GUEST COMMENT The rise of Instant Returns: the next chapter for the now economy
David Saenz is a chief operating officer at Stuart
Welcome to the “now economy”
There is no secret that same day delivery is fast becoming a popular offering for retailers. After all, why wait a few days, even tomorrow when you can have it sooner? We conducted a study last year which found that customers would on average, spend an extra £168 from their favourite high street retailer if it offered same day delivery and 62% would be prepared to pay a premium for the service.
Welcome to the “now economy”, where consumers expect faster, more flexible delivery options. In response, popular brands such as Amazon , Argos and Sainsbury's are trying to meet expectations by offering customers with same day and same hour delivery options. In the race to stay competitive, on-demand delivery is increasingly allowing retailers to differentiate.
Yet it does not just stop with deliveries. One area which has not been covered is the increasing appetite from retailers to also offer instant returns.
Imagine being able to book a return at a tap of an app, a time and place which best suits you. No longer will we have to schedule in life admin in our busy times to visit a Post Office or a pick-up point. Not only being able to offer this level of convenience to your customers from buying to return is a huge selling point, but it can also help protect margins.
The unspoken pain point
Managing return is a standard course of doing business online. Processing returns is a major pain point, especially for fashion retailers. Seasonal stock runs on a three-month cycle, if not more frequent. The consultancy Clear Returns puts the cost of returns on the UK retail sector at a staggering £60bn every year.
Customers will often wait weeks, or close to the end of the returns deadline, to send our unwanted item back. When these arrive back to the retailer, they end up in a distribution centre when our item is stored, examined, reallocated, and redistributed.
This whole process can take a good six weeks – meaning large amounts of stock gets pushed to the next season. This means they go into clearance and the retailer loses out on margins. With Christmas coming up, this problem is further accelerated by customers “hedge buying” – in other words, immediately cashing in on Black Friday deals and only keeping the lowest price items, knowing they can simply return the rest.
To address this, we can expect to see a rise in retailers not only offering same-day deliveries; they are providing same-day returns. By being able to book pick collection slots within the hour, retailers can make it convenient for customers to initiate a return and incentivise the process to happen much earlier in the process. We have already seen an increasing number of retailers across Europe looking at immediate returns as part of their offering.
One of the first to offer instant returns in Europe, is the online clothes retailer, Zalando. We work with Zalando to provide instant return services in Paris, where their customers can schedule the pick-up of their return parcels within 30 minutes or schedule an appointment within a week. Once the request has been made, our platform automatically allocates the task to the nearest available courier and customers can track their returns in real time.
Protect margins and boost sales
In addition to offering greater convenience to customers, there are a number of benefits for retailers offering instant returns. Last year, retail experts found that with more of us shopping online than expected and returns on the rise, up to one in five items were unavailable to the sale during the sales period as they were stuck in the returns process.
Same day returns mean more unwanted items can be put back into the system and resold. Therefore, retailers are more likely to have the items customers want, in their size, and available when they want it.
By shortening the process, same day returns also reduces the number of items that will end up out of season by the time they are distributed, especially those that have been purchased mid-season. As a result, fewer items will be forced into clearance sales, and less storage space will be required, therefore protecting margins for the retailer.
While it is up to retailers how the cost of this service would be passed to the customer, the potential cost savings from an efficient returns process means that immediate returns can pay for itself.
Another use case which we are likely to see is the emergence of companies using instant returns to help meet environmental obligations for consumables. Coffee capsules are just one example of an area where instant returns can help encourage more consumers to recycle spent capsules.
The now economy is here to stay, driven by consumer technology, and further reinforced by retailers investing in technology to make their shopping experience effortless and more efficient.
While instant returns remain a relatively new concept, especially in the UK as many retailers are only just getting to grips implementing same-day delivery offerings, it is only a matter of time before it becomes a standard offering.
Photo credit: Narong Jongsirikul (Fotolia)