Are you ready for the returns rush?

As the mayhem of the Cyber Weekend kicked-off for its fourth established year in the UK, it’s clear customers have become well accustomed to the lure of retailers’ discounts and the savvy shopping practices required to grab the best bargains.

As online sales surge during the pivotal Cyber Weekend, in many cases this also results in an increase in returns during the weeks to follow

Rebecca Howarth, Torque

The days of simply visiting the store for the best deals are long gone. More and more customers conduct online research before making a purchase and take advantage of a multichannel offering.

However, as online sales surge during the pivotal Cyber Weekend, in many cases this also results in an increase in returns during the weeks to follow – with returns for clothing and footwear expected to reach around 60% alone.

Intentional returns

The difficulty for retailers comes as many customers buy multiple sizes of one product when purchasing online.

Not only does the lack of changing room facilities online influence multiple-size purchases, but an increased basket value can also guarantee free delivery from many retailers leading to customers deliberately purchasing intentional returns.

While retailers are faced with this issue all year round, it is exemplified at this time of the year as the proportion of online purchases increases as customers take measures to ensure they don’t miss out on any deals.

The convenience of mobile apps and effectiveness of push marketing make it easy and accessible for them.

This type of consumer behaviour can ultimately result in losses for retailers, not only in the cost of processing each order but through the costs of handling returns and the added impact of accruing surplus stock as a result of missed sales.

In a dream scenario, retailers would be well invested with single-stock view capabilities to help mitigate the cost of returns.

This would allow retailers to quickly locate returned stock in stores and warehouses and use it for store replenishment and fulfilling online orders – increasing availability and reducing surplus stock levels. Currently only a handful of retailers are ahead of the game in this.

Historical data

So how can retailers prepare for the volume of returns expected? It starts with history.

Not only does data help shape stock builds and sales plans, but historical data will provide a starting point in pre-determining the expected workload and, therefore, the level of staff needed to manage this, generating a quick turnaround of returned goods to re-saleable stock.

Most proficient companies will have pre-empted the increased business in the run-up to Christmas, with additional staff hired both in stores and distribution centres to ensure high customer service levels can be attained when fulfilling new sales, while also processing returns.

In addition to planning resource, retailers would be clever in turning a return into an exchange in store, minimising sales losses

Rebecca Howarth, Torque

The correct staff numbers will contribute towards the success of an organisation’s ‘reverse supply chain’, where stores will benefit from sufficient stock room space for returned goods, while also managing a quick turnaround of returned stock to saleable conditions where appropriate per store and channel.

In addition to planning resource, retailers would be clever in turning a return into an exchange in store, minimising sales losses.

A quick change-around of merchandise displays, showcasing new and high-season stock is a great way to help entice spend and encourage exchange.

While the above will help manage returns in the here and now, there is still the question of what retailers can do to prevent the volume of returns in the future.

It is to be expected that as more consumers shop online the issue of returns becomes more prominent. Therefore, it’s not necessarily about what retailers can do to prevent this issue, but what they can do to mitigate the damage of this.

Plan, predict and manage

Mitigating the damage leads us in house, where returns must be costed into financial plans, taking into account online sales forecasts and growth expectations for the financial year, as well as predicted trade during peak periods such as the Cyber Weekend to accurately predict return volumes.

Returns need to be accounted for on a weekly basis by merchandising and financial teams

Rebecca Howarth, Torque

Returns need to be accounted for on a weekly basis by merchandising and financial teams in their weekly sales, stock and intake plans per department to manage their effect on margins and also stock levels.

This will in turn moderate the issue of surplus stock and markdown costs due to missed sales.

 

What is clear is that as retailers continue to invest in convenience in a competitive marketplace, including utilising delivery and return drop-off points such as Doddle and Hermes, customers will continue to place orders with intentional returns, taking advantage of the ease in returning goods and in doing so increasing the importance of effective returns management for retailers.

Torque is proud to be associated with Retail Week’s fashion-themed week.