responsible for that is a significant consideration. If those goods are unchecked, apart from the security threat of a box containing a device designed to cause injury or destruction of property, there is also the issue that items can be stolen. After all security tags have been removed before despatch to the client. How you keep tabs on those opening the parcels will be an important part of the risk management process.
New technology links customer receipt to video of order pick and secure despatch
Of course some people will fraudulently return incomplete packages and claim that goods were missing from their deliveries. In practice the first recourse of a retailer is simply to apologise and send or credit the “missing” item. Of course this can very quickly get very expensive.
However, new technology available now links the customer receipt with the pick note and video of the pick taking place and the package being sealed. Quickly installed and available as a rental option as opposed to capital expenditure item, these systems can pay for themselves many times over in a very short space of time and are easily added to existing systems.
At a time of year when exposure to this kind of deliberate customer fraud and friendly fraud is high, the above technology could be invaluable. Not only in terms of saving money through reducing unnecessary refunds, but also to add greater consistency to the customer journey at the fulfilment stage.
After a challenging year for many, there is no doubt that the New Year will bring still more. Some as yet we cannot foresee. However, the need to prepare for a returns tsunami is something retail can and should prepare for.