By Stuart Greenfield, sales director at Advanced Supply Chain
There’s an emerging trend of retailers making ‘speed’ the number one priority for reverse logistics. Emphasis is shifting from cost-first decision making, which has long influenced returns strategies.
Rather than grappling with decisions about whether to charge shoppers to send products back or scrutinising supply chains to cut costs and reduce the financial impact of returns on margins, retailers are now concentrating on how they can make returns processing faster and slicker. The strategic shift is being driven by goals to achieve optimum selling prices, encourage re-shopping and build brand loyalty.
Optimising selling prices and sales
The growing volume and frequency of customer returns risks creating an expanding ‘returns void’ – the time that stock spends tied-up in reverse logistics and unavailable for sale. Products sent back need to be inspected and may require some form of repair or restoration work. For example, clothing might need cleaning or steam pressing. These are important quality control procedures but can mean a void of stock worth tens or hundreds of thousands of pounds dwelling in returns processing.
A ‘returns void’ can create two significant pain points for retailers. The first is missed sales, meaning an immediate impact in terms of lost revenue, as well as a longer-term impact. ‘Out of stock’ scenarios can affect the stickiness of shoppers and reduce their willingness to revisit websites. It can quickly drive them to competitors’ ecommerce sites.
The second pain point of a ‘returns void’ is asset depreciation. The time that stock spends in the returns process erodes the opportunity to sell goods at Optimum Selling Prices (OSPs). This is particularly risky for seasonal lines, where there’s shorter windows to sell goods at their OSPs, and when consumer demand can quickly switch to the next trend. Achieving OSPs can often prove a more effective strategy for protecting margins, rather than cost cutting in supply chains.
Re-shopping after returns
Part of the returns process involves issuing customers with refund. Retailers are increasingly keen for this refund to be spent again, meaning an item being sent back doesn’t spell the end of a shopper’s purchasing journey. This is why there’s a growing focus on the timeliness and speed of returns processing. Quick refunds are becoming something of a silver bullet for returns. If shoppers get their money back quickly, they are more likely to re-spend with the same retailer. Re-shopping helps to address the overall profitability of returns processing.
ASC research of 2,000 consumers has shown that around 7-in-10 shoppers are more likely to re-shop with the same retailer if they receive a speedy refund. To achieve this, retailers need connectivity and accurate data throughout reverse logistics, which enables fast, consistent and diligent quality control of returned products. This creates the ability to appropriately and quickly issue a refund.
Building brand loyalty
Consumers want to have the freedom of trying products to see if they meet their expectations. They also want to have the confidence to know they can physically check that an item matches how it has been described online. If an online order, genuinely, isn’t right for a customer, shoppers expect to be able to send it back. Making this quick and easy can prove effective in building brand loyalty.
Slow and clunky returns processes frustrate shoppers. Not only will they be less inclined to spend again with the same retailer, but they are also likely to vent their dissatisfaction online. Social media and review sites can become quickly filled with negative experiences and opinions, creating a damaging digital footprint for retailers.
Improving transparency throughout reverse logistics can enable retailers to better manage consumer expectations. Shoppers can be kept up to date about the status of their returned item and issued with a timely refund to avoid frustration and dissatisfaction.
Quicker returns processing is becoming the number one priority for reverse logistics. Forward-thinking retailers are increasingly realising that this can deliver greater, long-term benefits for margins than a cost-first approach to returns.
For more information about how to optimise the speed of returns, contact ASC. Email: enquiries@advancedsupplychain.com
