Tobin Moore, CEO and co-founder, Optoro
Since the onset of the COVID-19 pandemic, many retailers have scrambled to stay afloat in a chaotic, uncertain commerce landscape. In response to a drastic surge in online shopping, retailers put a laser focus on their forward logistics: navigating shipping crunches, expanding contactless payments, and implementing curbside pickup.
Adobe Analytics forecasts a record $184 billion in online sales—a 30% increase from last year. What’s more, 80% of consumers plan to do most of their shopping online, according to Optoro research. While retailers have poured resources into optimizing digital shopping tools and correcting for potential kinks in the forward flow of product, it’s their management of returns—a too-often overlooked area of a retailers’ business – that may save them this year.
Each year, quickly following the flurry of holiday shopping, returns present a growing challenge for retailers and brands. Ecommerce purchases, on average, have up to three times the return rate of brick-and-mortar purchases, likely resulting in record rates this holiday considering the boom in online shopping. Without a sound strategy in place, retailers risk eroding customer loyalty, suffering extreme financial loss, and contributing to a severe environmental problem as many returns end up in landfills.
Treat returns as a customer loyalty linchpin
In an ever-competitive race against Amazon, consumer demand for a seamless and convenient returns experience is higher than ever. According to our research, 89% of consumers are less likely to shop at a retailer or brand; they had a bad experience returning an item. And in an already unstable year, retailers and brands cannot afford that risk. Features such as online portals, QR-enabled contactless returns, instant credit for repurchases, status tracking, and packageless returns are all innovative yet accessible tools that can dramatically improve the customer-facing returns experience.
Our data shows that 66% of consumers prefer returning in-store, and the market responds to this demand as retailers realize they need to stay competitive. Shipping carrier UPS has partnered with brick-and-mortar retailers like CVS and Michaels to provide contactless returns drop-offs for online items. Big-box retailers such as Staples and Kohl’s are leading strategic partnerships with ecommerce retailers to offer packageless returns drop-off powered by easy-to-use QR codes for consumers. Also, Walmart’s Mobile Express Returns easily supports online and in-store purchases, limiting the need for shoppers to mail back returns. As many consumers have lost access to the shipping supplies or convenient shipping locations that their workplaces might have provided, offering an easy returns process will be make-or-break this year.
Shoppers are also demanding speedy refunds. According to Accenture, today, 70% of customers expect refunds within six days compared to the 2019 holiday season’s average of 13.4 days. Expanding instant refunds through solutions like Returnly that can provide an Instant Credit is one simple solution to satisfy consumers. And for retailers, this solution significantly increases the likelihood that consumers will repurchase their item right away, rather than finding it elsewhere.
Identify resale channels to recover revenue and increase circularity
From Thanksgiving to the end of January, Optoro is predicting that consumers will return a record-level $115 billion worth of merchandise and, every year, returns produce more than five billion pounds of landfill waste. Returns can pile up quickly at stores or distribution centers, and without a plan in place to efficiently move and resell massive loads of inventory, items can go to waste.
Fortunately, today, there are a plethora of re-commerce options, especially as the resale and secondhand industry continues to grow. Seminal brands like Pottery Barn, IKEA and Levi’s use resale to expand revenue streams and achieve circularity. This helps retailers recover from the financial cost of returns and promotes more sustainable outcomes—an increasingly important value for consumers.
Without reimagining returns, retailers run the risk of being weighed down by goods that can quickly lose seasonality, re-stockability, and resale value. To reclaim the most value, retailers need to look for technology that can quickly process and manage the mountains of returns anticipated immediately following the holidays. Retailers should look for ways to streamline and automate inspection and shipping of returns and use data analytics to determine the best channel to resell an item.
After years of focusing on forward-logistics, most retailers have wised up to the growing need for an accompanying stable and deliberate reverse-logistics strategy. And if this system felt like a nice-to-have before, it sure feels more vital now that consumers are online-first and ecommerce returns are more likely than ever before.
This holiday season will undoubtedly pose extreme challenges for retailers, but finally, dedicating resources to rethinking the returns management puzzle could be a lifeline. To win customer loyalty, increase exchanges and repurchases, cut costs, diversify revenue sources, and adopt more sustainable practices, the moment to invest in returns has never been more urgent.
Optoro is a returns technology company.
Favorite