InternetRetailing’s Ian Jindal outlines a new, sustained research and analysis programme to take a ‘joined up’ view of the question of returned orders in multichannel – the problems, opportunities, commercial perspective and customer impact, along with stratagems to improve performance.
Returns are an issue for every retailer, and some sectors and product categories more than others.
Minimising returns has a direct impact on profitability. Looking beyond the individual order and to the customer’s ‘lifetime value’ and it’s easy to posit a correlation between a customer having a ‘right each time’ purchasing experience (rather than the disappointment-to-annoyance of the returns process) and increased long-term profit. Proving this – along with a clear identification of the components of success – is far from simple, however.
Furthermore, it could be that returns are an integral part of selling (giving confidence to try new products, for example) and a seamless returns process may delight the customer leading to advocacy and repeat sales. Conversely, an improved level of product presentation, sizing information and purchasing advice could increase confidence in purchasing and reduced levels of returns.
In short, there are many interacting components all seeking to influence a single measure, and then further levels of debate as to the correlation of that measure to order, seasonal and customer profitability.
At InternetRetailing we have decided to take a broad and ‘joined up’ perspective on the question of returns, of customer attitudes and retailers’ interpretation. We’re going to combine the insights of experts in logistics, operations, merchandising, reputation and presentation to give us a rounded view of how to increase customer satisfaction and spend, focusing on purchasing confidence and reverse logistics experience. Our partners cover the gamut from display and presentation via personalisation to delivery, experience and returns.
Most importantly they share an attitude of combining insights and working together in order to delivery not only point improvements but sustained, connected increases in customer profitability.
Internet Retailing is conducting a three-month research programme to identify the issue created by returns, explore the mechanisms that can help retailers to reduce them and importantly look at the opportunities returns offer in terms of customer experience and retention.
The research programme runs through September, October and November and comprises:
- Surveys to our readership
- Retailer interviews
- Research roundtable
- Metrics development
- Returns supplement
- Research briefings
In this issue we hear from two of our partners on their approach and interest in the project, and there will be further updates via internetretailing.net and our newsletter.FITS.ME
Heikki Haldre, CEO and Founder of Fits.me (www.fits.me
) - the virtual fitting room for online clothing retailers – reflects upon the challenge of returns, and his expectations from this collaborative research.
No company wants to see its product returned, unwanted, by customers. Sure, there are admin costs – if you have a high level of returns I expect your customer service section is busier than average, for example. But retailers frequently offer free returns, bearing the costs of collection and return themselves. There are re-warehousing costs. There is the near-inevitable discounting of the returned item for re-sale. All of these directly, inevitably, impact retailer profitability, and they quickly mount up.
Quite aside from the logistical and financial implications of returns, you also need to accept the high probability that there is something ‘wrong’ with the returned product. At the very least it is a fact that the product in question has, somehow, failed to meet your customer’s expectation. Arguably, a malfunction issue is less damaging – we’ve all experienced the ‘dead on arrival’ appliance or electronic item, and we’re fairly realistic about that.
But what about the product that didn’t live up to expectations for some other reason? That’s a different issue; however you rationalise, record and report it, you have somehow let the customer down. Your customer did not, after all, purchase the ‘right to return’; she attempted to purchase something because they wanted it.
There are considerations beyond just costs. For example, does that customer come back, and to you? How long does it take before the customer loses patience; how many chances should you expect? What if they fail to return at all, and keep a negative reminder of your brand on their shelf, or in their garage or in their wardrobe? What is the impact on your brand? Crucially, what can you do to avoid it happening in the first place? Could you be doing something different to reduce the incidence of returns or handle them better?
Some sectors are impacted by returns more than others, and are in significant need of solutions to address the issue of returns. Just last week I was in a room with more than 20 clothing retailers, and not one reacted with surprise when one senior manager revealed garment return rates of 25% - a figure substantiated as entirely normal by other research. Numbers of that size make the issue of returns of huge importance.
The issues are far-reaching, and not always well understood. While returns impact a quarter of apparel online retailer’s business, many use ecommerce analytics tracking software that doesn’t explain why the return happened, or what happened next. Returns clearly skew actual conversion rates, and impact the long term conversion rates of repeat business. There are knock-on effects that aren’t always appreciated: for example, a 1-in-4 return rate, with 27% of those returns exchanged, means an average of 1.6 deliveries per completed sale. Pricey, if you’re offering delivery and collection for free.
Why is Fits.me involved with Internet Retailing’s ‘Returns’ project? Because, for online clothing retailers, our technology directly addresses the issue of returns. Our virtual fitting room helps boost their profitability by enabling them to overcome what Mintel (Online Fashion, March 2012) describes as “the biggest obstacle facing them”: the fact that it is impossible for online shoppers physically to try on garments before buying.
Dressed in a retailer’s key garments in each available size, our sophisticated robotic mannequins are photographed at high speed in thousands of permutations of body shape, subsequently enabling us to display to online shoppers the garment pictures that correspond to their exact body size and shape, from just a few basic measurements.
Knowing exactly how an item fits is a vital part of the product description, as important as knowing the colours or patterns, and being able to communicate size information correctly gives customers the confidence to buy. The results can be significant: an improvement in conversion rates of 58% compared to shoppers using a traditional size chart, and a substantial reduction in returns due to customers buying an incorrect size of some 28%.
With Internet Retailing we hope to share with you our extensive general knowledge about returns, and to help us all to find out as much more about returns as we can: their cause, their impact and how to avoid them. We look forward to the journey.COLLECT+
Mark Lewis CEO of Collect+ (www.collectplus.co.uk
) explains how its network of over 4,800 ‘parcel stores’ offers a convenience collection and returns service that’s closer to the customer. Collect+ [IRDX VCPL] sees both the outbound and return portions of an order’s journey and here we learn more about their interest in collaborating in our research.
“Founded in 2009, Collect+ is a modern day alternative to the Post Office, providing convenient, economical and flexible parcel returns and delivery solutions for our customers, through our nationwide network of nearly 5,000 parcel stores. Our business has seen significant business growth in the last year; parcel volumes have grown 250% and the company is now processing parcels at a run rate of 5 million a year.
This volume gives Collect+ an unique perspective on the ‘final mile’ . Over 87% of the UK’s urban population lives within a mile of one of our collection points, and with these stores open seven days a week with extended hours we have insight into customers’ preferences around times, locations and days for collections and returns.
As part of the PayPoint network, our stores are vetted and the staff get extensive training. Their customer service expertise is a source of qualitative insight into the reasons for returns and the customer’s satisfaction with the experience.
As research partners we will be providing insight from our main service lines.
The most obvious source of data is our specialised Returns Service, established at our launch in 2009, and now used by over 125 retail clients, including Amazon [IRDX RAMZ], Very [IRDX RVER], ASOS [IRDX RASO], Asda Direct [IRDX RADD], Clarks [IRDX RCUK], House of Fraser [IRDX RHOF], Boden [IRDX RBOD], Wiggle [IRDX RWIG], Music Magpie, Arcadia Group [IRDX RARC], Surfdome [IRDX rsfd], Dell [IRDX RDEL], M&M Direct, Chain Reaction Cycles, Zalando [IRDX RZAL], Chums and Virgin Media. Our clients already benefit from detailed daily reporting, and we will be analysing the aggregate trends to contribute insight to this research. We capture information from the returns request and label download (either free or paid via www.collectplus.co.uk
, or even via the retailer’s website) and then throughout the return journey to the retailer.
We also gain insight from our “Click&Collect+” service – used by both pure-play and multichannel retailers (including ASOS, Amazon, Clarks, House of Fraser, Very and Littlewoods) – which combines next day delivery and local collection services with an enhanced level of convenience and flexibility based on our comprehensive contact strategy. Customers are alerted to their parcel's arrival in-store by text and email alerts, which include a unique code code which enables them to collect their item. Our client feedback shows that the service increases customer satisfaction and loyalty.
In this research we are going to consider further how a seamless shopping experience and ‘round journey’ approach can – in conjunction with other measures from our research partners – work to create an even greater level of commercial success.
We are looking forward to contributing and learning, and to sharing the results of the research with InternetRetailing.” If you would like to contribute to the research, have a view on returns or questions you’d like us to address, please let us know – firstname.lastname@example.org. We’re excited to launch this research – the first in our new research output – and look forward not only to the first baseline results, but also building on the research annually.