Keeping stock sold – avoiding returns the key to retail profits
The sales figures over the peak trading periods of Christmas and Black Friday may make the headlines, but those returns coming back over the next 28 days will cost retailers millions…and often get ignored.
It’s time to get the facts.
Playing for keeps…
Clear Returns new Playing For Keeps report offers the facts around returns on Black Friday, peak season and beyond. £160 million of Black Friday stock is set to be returned, stock that will then be unavailable to sell during the most critical trading period of the year…Christmas.
Playing For Keeps is more important than ever as it is not really a sale until the customer decides to keep it. Returns kill retail profits and Clear Returns presents the facts that the wider retail business simply cannot afford to ignore:
Clear Returns can help retailers regain an extra £1 million for every £10 million returned, statistics which make Clear Returns one of Europe’s top tech scale-ups according to The Telegraph.
Clear Returns CEO, Vicky Brock, explains why Black Friday could end up being a short term gain but long term loss for many retailers:-
“Forget the headline-grabbing figures of what analysts say people are going to spend on Black Friday. That’s just the beginning. The real concern is that the event could end up costing retailers money rather than boosting their profits.”
“This is because the spike in sales from November 27 will be followed, for many businesses, by an increase in returns – and profit is only generated when customers decide to keep their purchases. On average, 14 per cent of all consumer electronic sales are sent back, and in the build-up to Christmas in particular, this can cause all manner of logistical headaches and lost margins.”
Talk to Clear Returns now to help your customers keep more of what they buy – and keep buying.
Our research shows that the largest proportion of returns are often caused by first time, dissatisfied customers. These customers were dipping their toe in the water and trying out a new retailer but ended up disappointed with the product they received.
The largest proportion of returns are caused by first time dissatisfied customers
Generally these customers make a small purchase of one or two items with a fairly low basket value therefore they may not appear to be a lucrative prospect, however once they receive an unsatisfactory product they won’t buy from you again. This means the true cost isn’t just a refund – it’s the customer who has been lost, and may leave bad product reviews or share their dissatisfaction via social media.
Luckily this is a problem you can act upon if you are able to detect product issues or mismatches between online content and customer expectation quickly and remove these items from customers view. Targeted customer service can salvage the customer experience and ideally convert the return into an exchange, which is where in-store returns have an advantage as active salespeople are on hand to help customers.
As this group account for such a large proportion of returns, helping even a small percentage to exchange the unsatisfactory product or incentivising the customer to visit again will save millions of pounds in revenue.
Quickly identifying product or online content issues can salvage the customer experience
Clear Returns’ customer value scoring has the ability to identify these customers within your existing CRM, allowing marketing and customer services to act quickly and alter targeting appropriately to encourage these customers to return again by perhaps providing customer support or offering exchange suggestions.
Increasingly customer reviews are influencing purchasing decisions, something that several research studies have highlighted.
One particular summary of this research that Econsultancy published today discusses this in the online and offline retail world. They report that Google’s consumer survey last year found 84% of customers felt that online research and feedback helped influence their buying decisions.
This article also highlighted that site visitors who interact with reviews are 105% more likely to purchase.
Econsultancy’s 2012 report – How the Internet Can Save the High Street – also touched on this issue. Of the customers they surveyed 44% said they always researched purchases online before buying offline.
This report also highlighted that 43% of shoppers now use their smartphones on the move to compare prices and read customer reviews, a huge jump from just 19% the previous year.
In the world we live in today we are exposed to a huge amount of information at our fingertips, it is therefore unsurprising that customer reviews are much more trusted than product descriptions or marketing techniques.
As the online channel and consumer choice grows, it is likely that reliance on customer reviews will only increase. Therefore retailers should act now to bring their online reviews in-store to influence buying behaviour in an positive way.
UK consumers feel increasingly frustrated and disappointed about returning garments.
Our research uncovered that fit was the main reason that consumers had to return items with a staggering 80% of returns being made for this reason.
Almost half of the customers in our sample admitted ordering the same item in multiple sizes in an attempt to overcome fit issues when buying online. However this may still not be enough as retailers are increasingly accused of not providing accurate sizing.
The Daily Mail recently put high street stores to the test and found that many retailers utilise “vanity sizing” to make consumers think they are a smaller size and therefore encourage them to buy more. The full article can be accessedhere
By using this method of sizing retailers may be creating more problems for themselves when it comes to e-commerce sales as this will surely only increase the number of returns they receive and consequently increase their costs.
Customers were also left frustrated by poor product description and or photographs on the retailer’s website contributed to 55% of returns:
There could be some improvements in photographs, measurements or articles, it can be difficult to tell an items exact colour, feel or fit.
Retailers should be more careful to avoid returns of this nature as this problem can be solved relatively simply if they are aware of a particular issue. This is where customer recommendations and reviews are key as this tool can inform the e-commerce team on any issues with a particular product. Also features such as the “catwalk view” used by e-tailer ASOS where customers can see the garment in motion and would allow customers to gain a better understanding of fit and style.
Survey results also demonstrated that customers are unaware of what happens to products when they are returned. Over a quarter of consumers never think about what happens to their returned items, and almost 75% assume they go back on the shop floor. However the returns process is often much more complex and costly than this and if consumers realised the implications of returning items they might buy more carefully in future!
Posted by Ellie