In the latest eDelivery Magazine, Sean Fleming, editor of eDelivery.net examined omnichannel returns and how retailers are analysing processes and customers to ensure profitability.
he first working week of 2016 might feel like a dim and distant memory, but it was the pinnacle of the retail returns squeeze; the point in the year where days get labelled things like National Returns Day and Mail-Back Monday.
Royal Mail reckoned somewhere in the region of 50% more returns were made on 4 January than on an average day in December, which Clear Returns predicted as being almost one million parcels sent back on that day alone. Doddle says it saw a 140% jump in the number of parcels being sent back via its store network on 4 January compared with a typical day in September.
Handling returns badly can damage a customer relationship, and can be costly if you aren’t able to resell the item quickly and efficiently. Slick, customer-friendly returns processes can be thought of as high-cost exercises, but there’s much more to it than that. The commoditisation of the front-end of retail (product and price are broadly similar, for example) means customers are increasingly evaluating retailers on operational execution – delivery and returns being chief among them.
The New Front Line
This is the new front line, or one of them at least. Returns are a sales tool, and the changing room is now often in a customer’s home. Get it right here and you can build a long-term relationship with a customer, or even put a smile back on someone’s face if they are disappointed in their purchase. But get it wrong – whether being too slow getting the stock back on stream, or making it difficult for the return to made – and you risk losing a customer and margin at the same time.
Tales of retailers throwing returned bicycles into a skip because they didn’t know how to process them for resale already feels a little like urban myths, so far removed are they now from most businesses’ behaviour. Yet there’s still a long way to go for many retailers before their customers are exposed to beautifully smooth, frictionless returns that echo the ease of transacting a sale.
Alex Watson is head of global transport and logistics at Superdry, a brand that has grown considerably in recent years and sells through an array of channels, both here in the UK and in international markets. How has that expansion affected its returns outlook, and how is that being played out across the business?
“In the last three to five years, Superdry has really graduated from being a UK-centric business. The UK is still the main market, of course, but we’ve already had a year where we sent more ecommerce volume outside of the UK than we hold inside it, and what we see is there’s very different attitudes toward things like returns across different markets.
“I’m sure that’s what a lot of retailers are seeing. For example, our returns from mainland Europe, particularly Germany, are much higher than they are on our own sites and in the UK market.
“Our basic premise with returns is that it’s all about simplicity, really. There are some great stats about the degree to which customers consider returns when they make a purchase. So my view is, as a fashion brand – and it’s our view in general – is that the returns policy is a potential barrier to the sale; if your returns policy is flakey or making a return is hard, it will put customers off.
“Fashion’s a relatively tactile industry, so effectively we want making a return to be as simple as possible for customers, and not to penalise them for it.”
There are well known issues many retailers face where returns are concerned. If a return is made to the original point of purchase things are generally straightforward. But the picture looks different if a customer is returning something bought online to a store that isn’t actually owned by the retailer.
“You get these situations… we own that store, so you can return that there, but that store, that’s a wholesale customer, so you can’t return it there, there are all these sorts of things that go on and are widely known. We’re looking to break all of that down, effectively,” says Watson.
“By recognising that all the different parts of your network – not just the ones that are specific to any individual channel – can form part of the greater supply chain, we believe we can both leverage reduced cost and greater availability, so that’s really going to be the crux of what we’ll be working on, both now and going forward.”
Of course, a less-than-ideal returns experience isn’t just bad news for the shopper who wants to send something back. Vicky Brock, CEO of Clear Returns, cautions that there are different types of returning shopper persona, and that if you get it wrong with some of them at the returns stage, they’ll never come back.
“There are huge numbers of shoppers who don’t want to have to return things. For them it just means something went wrong. The lost lifetime relationship, even when the return is smooth, can be enormous,” Brock explains.
Identifying those especially sensitive to any difficulty in the returns process can keep a customer relationship upright and can even further enhance it.
While it wouldn’t be hard to laugh off comments like ‘in an ideal world you wouldn’t have any returns’ where would we be without a little idealism? And if you take that outlook and deploy it tactically it can be put to good use; in an ideal world returns are part of our sales process.
Negative to Positive
First time customers who buy one item and then return it ought to be little red flags to the most alert retailers… what went wrong?
Clearly average order values, operating margins and your own average lifetime customer value equations will play a part in this, but if you can identify those brand new customers who return 100% of their first order, why not make individual contact with them and find out why they chose to buy from you and then why something went wrong? It might just be enough to turn a negative customer experience into a positive one.
Sean McKee, is head of ecommerce and customer service at Schuh, a retailer with an enviable reputation where delivery, collection and returns are concerned. How was that reputation won, and what is Schuh doing to make sure it hangs on to it?
“Sadly, lots of retailers think about admin before they think about the customer, and you really see that in the returns experience some retailers present customers with. We try to ensure the customer never has that impression of us. Even if there is an admin headache relating to a return, the customer just shouldn’t see it.
“Returns are becoming more and more important for us. We’ve always been relaxed about things coming back.”
Having a single pool of inventory across the entire business means a pair of shoes bought online, but returned to a Schuh store can be back on sale and in a customer’s hands – better still, on their feet – within hours, maybe even minutes. But don’t be fooled into thinking the Schuh strategy is one of simply opening the doors to returns and maintaining a benevolent smile as stock pours back into their network of stores and outlets, though.
“We’re trying to better understand where returns are coming from – breaking down our data to see what kind of consumption drives returns,” McKee says.
One such finding is that returns from in-store click-and-collect purchases generate the highest of Schuh’s return rates. McKee explains: “it’s a convenient collection option and it tends to be looked upon as freer-than-free delivery by customers. Repeat customers also have a higher return rate, but they have an average net worth that makes that more than ok.
“Returns can be made to any store or through CollectPlus – which is free to registered Schuh account holders – but most returns go into Schuh stores. The customer gets a brand interaction in the store, they get to speak to us, to a person.”
It can also be possible to spot returns at the point an order is placed, says Clear Return’s Vicky Brock. “We’re working on predicting returns; if three dresses go out all different sizes, you know two will be coming back. So route the return accordingly to make the turnaround faster.”
Not everyone sells shoes or dresses though, and not every shopper makes it easy for retailers to spot an incoming return before that customer has even made their mind up. However, everyone could do more to assess the value of a customer, and how much additional cost (spent on handling both a delivery and a return) can be judged to be an investment, not a write-off. The more complex the sector or category you operate in, the more complicated this is likely to feel. By the same token, the more points of inflection there are, the more opportunities there will be to introduce improvement.
The Integration Challenge
Customers may want flexible delivery operations, but for retailers, more choice means more systems integration. Nor is it just integration of software. Tight integration between systems is required – from CRM through to stock management at DCs and in-store to track-and-trace of the actual delivery software level including the physical processes involved in setting up alternative carriers for the different destination types.
So, while online shoppers may be more aware of possible delivery options, they can’t assume they’ll have access to the full range of these resources for any given home shopping transaction. Quite the opposite, in fact; in many cases they still won’t be able to use any of them.
Access depends on a number of factors: what any given retailer offers in the way of delivery options; how willing the carrier is to deal with non-standard deliveries.
Two companies who have pioneered solutions to this challenge have been MetaPack and NetDespatch (now part of Royal Mail). Both offer cloud-based carrier integration platforms where order delivery data is automatically transferred from a retailer’s system to the chosen carrier. Printed shipping labels, manifests and custom documentation, as well as any required data files are also automatically generated. In addition, tracking is available from point of despatch to point of delivery. With MetaPack’s Dynamic Delivery Option, for example, shoppers can simply enter their postcode and are shown any PUDOs within range – locker banks, retailer’s own stores or a convenience store. Manual data entry is eliminated, saving time and reducing the risk of errors.
NetDespatch offers a barcode-based service to make it easier for customers to collect parcels from in-store collection points. Online shoppers are automatically sent a unique barcode embedded in an email or text message when their purchases arrive in their chosen pick-up location. This barcode is then scanned by the shopkeeper on collection, significantly reducing transaction time at the till, securely identifying the parcel, and ensuring that the person collecting the parcel is authorised to do so.
Track and Trace
The role telematics plays in click and collect depends on how the retailer is organising the service, but real-time mobile data is key both to delivery efficiency and customer experience. Next-day collections from retailer’s own stores usually indicate stock is being shipped from an RDC, with the retailer having greater control over the delivery. Deliveries to alternative collection points means ensuring your delivery partner can deliver the real-time data necessary for that great customer experience, while the same-day or one-hour services now being offered by Argos and Halfords, for example, require greater integration with in-store stock control systems.
Retailers are waking up to the fact that an inferior delivery service could cost them business in the long-term and finally recognising that they need to be more proactive than they have in the past. Consignments need to tracked from despatch to the point of delivery with a real-time tracking system – data can be easily captured at any point on a mobile device with a barcode scanner. Tracking the vehicle on which the parcel is travelling means customers can be notified of impending delivery arrivals in store – there’s even no need to wait until the parcel actually arrives because the GPS system on the vehicle with integrated traffic information can provide a realistic ETA at the collection point.
Consumers now expect this level of accurate, consistent information about the status of their delivery – either by email or, increasingly, to their smartphone. Passing the responsibility to a carrier and posting a notification on the web page that the parcel is “out for delivery” is frustrating for modern consumers, who expect more up-to-date information and know that some companies supply it. Increasingly, consumers view this level of information as inadequate and it doesn’t provide the first-class customer experience retailers strive for.
Integration between in-field mobile data information with existing office-based IT systems delivers business intelligence that can be vital in highlighting shortcomings in the existing customer experience. How long typically does it take between a parcel arriving, the customer notification and the customer actually collecting the goods? Is it possible to measure any additional transactional spend by the customer once in the store?
In the same way that retailers learnt how to manage the customer expectations and the costs of home deliveries, so click and collect will continue to develop. Not all retailers will have the level or integration or telematics capability to offer same-day and one-hour delivery to online shoppers, but they might have to up their game – as those shoppers realise it’s possible, expectations of “good service” will rise again.
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