The future of retail and the returns that come from it

boxIn the rush to give shoppers what they want, when they want, and on whatever device, retailers have flocked to omnichannel offers and tempting promotions. But those offers will only cost them lost profits and lost future customers without investment in non-sexy back-end systems and logistics processes.

This past Christmas and peak sales period, many retailers were unable to deliver on the fundamentals of meeting customer promises – stock available to buy and timely order delivery. Retailers have been over-promising, especially when selling through their omnichannel networks, which has created a nasty feedback loop that exacerbated existing changes in customer behavior and exposed underlying weakness in back-end and logistics systems.

It’s no secret that the recent Christmas shopping chaos backlogged many retailers who didn’t invest in their back-end systems and was one of the reasons parcel delivery company, City Link, went bust. The backlog happened for a few reasons – the massive discounts in the lead up to Christmas kicked in earlier, continued longer and shifted January trading into the peak Christmas trading period. Also, a surge in early online purchases took product out of stock, much of which was later destined to come back as returns (in some categories e-commerce returns rates will have come close to 50 per cent).

With the ‘new shopping’ – major advancements in e-commerce and m-commerce selling that make a customer’s buying experience as convenient as possible – the future of retail is certainly here. Retailers want to offer their customers everything from click and collect services and free same-day shipping to lenient return policies, but without a proper strategy on how to meet these offers they are prone to disappointing customers and losing money from returned products that would have otherwise been kept.

Vicky Brock, chief executive of Clear Returns, said that ‘back-end tech and systems integration are not sexy and they don’t win shiny awards or get much PR, but they do allow businesses to survive, compete and thrive. If there’s a failure anywhere in the process it’s a failure of the retailer’.

Usually after customers receive their delayed products weeks after the holidays ‘they return them’, Brock said. ‘This year, that New Year returns spike happened during Christmas trading, which had an impact right across the supply chain and onto the shop floor, and it contibured longer due to those process failures. The thing a lot of people forget about is the impact of returned products on profits, and waiting weeks for a pair of boots to arrive in the mail only gives the customer time to reconsider their purchase or to find another pair of boots that they like better’.

As much as delays in delivery kept customers waiting in the lead up to Christmas, it also lead to a pile up of unprocessed returns, with little time to repackage them and get them back out on the shelves for consumers to buy. Next year we can expect that more emphasis will be put on the prediction and processing of returns, so that they don’t sit on a warehouse shelf decaying and losing value. Clear Returns helps retailers identify what will return and when, which will be information needed to avoid these customer experience and profit killing issues next year.

Clear Returns offer the solution to your return problems. Why not get in touch?

Contact Us HERE

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Email: info@clearreturns.com
Phone: 01415544175

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Are you targeting the right customers with your email marketing?

Recent studies revealed today indicate that customers are increasingly receptive to email marketing techniques, but are you targeting the correct groups?

A recent study by marketing firm Alchemy Worx shows that consumers are highly responsive to email marketing, estimating that for every extra monthly email sent to a pool of 5 million customers, retailers can make an additional £1.8 million. Better still, the Direct Marketing Association has found that customers have become more receptive to email marketing, especially when the email contains information about coupons or special offers.

To maximise this marketing opportunity you need to be able to identify your best customers

To maximise this marketing opportunity, however, you need to be able to identify your best customers. Not just in terms of what they buy, but what they actually keep. Your normal and high-value customers, who make up almost half of your customer base, keep the majority of their purchases and may welcome a chance to stock up on their favourite brands, especially if they know they’re being rewarded for their loyalty. Other shoppers, specifically the over-buyers who buy large baskets with the intent of returning the majority of items, may simply use special offers as an excuse to place enormous orders– which then turn into a big pile of costly returns for you to deal with.

Being able to distinguish types of customers and exclude expensive, over-buying shoppers from certain campaigns allows you to maximise profitability

Being able to distinguish these types of customers from each other and excluding those expensive, over-buying customers from certain email campaigns allows you to maximise profitability. Plus letting your high-value shoppers know you reward their loyalty by offering special perks means a better shopping experience for them. Finally, the receptiveness of customers to email interactions means customer service has the opportunity to contact these over-buyers to help direct them towards less costly options, such as exchanges or personal shopping services to help them find the products they want.

Posted by Shaylon

When ‘showrooming’ is a win-win situation

As more and more shoppers are constantly surfing the web on mobile devices, there has been an increase in what retailers and trade press are calling ‘showrooming’ – where consumers try an item in store and then check online to see if they can get a better deal elsewhere. A recent Retail Times article covered this very subject, warning retailers of the threat this behaviour poses. Many retailers are concerned this could undermine business, since their store may simply provide advertising for their lower-priced competition.

Many retailers are concerned showrooming could undermine business

However, research on shopping behaviour by the Clear Returns team shows that showrooming may actually benefit retailers who understand how their customers prefer to shop. One in every five returns can be traced to ‘overbuyers’, a subset of shoppers who like to buy a selection of items to try on at home, and then send the excess back, incurring a high cost to serve for the retailer.

Showrooming may actually benefit retailers who understand how their customers prefer to shop

Where overbuyers are involved, showrooming is a chance for retailers to create a win-win situation. Encouraging overbuyers to check out products and do their comparison in store saves on expensive shipping and returns. It also means these customers are happier with their final purchase. Also because of the cost to serve saved, this means retailers may even wish to offer incentives for certain showrooming shoppers to make their purchases now, rather than waiting to purchase online.

Offline versus online – the key differences in consumer behaviour

Offline versus online, consistently the channels are being merged – but how different is consumer behaviour between channels? Clear Returns investigate.

A recent study of 2,000 consumers, reported in the Retail Times, found major differences in how men and women prefer to shop in brick and mortar stores. Women not only spend almost five times more per year, but also spend much more time comparing merchandise and trying on clothes. Men, meanwhile, tended to enter the shop on a mission, buy the item and leave, even though they were just as likely as women to consult a salesperson about their purchases.

Women spend 5x more than men and spend more time comparing merchandise

Interestingly, this pattern doesn’t necessarily hold true online. Research by the Clear Returns team shows that men and women behave similarly in the online retail environment, with the majority of shoppers spending similar amounts of money on similar numbers of items regardless of whether it was menswear or womenswear. This may be because many shoppers we interviewed said they found shopping in brick and mortar stores to be a fun day out, while online shopping may be more utilitarian. However this can also be true in reverse. Some shoppers enjoy no more than a browse of their favourite stores online and hit the shops when they are fulfilling a specific, pre-determined need.

Women were 16% more likely to buy extra items with the intent of choosing their favourites and returning the ones they didn’t like

One pattern does hold true, however. Women were 16% more likely to buy extra items with the intent of choosing their favourites and returning the ones they didn’t like. This mirrors the extensive comparison shopping seen in the study of shoppers on high street. Recognising this need can help online retailers adjust their website content to help their customers comparison shop without having to make a purchase and return.

Blurred lines between online and in-store

Is referring to shopping via online and in-store ‘channels’ becoming increasingly out-dated, as consumers continue to adapt their shopping behaviour,?

A recent article by the Wall Street Journal explored the state of online sales in the U.S with information gathered from the SEC (Securities and Exchange Commission). They struggled to uncover concrete details about the amount of items retailers sell online in relation to total sales. They were also concerned about potentially misleading results being posted by retailers who claim high growth rates but do not disclose details of sales made online and in-store. With many retailers announcing impressive sales growth online, how does this really stack up compared with the totals?

The SEC stuggled to uncover concrete details about the amount of items retailers sell online

Within the Wall Street Journal piece they speak to the likes of Target about their strategy. Casey Carl, who runs Target’s omnichannel efforts, commented “There’s such a blurring of the lines that it doesn’t make sense to delineate between whether it’s an online or in-store sale”.

1 in 5 UK shoppers buy more online than in-store

Internet Retailing also posted some new research this week that shows 1 in 5 shoppers in the UK now shop more online than in-store, and almost another fifth shop equally as often online and in-store. Consumers clearly see value in the convenience of online as well as the ability to touch and feel items in-store. So why should shopping be defined by channel? Shopping today has come to have a whole new meaning beyond a traditional trip to the high street.