Playing For Keeps – keep stock sold over the peak trading period

 

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.

Expert insight…

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.

Returns & why they should be on the retail CSR agenda

It really pains me, and I know it pains many people, to see the sheer amount of packaging and waste that goes into a delivery of a product ordered online.

I realise there’s a trade-off between the amount of packaging in the box and the quality of it on arrival. You don’t want to compromise on the packaging to the extent that the delivery arrives damaged, so it’s safer to over-package.  But of course, that has a huge cost and environmental impact.

These hidden social costs are even extreme when there is a return involved.  E-commerce returns for fashion in the UK average 30%. They can exceed 60% in Germany. You’ve got the customer opening all of this, so the packaging is very rarely in a condition that can be reused or salvaged for a future despatch. Not only that, if there is a return in that package, the shopper is going to be repackaging or bundling it up to go back in a van to go back to a warehouse where it’s got to be opened, cleaned, repackaged and finally made re-available for sale. That may involve it having to be transported to a different warehouse or back to store.

There’s potentially a significant loss of margin in that process. Packaging, road miles, you know, environmental impact, social impact all the way through this process of a return, yet alone the business impact from things like reduced margin, poor customer experience, and impact on profitability.

CSR and returns

It is this aspect of the social, economic impact, environmental impact of a return that both the shopper and the business are failing to give adequate consideration.

I believe a retailer serious about its CSR (Corporate Social Responsibility) will be arguing to the rest of its organisation, arguing to the board, ideally even educating some of the customer base, that returns at their current level are not sustainable. You are not doing anybody a favour –  including the customer when you are incentivising them to return and shop with the intention of returning  – because there are all these hidden costs.

These hidden costs are not necessarily borne by the retailer. They’re not necessarily borne solely by the shopper but they are ultimately borne societally. The cost of a van going two or three times to deliver a parcel because customers are frequently out, the cost of then picking that parcel up from the post office, or from the customer, back to a central warehouse, the cost of all the stuff that’s going on at the central warehouse, the product then being shipped by road to another warehouse where it gets back into the supply chain. The cost of buying more stock than required, simply to keep availability due to the sheer amount of stock out on loan.  And the waste involved in packaging and re-packing the same item time after time.

Potential impact on consumer behaviour

It is common to see returns having  a £30+ cost associated with them and that’s just direct costs of the handling, delivery and packaging, let alone externalities of environmental impact and waste. What I would like to see is organisations like John Lewis, Marks & Spencer’s and IKEA, who’ve been very forward in talking about CSR, environmental impacts and how they’re doing ethical sourcing, to also start talking about ethical returning.

Incentivising people to buy more and more, and return more and more is not, in my view, sustainable or ethical, and I think if the shopper was more aware of how much product goes literally into landfill, the r0ad miles generated, how much packaging goes to waste, how much stock gets cleared off the jobbers for disposal at a fraction of the cost price – they would be concerned and they would probably look at their own returning decisions.

Focussing the CSR agenda to include returns

I work in this industry, I’m obsessed with the data and I’m aware of what’s happening – but very, very few people are. So, it’s really important to me that returns get on the agenda of corporate social responsibility and that this is one of the things that CSR directors and retailers are talking about in the coming years.

Because returns at this level are not sustainable for anybody, not at business level, not on an environmental level and not at a wider society level.

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Why measuring retail sales & marketing performance has to factor in returns

Marks & Spencer have attracted unwanted publicity in the last few days, as they have quietly adjusted their figures to reflect that their online sales over the past four years were £500 million less than previously stated.

Why? It all comes down to returns and how the business attributed them internally. Clear Returns regularly see retailers assign the full upside to the online channel – revenue growth, record sales figures, stellar marketing conversion performance – yet barely factor in the extraordinary downside, in the form of high returns. Frequently we see retailers like M&S fail to account for the full online returns picture, so returns to store and all the operation-wide associated costs of returned do not get fully reconciled back to the online business.  This matters.

Returns from online are far higher than in store. They can exceed 35% for UK women’s fashion (and exceed 60% for fashion in Germany).  Some of these goods are returned by mail or Collect+ – thereby incurring two way postage costs. But where the retailer has the store base, as half of online returns – or more – will get returned in store.  These store returned goods rarely go straight back onto the shop floor – the store may not stock that range, the goods may need cleaning or repackaging, so they often require sending back to central warehouses to be processed which can take weeks.  In the case of certain product categories – like electronic goods – they simply cannot be resold as new.  Write-off rates are eye watering and this impacts the bottom line.

Clear Reurns marketing reconciliationYet depending on the level of information available internally around returns, the online channel may neither incur the costs for a high returning campaign or product line, nor see the data that would allow them to make changes to the way they buy or market goods in future.

And its worth remembering, that M&S’s £500million over the last four years doesn’t include the cost of marketing to acquire the sale that led to the return, it doesn’t include handling costs, it doesn’t include lost lifetime value from the customer finally fed up with having to return yet another order.

Clear Returns customers – and Marks and Spencer’s are not amongst them – do not have this problem.  They can reconcile returns back to the orginal marketing activity.  They can remove problem products from promotion fast. They can attribute refunds and returns costs to the correct channel. And they can make business decisions that grow retained revenue – thereby profits – across their whole business, rather than over-rewarding one channels performance at the cost of the whole business.  Find out more

 

Clear Returns MetaPack Returns Webinar

Retail Returns Insights Webinar Available Now

Are returns a headache for your retail business?

Clear Returns invites you to listen to the solutions explored in our recent webinar with MetaPack, Returns: The New Battleground for Retail.

The webinar was a collaboration between leading industry professionals, Clear Returns’ CEO Vicky Brock and MetaPack‘s Commercial Manager David Staunton,  who discussed solutions around returns strategies and analysis, which has become an increasingly complex issue amid changing customer behaviour and a dynamic retail landscape.

E-commerce sales are experiencing significant growth, so much growth that, for many retailers, distance selling has become difficult to sustain with return rates as they are. Only 16% of retailers have said they’re able to profitably fulfil omnichannel customer demand, while some retailers are seeing their return rates grow faster than sales.

Clear Returns’ data analytics has shown that 1 in 3 fashion items bought online in the UK are returned, and in some geographies, such as Germany, that rate can go up to 60%. But it’s not only fashion retailers that are seeing too many products come back to the store. Clear Returns works directly with clients from electronics, to jewellery – delivering returns intelligence to all non-grocery categories.

Returns are a growing problem for retailers across sectors and channels, especially since the damage done by returns goes beyond the initial refund – up to 80% of first-time customers who return will never shop with that retailer again, resulting in a significant loss of customer lifetime value. During this major shift in retail, it’s essential that distance sellers focus on maximising their returns strategies and customer experience with innovative technology and proactive solutions.

To learn more about these returns trends and issues and how Clear Returns’ and Metapack can help you tackle them, listen to the free webinar.

Get in touch directly at info@clearreturns.com to discuss how we can help your retail business grow its profits by helping your customers keep more of what they buy.

 

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

OR

Email: info@clearreturns.com
Phone: 01415544175

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Bird & Bird Panel: How Technology is Changing the Retail Landscape

On the 27th of November, international law firm Bird & Bird hosted Creative Disruption on the High Street, a panel of entrepreneurs debating the intersection of retail and technology and the future of shopping channels. The panel was held at the Design Museum in London along the complimentary backdrop of the museum’s Women Fashion Power exhibition.

The panel discussions touched on topics of how technology is shaping the way consumers shop, why attention toward omnichannel is important, and how retail technology businesses, like Clear Returns, are helping retailers improve their customers’ experiences while shopping online and through mobile. Vicky Brock, CEO of Clear Returns, spoke alongside companies represented by leading entrepreneurs Elizabetta Camilleri, Stuart Marks and William Shu from SalesGossip, JLAB and Deliveroo.

At the Bird & Bird event, technology entrepreneur, Stuart Marks said that one of the biggest problems today’s corporations are facing is that ‘the world is moving very fast’, too fast for the skill sets within big corporations to keep up with the changing retail landscape and its quick shift into omnichannel. This is why it is important for big corporations to work with tech startups who know how to face not only the benefits that advancements in technology have brought into retail, but also its challenges.

Among the many challenges of this massive shift in retail, Clear Returns tackles a problem that costs retailers millions, but often gets ignored: customer returns. A growing customer returns rate is one of the symptoms of quickly growing retail technologies, as more customers turn to online platforms to purchase products, platforms that may have not yet been adjusted to ensure that customers have the best possible online experience.

One in three fashion items sold online in the UK are returned, and in Germany it can be as much as 50 per cent.

What Clear Returns does is provide an early warning system that helps retailers spot the products that are most likely to be returned and spot the customers that are most likely to return products, which gives retailers the data they need to take fast action in preventing returns. We do this with sophisticated data software that can locate the source of a returns problem after only five returns. We provide a solution to a problem that was originally propelled by retail technology with retail technology itself.

Watch the video below to learn more about Clear Returns and our Bird & Bird’s Creative Disruption on the High Street as well as other companies that took part in the event. If you would like to learn more about the work we do, you can look at our recent holiday returns analysis or watch our brief video on how we tackle retail returns.

Posted by Lisa Monozlai

Don’t talk about returns, talk about keeping

Returns are killing retail profits, but who cares?

Tackling returns is complex and here is no single magic bullet.  Often there is no one person or team responsible for minimising returns. And even when there is a named owner of  “the returns problem” that person requires the buy in from teams across the full spectrum of the retail operation in order to be effective. Yet that co-operation rarely happens.
From the recent returns roundtables and discussions Clear Returns has hosted at Home Delivery World, IMRG and the Retail Forum, we’ve seen the same internal barriers occurring in retailer after retailer:

  1. Incentivising revenue targets over profits
  2. Failing to understand the margin impact of returns, including reselling returned stock at a loss
  3. Assuming a return to be a positive outcome for a customer
  4. All KPIs and performance metrics stop at the sale
  5. Accepting that high levels of returns are inevitable
  6. Lack of focus on shortening the period to get returned stock back on sale, including fulfilment of clean stock ahead of returned stock
  7. Lack of enforcement of existing returns acceptance policies
  8. Poor data visibility and lack of actionability from existing returns data

There is no fix to this without a top down approach.  Nor can a single individual or team “solve” returns alone.

So why not turn the thinking upside down?

Is there a board of directors of any retailer anywhere that doesn’t want to boost profits, reduce costs and increase customer experience?  Is there any management team anywhere dedicated reducing the profitability of stores and customers?

So what’s the problem?

Returns have become bogged down in the vocabulary and remit of operations and logistics.  They’ve become someone else’s problem. It’s so easy to blame the delivery company, or those pesky customers buying two sizes of everything. It’s harder to acknowledge that ecommerce has changed how customers buy and that everything from buying strategies to marketing and stock coverage are being impacted.

So how about talking about keeps instead?

How can retailers co-ordinate buying, sales and marketing, fulfilment and service processes to ensure more customers keep what they buy and more sales actually result in a profit?

With a vision like that from leadership, those internal barriers seem a lot more surmountable.

Posted by Vicky Brock

Why returns are costing you more than you think…

It is easy to dismiss returns as someone else problem – someone in operations or the warehouse maybe.

But helping your customers keep more of what they buy is every retailers business.

Returns kill profits – and not just due to operating costs, but also because the impact of a return on customer experience and lifetime value can hit future revenue. If a problem product hits a new or high value customer, the impact is felt right across the business.

As the infographic above highlights, the costs associated with handling a problem product are only half the story.

The costs of acquiring a customer in the first place are rarely factored in to returns – yet some campaigns (like the one featuring this jacket) can directly cause returns.

But the real pain for retailers is the impact even a seamless return can have on customer experience.  Up to 80% of first time buyers never shop with a retailer again if they have to send back their first order.  That impact can be 2 – 10 times the operational costs of returns in the first year alone.

It is not really a sale until the customer decides to keep their purchase, so helping your customers keep more of what they buy – for example by spotting and acting on problem products and inaccurate descriptions – can only be a win win!

Posted by Vicky Brock

What eBay sellers can teach retailers about avoiding returns

With razor thin margins, a return leaves an eBay seller out of pocket. The same is true of larger retailers, or course, but for the individual seller it’s personal.  They care because it’s their money.

Not only is it the cost of lost product and postage that hits the seller, the eBay ratings system means that a seller’s future trustworthiness and margins may be impacted by a return.  Customer experience is quantified. Good sellers achieve better prices than unknown or poor scoring ones, so maintaining ratings are really important.

Returns send a chill through their hearts in a very direct way – and experienced eBay sellers have devised tactics to avoid them.  Some of these tactics are also highly applicable to larger sellers and correlate to how Clear Returns helps tackle returns in larger, complex organisations.

Pain in the wallet drives prevention

The thing that hits an eBay seller’s wallet hardest is the non delivery claim. A seller has to balance low postage costs to stay competitive, with the more expensive certainty of a signature. Plenty of items are sent without any proof to protect the seller and whatever has gone wrong, the buyer always get the benefit of the doubt. The seller has lost their product, shipping costs, has incurred eBay and Pay Pal costs and is thoroughly out of pocket.  But a seller can’t afford to risk their reputation, ratings and right to sell on eBay by obstructing the return, even when a seller suspects a buyer is exploiting that with false claims.

One way eBay handles this – something Clear Returns has also tackled in a different, more appropriate way for multichannel retailers – is to allow sellers to block potential purchases from future transactions.  This in theory helps prevent bad buyer behaviour escalating – at least with the same seller.  The seller community also effectively polices buyers, and buyers are rated in the same way as sellers.  A buyer with repeat suspect behaviour may find themselves blocked, meaning genuine buyers and sellers both benefit.

Not all customers return equally

When a good customer misses out on a buying product because it is out with a known fraudulent shopper (who is less price sensitive than the customer who was planning to keep it) but retailer and shopper lose.  The way Clear Returnshas brought this important customer level actionability to large retailers is through our predictive data platform, which scores and segments customers based on what they keep, then allows automated service responses during and post transaction. The return can be prevented before it occurs.

Good shoppers having a bad experience can be better serviced, fraudulent returners and particularly wardrobers can be effectively blocked.  The seller is protected, good shoppers stop subsidising the cost of fraud – and get an improved overall experience.

Closing the expectation gap

The eBay seller has to reduce the risk of surprises for the buyer in order to minimise the likelihood of a return. While this is more complex for enterprise retailers, at its heart the challenges are the same

Apart from delivery issues, an eBay seller is most vulnerable to those returns caused by expectation gaps and quality control issues.  They are are not obliged to offer refunds because something doesn’t fit  – only if they fail specifically to deliver on a promise.  Providing good measurements and fit information will cut down on questions and get a better sale price, because it reassures the buyer – but ultimately the buyer chooses what they are prepared to pay for something that may or may not fit.

What the seller has to do is reduce the risk of surprises for the buyer – with good descriptions, correct labelling information, images from multiple angles – and most important of all, highlighting and photographing any flaws or faults.  After delivery issues, undisclosed flaws and mis-description are the key causes of returns. And as many retailers will recognise, the nearer the top of the price range the item sells at, the less toleration the customer has for product issues.

Awareness of the scale of the problem drives action

Because the eBay seller feels the pain directly in their pocket, and because for the most part they have a very simple supply chain and touch most parts within that process, their hands on tactics for reducing returns have become pretty sharp.  The data is very real to them, even if once the return occurs, they have little choice but to understand why and ensure the same thing doesn’t happen again.

The enterprise process is far more operationally complex – yet at its heart the issues are the same. First the scale of the problem needs to be understood – from data comes insight, then action. It is by closing the expectation gap, spotting problem products, tackling the major cost points and differentiating problem customers from the majority of good shoppers that ultimately determines profit.

Posted by Vicky Brock