Season Two of “House of Cards” is not the only thing to be returning on Valentine’s Day.
With more and more people purchasing gifts online for their loved ones, retailers can expect a proportional increase in gift returns this Valentine’s Day.
Kurt Salmon, a retail consultancy, estimates that around a third of all Internet sales get returned, and the National Retail Federation (download their report here) posits that returns can even make up to 40% of holiday sales volume, depending on the category of merchandise.
Shelly Banjo of the Wall Street Journal wrote a great article on this topic. In particular, she highlights how the convenience of online shopping (undoubtedly being helped by the promise of free returns) is eating into e-retailers’ bottom lines.
The damage that returns deal to e-retailers’ bottom line is serious, with some retailers noting that the act of customers returning the product may sometime cost them more than a lost sale.
Returns represent a significant cost to retailers that has room for optimization, and many are turning to various solutions to mitigate this cost.
For example, eBags Inc focuses on getting returns back into circulation, whilst Amazon empowers their customer service representatives to offer consumers gift cards or discounts to keep their products.
Unsurprisingly, retailers are also turning to data analysis to streamline operations, whether it be to use data to help customers estimate fit, or to identify which shoppers are ‘chronic returners’, affording them insights into to how to solve the problem.
This move is in line with a report by McKinsey & Company, which highlights the power that big data and analytics have, enabling retailers to transform the way they do business through understanding their customers and their service better.
It seems that the fundamental question at hand is how best retailers can balance the need to drive sales and deliver a great customer experience with simple economic sensibilities.
With the speed at which e-commerce is revolutionizing the way we think about traditional retail, an important next step would be to look into how expectations have changed, and how old processes can be reworked to deal with the nuances of the modern customer.
How can E-commerce reinvent the way we do business?
About Loop: Based in Silicon Valley, CA, Loop is changing how retailers approach their top e-commerce pain-points by providing an innovative, patent pending shopping and gifting platform that removes the obstacles consumers face when trying to buy a real physical product as a gift. They were recently selected by Forbes as one of 12 companies “moving global commerce forward.