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Opinion: How to turn post-Christmas returns into a competitive advantage


As Black Friday and Cyber Monday draw to a close, and only a few weeks of Christmas peak remain, retailers could be Artistic Vision & Design, Incforgiven for thinking they can relax post Christmas Eve. However the reality is far from it says Enda Breslin, head of sales and business development EMEA at omnichannel ecommerce technology and operations provider Radial.
The run up to Christmas signifies the busiest time in the retail calendar. Months of pre-planning go into managing and co-ordinating the Christmas rush, and predictions show that 2016 is set to be a bumper year for festive sales.

But any collective sigh of relief from retailers come Christmas Eve may be premature. Post-Christmas returns, as well-intentioned gifts are sheepishly returned for something more appropriate, are as certain as groan-worthy cracker jokes.

Inevitably, the more consumers spend, the more returns will be made. Retailers already busy with post-Christmas sales will also have to battle with an increasing number of returns – meaning peak season extends beyond the festive season. But managed well, the combination of sales and returns can be beneficial: the better retailers become at integrating returns back into the supply chain, the less value they will lose through inefficient returns processes.

How can retailers manage this hike in returns, and can they turn this festive tradition into a competitive advantage?

An overlooked battleground

Radial recently launched a study into how delivery and returns differ between the primary European markets of the UK, France and Germany. Our research showed that the stakes are higher than ever when it comes to delivery: leading retailers now offer an average of 3.3 delivery options, and a further 40% offer four or more.

But delivery is just one side of the fulfilment coin. While retailers have typically tended to focus on this, it’s returning an item that is the all-important final touchpoint between business and customer.

Despite the obvious benefits of getting returns right, our study shows that retailers often underestimate their power. Returns can be costly and frustrating, but the reality is that they remain an unavoidable part of doing business. It’s important to remember this over Christmas: this may be the first time shoppers interact with your business, and the benefits of nailing your returns strategy now could see you reap the rewards.

This is especially important as fulfilment becomes more customer-focused and convenient; people will expect the same level of ease when taking items back to retailers.

Discrepancies in the returns landscape

Our research shows that there’s still plenty of room for improvement when it comes to returns. Encouragingly, just 16% of retailers surveyed only offer a single return option – but 42% of retailers expect their customers to foot the bill for their postal returns.

Much in the same way that flexibility is key when it comes to delivery options, returns must also cater to the same wide customer preferences and differences in shopping behaviour. Not all customers will have easy access to a nearby post office, and others will want alternative returns options that are available outside of office hours.

Providing flexible and friendly returns in line with customers’ expectations will be key to establishing customer loyalty. ASOS is a fantastic example of a brand that has made returns free, easy, and tailored to individual international markets – a great driver of customer loyalty for source of growth for the business. Smart retailers make returns easy all year round, not just at Christmas.

We urge retailers to absorb the cost of returns into their bottom line. Not all returns need to be free, but we strongly recommend offering at least one no-cost option. Penalising present recipients by charging them for returns will do you no favours, and could affect the customer’s vision of your brand and whether they decide to shop with you in the future.

Capitalise on in-store returns

If businesses must absorb the cost of returns as part of their business models, they may as well use them to benefit their bottom line in any way possible. Retailers can capitalise on returns further by encouraging customers into their bricks-and-mortar stores. By giving consumers the option to return items physically, retailers not only save on additional posting costs, but can benefit from incremental footfall into the store and convert refunds into exchanges – or even new sales.

It’s a particularly lucrative opportunity for fashion retailers, who often bear the brunt of high return rates due to sizing issues – an obvious problem with gifting clothes. Yet surprisingly, just 59% of retailers we surveyed offer an in-store return option; a particularly low number when one considers the benefits.

Think local, act global

Retailers looking to expand abroad must consider their returns strategy as carefully as their delivery. Considering 53% of European cross-border shoppers are highly influenced by flexible returns options, it’s a crucial way for retailers to establish themselves in a new market.

Our study showed a high degree of localisation in each of the three markets we studied for return options: in Germany, for example, the vast majority of retailers offer returns through DHL PackStation and Hermes PaketShop’s networks.

Understanding the local returns landscape is imperative: make sure your offering in these areas aligns with local organisations, or you could risk alienating yourself from prospective customers. And if it’s better than your rivals, it’s a chance to steal a march and increase loyalty.

Radial recently released their European eCommerce Delivery & Returns Index 2016. The survey of 100 leading online and multichannel retailers selling in the UK, France and Germany will help you understand customer expectations in each market when it comes to delivery and returns. The report is available to download here.

Image credits: Fotolia and Radial

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