Whether it’s due to mispacks, damaged goods, inevitable peak season returns or services like Try Before You Buy, there is a tsunami of returns coming and businesses like yours need to be ready for it.
However, our research has found that more than half of all retailers (51%) claim their margins are being squeezed by returns, yet 69% are not deploying any technology solutions to help process them.
This means that there are too many retail businesses who won’t be flood-proofed before the tidal wave hits.
But what exactly is a returns tsunami?
It’s estimated that 28 percent of holiday gifts bought in 2017 were returned at a value of $90 billion, while it’s said that it takes an average of 7 people to touch just one return. That’s a huge amount of returned inventory and money spent on a process that doesn’t increase revenue.
Furthermore, initiatives like ‘Try Before You Buy’ (TBYB), should you choose to offer them, could increase returns even more. The TBYB model enables customers to order multiple items before deciding what they’d like to keep with no upfront cost; they simply return anything that they don’t want. But our research into the TBYB trend reveals that customers would return an average of over three more items each month with this sort of shopping model in place, resulting in a rise for the “serial returners” culture.
The final cause of a tsunami of returns lies in the avoidable returns. These are returns caused by incorrect items being shipped out, products being damaged in transit, or faulty goods received. Preventing these types of return are within your control, but they rely on efficient workflows, transparent policies, strong supplier relationships and effective inventory and warehouse management systems being present within your business.
What does it mean for your retail business?
Without the right systems and workflows in place, there are common pain points you may experience from a returns tsunami hitting your business:
- A lack of business efficiency and scalability
- Inaccurate or unobtainable business data
- Be inundated with quality issues for inventory and product delivery
- Be unable to monitor and analyze your returns data
- See significant effects on your margin and profitability
- Lack the ability to understand your serial returners
- See an increased number of bad reviews (on your own site and / or on social media channels)
- Receive lots of calls in to your customer service team
If any of the above points resonate with you, we’ve created a returns readiness self-assessment that you can take right now, which will assess your current set-up and capabilities against benchmark descriptions.
Based on your results, you’ll then gain actionable advice on where you can focus improvements.
So… are you ready for the returns tsunami? Take our self-assessment now to find out.