The internet “Returns Effect” – don’t let this be the end to your website ambitions!
The value of internet retailing in this digital age is undeniable. It brings additional sales, growth opportunities and also credibility and exposure for your brand with customers of all ages and in all markets.
There are many challenges to consider:
You need to invest, for example, in a really effective website, great product visuals and descriptions, a simple and secure payment platform, swift fulfilment – and then you have to factor in ‘The Returns Effect’: a subject of huge interest and concern for many retailers, which has been highlighted again recently. If returns are 30% or more of your sales, how can you afford to run an Internet business?
Of course it’s important to engage with customers, so that if they do need to return an internet purchase it’s easy and cheap for them to do, and it continues to build your relationship with them, so they come back to buy again. The more confident they are at purchasing, the more they will shop with you – many bricks-and-mortar retailers prove this again and again.
But now there are many methods to maximise sales and minimise returns costs, so you can build a profitable internet business.
Here are just some of the topics, which Foley Retail Consulting can analyse with you for a potential optimisation of your internet business:
Your returns process
Before spending on your website, many customers would like to know their options if – in the worst scenario – they need to return their purchase. Are your instructions clear and easy to follow, is the process simple, and does it provide you with all the information you, as the retailer, need about the reason for return?
Understanding and following best practice with a well-designed and clear process, means your customer is reassured, and in the case of a return the data you obtain can be used to reduce recurrence.
The Perfect Fit – or not
Fashion – both clothing and shoes – is notorious for its relatively high return rates. Because of the variability of garment sizing, many customers buy more than one size to get the best fit, doing the ‘trying on’ in their bedroom rather than your store fitting rooms.
First of all, it’s important to understand what purchasers need to see on your website imagery, and what information is key to help them judge from a picture and a written description what they’d actually look at and handle in your store. Getting this right is the first step.
Brands grade their sizes very differently, so how do you understand this and communicate it on your site? What does the competition do, what clever tips are there to optimise your wording and pictures and get the most effective response?
A number of ingenious solutions can allow your customers to enter and record their own size details on your site, and add the details of an item from a specific brand which fits them well – then as they select another piece of clothing/pair of shoes the appropriate size appears as a recommendation. ‘Magic mirrors’ help customers imagine how the garment’s colour, and shape will actually look on them, rather than the model.
All of these are great ways to engage with your customer and personalise the buying experience – as well as cutting back on the number of sizes they buy, and then, potentially, return.
Just as in bricks-and-mortar stores, there are always customers who – for example – wear clothing and return it as new.
One simple and cost-efficient deterrent is a tag system, which still allows easy trying on, but has to be removed before wearing the garment in public – taking off the tag signifies the customer is happy with the item, and can’t now return it unless faulty.
And what about repeat returners, and systematic fraudsters? Systems for recording shoppers, who return items very frequently allow retailers to monitor performance and individual offenders, and make considered decisions on action to take.
Inbound processes and reverse logistics
Major selling periods – such as Christmas, or Sale – can trigger volume returns, which need to be dealt with swiftly and efficiently to minimize the time the stock is effectively ‘off the floor’.
Many more logistic systems are now available to ensure efficient receipt, inspection and repackaging, which makes it much simpler and quicker to ‘turn round’ returns, and get them back into stock.
A central ‘returns-only’ warehouse, with specialist inbound team, or an out-sourced resource, might be the most cost-effective solution for your business, and resolve many issues.
Accurate reporting of returns
If you’re a multi-brand retailer, do you have a close handle on whether some of your brands have more returns than others? Are some products liable to more problems than others? Are there hidden details in your returns data, which could help you reduce your costs?
Analysis systems available for this research can help you pin down opportunities for simple economies, which could include, for example, different buying or product sourcing in future.
Charging for returns
Is it appropriate for you to charge for returns on selected products? What do your competitors do, and how do their customers respond? Will charges for returns reduce your sales?
Are you fully updated on the market and therefore what your options are? Clear information assists you make informed judgements about what costs are justifiable, and what are not.
“The Returns Effect” does not need to prevent you from optimising your business via the internet. There are many solutions to explore, which take advantage of recent technology, to minimise cost, and allow you to engage with your customers to build your brand and its reputation in the market.
Foley Retail Consulting has worked with many companies to analyse their individual issues and requirements, and produced effective and efficient resolutions in the area of internet retailing.
We’re happy to discuss with you the best way for you to optimise your performance and keep costs low.
Contact us here for a free chat.
For more information on Sue Dunn, Senior Consultant at FRC, with extensive apparel retail knowledge and fashion experience, click here!