This article takes a look at best practices for apparel retailers and manufacturers that are experiencing both an increase in e-commerce sales and intentional returns. It’s important for retailers to understand the implications of: lax return policies and how that drives intentional returns; how omnichannel strategies can both complicate return procedures and increase in-store traffic; and how to collect honest feedback from consumers when they make a return.
At the 2019 Reverse Logistics Conference and Expo, Jeff Streader, Managing Director at Go Global, moderated a panel on the retail sector and what is being done to address intentional returns. The panel included experts from Inmar, Walmart, Auburn University, and Under Armour. The following is a summary of that panel discussion.
E-commerce and Returns will Continue to Grow
E-commerce retail currently represents only 10% of all retail sales; however, e-commerce sales have a 30% return rate. Experts predict that within the next 10 years e-commerce will represent 30 to 40% of total retail sales. If return rates continue to hover at 30%, if not higher, current reverse logistics models will not sustain this volume of returns without new processes in place, including new tools to liquidate those returns. New tools and processes can include taking a look at intentional returns, why they happen, and what kind of impact—both positive and negative—they have on omnichannel strategies.
Intentional Returns Occurs Across all Price Points
Major retailers report that apparel represents the highest rates for both revenue and returns, with shoes a close second place. Keep in mind, a majority of apparel returns are intentional (an intentional return is when a consumer buys a handful of apparel items—a couple tops, a couple pairs of shoes, a couple pants, perhaps matching earrings or a necklace—but only intends to keep two or three items, depending on what goes together and what fits). To compound matters, intentional returns are a phenomenon that occurs across all price points. It doesn’t matter if a consumer is buying three luxury items or three clearance items, the practice remains the same. For these intentionally returned items, retailers have to pay warehouse and processing costs that can also include new packaging, cleaning fees, and shipping fees.
Intentional Returns & Omnichannel
Many retailers are adopting an omnichannel strategy to appeal to consumer loyalty. At the top level, an omnichannel strategy allows a consumer to have the same experience shopping with a retailer whether that be online or in-store: same inventory, same prices, same return policy. Omnichannel strategies often include the perk that customers can buy something online with the option of returning the item in a store. This leads to complex situations, such as getting the right refund to the customer, especially when a customer wants to return an item purchased online at a store.
To alleviate questions from both customers and store managers, a best practice is to acknowledge the need for simplistic return policies. That way, it’s easy for both store managers and customers to realize expectations. A simple return policy could state that the customer can make a hassle free online return in-store and store managers will accept the return knowing that it won’t count against their sales.
In-store returns increase foot traffic
Many retailers have realized that the combination of increased e-commerce sales, when paired with simple in-store return policies, leads to increased foot traffic at stores. Many times a customer will go to a store to make a return, and oftentimes they will trade up to buy a more expensive item, and/or they will pick up a few other items as well. Basically, in-store returns provide an opportunity to ‘upsell’ when customers return online purchases in the store.
Collecting Honest Feedback from Intentional Returns
For many retailers, current return processes do not provide a means to learn why a customer is returning something. This is especially true when a return label is included in the box. While it’s simple and easy for the customer to repackage unwanted items with the prepaid shipping label, the retailer loses an opportunity to collect feedback.
Disruptor companies like Stitch Fix and other try-before-you-buy models ask for specific feedback on each item for both bought and returned items. This feedback is seamlessly integrated with the check out process. This leads to collecting honest feedback because the customer believes that their responses will improve their next Fix. The Walmart app provides something similar in that it makes people list a reason for the return. Research has shown that customers are more honest with an app than they are face-to-face with a store manager.
Returns are the rule in retail. For items that can’t go back on primary shelves, talk to B-Stock for your own private, auction marketplace to sell returned, excess, and other liquidation inventory. This technology-driven approach will increase recovery rates on consumer returns and will keep warehouse inventory moving.
We also invite you to review our case studies and our suite of private marketplaces that we operate for 9 of the top 10 U.S. retailers and hundreds more.