Graham Best is CEO of ReBOUND
Three years ago, Tom Enright, a senior analyst at Gartner, described returns as the new battleground for retail. He predicted an increasing surge in the number of returns made from online retail purchases, calling on brands to address this issue and catch the secret expenditures hidden in their processes.
Despite this clear warning, retailers still haven’t woken up to the importance of getting returns right. It’s costing around £20bn annually, which doesn’t even include the millions in lost revenue from dropped baskets. It’s a growing problem and one that few ecommerce leaders are measuring, let alone tackling head-on.
But why? In terms of efficiency alone there are a number of major cost benefits. In addition there’s also scope for a company’s returns process to become a key driver for sales and brand loyalty – shoppers will buy more regularly knowing that they won’t be inconvenienced for exercising their consumer rights. In fact, 63% of consumers say the returns experience now factors into which retailer they choose to shop with online, according to JDA and Centiro.
Against a legacy of inaction, it’s about time retail’s senior leaders faced up to the returns issue. Here are three questions I urge the board of any major retailer to bring to the table next time they meet:
What is the extent of our returns problem?
It’s hard to fix something that you don’t know about. For many retailers, the biggest challenge is simply understanding how robust, or leaky, their returns process is.
This comes down to having the right data and senior management prioritising and reviewing it. It goes beyond just spotting a high returns rate; an accurate picture of your returns performance requires data from across the organisation as well as digging into the granular detail. For instance, comparing country-to-country returns rates could shed light on the specific challenges faced in different markets. Asking and understanding why consumers are returning items will give you business intelligence that can feed into the product experience. While data on their returns behaviour is needed to understand how you can make it more convenient.
Crucially, the issue can only be tackled successfully if key information comes together cohesively and in one place. It’s success requires dedication from any retailer; but if achieved it can turn a perennial problem into an opportunity for real growth.
Who’s taking ownership to fix this?
Of course, this kind of collaboration is only possible with the right person bringing it all together.
Traditionally returns has fallen through the cracks as executives tackle alternative priorities they are more closely judged by. Logistics directors have typically focused on the outbound prize, increasing delivery speed or expanding their delivery options, for example. Meanwhile ecommerce directors are more eager to drive sales and basket conversions, directly and obviously adding value to the organisation.
In many ways, this is the root cause of the ongoing returns problem. It requires as much investment in time and resource as successful delivery programmes or attribution campaigns, as well as the same level of cross-departmental collaboration. These competing priorities require a sole point of responsibility to drive returns efficiency and turn this way of working around.
It’s no surprise therefore that brands with a dedicated “head of returns” are winning. The likes of Asos [IRDX RASO] who topped our leaderboard in the latest ‘Great Returns Race’ benchmark report, are evidence of this and are among those retailers leading the fight against poor returns. A quick search on LinkedIn, however, shows that there are only approximately six ‘heads of returns’ working within the retail sector in the UK. More retailers would benefit from having someone lead their returns operations.
How should we be investing in returns?
Simply getting the basics right – having visibility of returns, offering a choice of local return methods and hiring a dedicated returns manager – will see a number of key benefits, not least improved efficiency and a better balance sheet.
There’s also significant opportunities to drive real growth for a retailer overseas. Ensuring a brand has the right technology, systems and processes in place, with strong visibility over the whole returns cycle, can enable it to tweak its service depending on the choices and challenges of a particular region. This removes one of the major barriers to scaling internationally and can therefore, have a direct impact on business growth. Within this context, investment in returns is a no-brainer for many retailers.
Investment in the returns process will also add long-term value when hiring new logistics talent. Those looking to take the next step in their careers are looking for a forward-facing brand, taking its customer service seriously by investing in its core processes. Businesses demonstrating this commitment are more attractive choices for talented logistics employees.
Today’s retailers face increasingly competitive times. As the spectre of Amazon [IRDX RAMZ] looms over the ecommerce industry, brands should leave no stone unturned to rise above their peers and improve their offering for today’s fickle shoppers. Ensuring the returns process is outstanding, and not just working, will become an increasingly important differentiator.
The opportunity is there for retailers. It’s time to grab it.
Photo credit: small smiles (Fotolia)