Our CEO Vicky Brock discusses in our blog this week the new point of sale – it is not when the customer makes the purchase, it is when (in the privacy of their home) they actually decide to keep it.
It’s a bold assertion that I made at the Internet Retailing Conference, IBM Business Connect and IBM Smart Camp last week, but I believe it is absolutely true. At Clear Returns we have the data to prove that for several sizeable segments of online shoppers, the real shopping process actually starts post transaction – where the retailer’s influence is minimal at best. The sale is just the short list.
Retailer expertise has always been in enticing the shopper to buy more than they require… reassuring returns policies have been an essential part of that enticement
Just bring the shop to me…
Retailer expertise has always been in enticing the shopper to buy more than they require. It is no different online – recommendation engines, multi variant testing, fitting room tools, retargeting, intense front end optimising are all tools to push up conversion and increase basket value. Add to this extremely generous or free delivery terms, that customers have come to expect. Not forgetting of course, in the online environment, the reassuring returns policies that have been an essential part of that enticement – you’re ok, its safe, we do free returns.
So just buy – what have you got to lose?
Well nothing, it turns out – at least if you’re the shopper. So buy we all do – but the shopper is no fool. Many are aware of the marketing tactics encouraging them to buy more and buy more often, and they are fully aware of the discounting cycles of their preferred retailers.
When the goods arrive the tables turn. In their own home, with only minimal retailer influence, customers can then actually make the decision on what they’re going to keep, and if they’ve paid by credit card chances are a penny won’t even leave their account, so even cash flow is not a constraint.
When the goods arrive the tables turn. In their own home, with only the minimal retailer influence, customers then make the decision on what they’re going to keep
Really – what have they got to lose?
I confess, I shop exactly like this -and our data shows I am definitely not alone! This is not sustainable in any sense of the word. Now think about this from an operational perspective. Think about all the additional layers of costs associated with this kind of sale – fulfilment, road miles, failed deliveries, spoilage, reverse logistics, lost margin due to discounting, lost sales due to items being out of stock, repacking, cleaning – the list goes on.
Think about the waste. The shopper may assume the returned item goes straight back on sale (or as our research shows they have simply never thought about it) – but that is rarely the case. Goods have to get moved to central warehouses, they may require repacking and cleaning, they may simply not be worth selling again and go to outlet or disposal. Additionally, an item that has been returned is more likely to get returned again, so is less likely to keep its margin.
This focus on optimising sales, rather than optimising what is kept is not sustainable in business terms or any other terms. For those of you in front end optimisation let me ask you this, would you put up with a bounce rate of 50% on a key product landing page? Well a bounce rate of 50% is nothing compared to a product return rate of 50% – and yes, those do exist.
Optimising for keeps
The reason I founded Clear Returns and the rationale behind our technology is that I believe we should optimise for profit, not simply revenue. Let’s judge a sale and let’s judge product performance by when it is kept, not when it starts the fulfilment process.
ECHO alerts on problem products or content after fewer than 10 returns have been logged. SEER allows you to understand customers based on what they keep and tailor responses accordingly. SMART EXCHANGE retains more spend post sale. Why? Because the sale is just the beginning.
Returns may not be sexy, but keeps are in everyone’s interest!
Posted by Vicky