08/09/2015

By Eric Fergusson, Head of Retail Services at eCommera

A few years ago, aside from the large mail order houses, the eCommerce market was pretty small and no one really cared about the profitability of the online channel as it only accounted for 1-3% of total sales. Today, eCommerce is fundamental and makes up a huge proportion of retailers’ revenue.

However, when online orders increase, so does the rate of returns. Although this is not a particularly new problem, it is one that has become increasingly important for retailers to manage effectively, in order to succeed.

It is also important for retailers to remember that a high rate of returns doesn’t always have to mean you’re making losses. As online retailers such as ASOS and boohoo have shown, targeting consumers at a lower price point means retailers can still make a profit even with a high level of returns. It is, however, essential for both pure-play etailers and omni-channel retailers to recognise what is required to make an efficient returns process - from the moment they receive a return from a customer, right until they put it back on the shelf. But to do this, it is imperative that retailers focus on the less ‘sexy’ stuff; the operational processes. These may include having a clear returns policy, implementing a rapid and effective process within the warehouse that ensures the product is made available for sale again quickly, a communication plan with the customer to make sure they are aware their return is being processed; whatever the focus may be, it has to be executed to perfection.

However, while this may seem easier for online-only etailers such as ASOS, who have one main warehouse; those who have both a website and stores across the country can come in to more difficulty. For example, if a consumer buys something online and takes it back to the store, where does the product get fully processed as a return? Where does the item go back on sale? These are both important questions that need answering, and can distinguish a good returns process from a bad one.

Brand identity also plays a key part. Retailers need to fully understand who they are selling their products to and target those people effectively, particularly in female fashion. Photography and written content are key to a consumer and can make a huge difference to the purchasing decision. It is also important to display things such as the measurements and fabric of an item, and to have a model who is representative of your brand and, more importantly, your consumer. Think about it. A size 8, 60-year old has a very different physique to a size 8, 20-year old. So not having the right information and feel on your website can be the difference between securing another new loyal customer and losing one. It’s simple: if a retailer is selling a dress, then they need to make sure the way their dress is presented to the customer reflects how the customer would want to look and feel in the item. It’s remarkable how often this is forgotten. Getting your brand identity right will ultimately mean you have a lower rate of returns.

What it comes down to is that returns are becoming part of the sales journey for a lot of consumers. It is becoming apparent that the retailers able to build this into the journey and harness the technologies available to help manage it, are the ones that will thrive. The question is, how many retailers will recognise this before it’s too late?