Retail Recovery: Offering a Superior Returns Experience in Shifting Age of Retail

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Retail Recovery: Offering a Superior Returns Experience in Shifting Age of Retail

By Gopi Krishnan and Siddharth Raghuvanshi - 08/19/2020

Returns have become a thorn in the side for many retailers, and the current state of economics is no exception given today’s uncertain times. Historically, reverse logistics channel management and service strategies have largely been focused on customer satisfaction, but what gets ignored are the crucial elements of return costs, profitability and reputational risks.

As retailers look to re-open their brick and mortar stores, e-commerce is still expected to remain as popular as ever. And brands have had to shift their returns process strategy to adapt to current consumer needs and concerns.

According to the Returns Management Strategy: Recapture Revenue study, managing the “return and repair” process accounts for 10% of total supply chain costs. In complex supply chains spanning countries, distribution points and channel-types, inefficient processes can reduce profits by up to 30%. While the return process is continuing to account for a portion of supply chain cost, companies are also losing salvage value on the returned products. The UPS report, Recovering Lost Profits by Improving Reverse Logistics stated that high-tech manufacturers without a structured reverse logistics plan and process could be losing more than “50% of returned inventory value” since most of the returned products can be sold in secondary markets.

In today’s climate, consumers are anticipating returning items during the retail recovery stage. However, handling the returns process no longer needs to be just a necessary evil in the e-commerce world. When managed well, these returns can minimize losses incurred while providing an opportunity to build lasting relationships and increase customer lifetime value.

So, how do we create superior customer experiences as we move towards the retail recovery? A combination of in-transaction interventions using the power of shopper analytics can provide some pointers:

  1. Intelligent alerts on returns decision:

Many items that are sold cannot be returned at a full refunded price. However, if the shopper gets an alert while initiating a return on the approximate refund, that could bring in more process-level transparency to the customer.

Additionally, when the return of any item is subjective to the shoppers’ profile, retailers can create alerts on returns acceptance or rejection based on other factors, such as the returns history. In a few cases, if it makes no sense for the seller to take back the item incurring a shipping cost, they can suggest that the customer keep the product while giving a refund based on the return ROI estimation.

  1. Product Recommender

In most cases, the shopper is unsure whether they should go for an exchange or an alternative. An alternative could be an intelligent recommendation of substitutes with products of low return propensity and higher user ratings. In today’s “new retail normal,” this can help bring down return rates, while boosting the shopper’s confidence.

If applied optimally, product recommenders can add to positive customer experience and enhance brand value. While stores are resetting, this could also be an opportunity to sell out-of-season inventory and offer bundles via relevant complementary products at a discount to manage inventory and enhance customer value from the return transaction.

  1. Self-service shipment for product returns

Asking the customer to ship back a product they wish to return can be a difficult part of the return logistics from a customer perspective. In an era with rising and changing customer expectations, customers expect the return to be picked up just as it was delivered. In today’s climate where consumers are concerned about health and safety, it may be wise for retailers to schedule at-home returns and exchanges, request item pickup times from the customer, and then ship to a returns center. This creates an organized, low-touch or even contactless solution for pickup, shipping, tracking and tracing.

  1. Returns Loyalty Bank with Gamification

As retailers juggle to find new ways to retain customers and improve the customer experience at every touch point, they can bank heavily on technology to ease the process. They can further their brand’s innovation by leveraging gamification in the form of redeemable returns loyalty coins, with activating rewards and badges at major milestones and deductions on every return. These can be based on channels, returns frequency, product type and return window.

There is much to learn from credit card loyalty programs, which incentivize certain kind of purchases and point redemptions. In this case, with a clean shopping history, a customer can get more offers and better upgrades.

  1. Contactless and Low-Touch Self Service Omnichannel returns and Exchange

In times when self-service is pushed across channels to encourage contactless and low-touch resolutions, retailers can also be innovative and offer self-service for returns and exchanges. With this, customers would be able to access in-store, on-the-go kiosks for returns and exchanges. Nonetheless, the kiosks should be intuitive, user friendly and should have a responsive user interface accessible operated by customers and store associates.

  1. Refund Tender Recommender

During the retail recovery process, some customers will prefer a cash refund if they are not happy with the available options. If the associate is unable to convince the customer to purchase or exchange for an alternate product, it is wise to recommend the right tender for refund – cash, debit or credit card, merchandize credit based on type of tenders used, customer returns history and annual basket size.

Moving forward:

As the retail industry is moving into a “new normal,” companies are going to have to be more inventive and pay closer attention to returns management.

A bottom-line driven approach will help brands build a more sustainable model and gain customer confidence. Today, retailers have an endless amount of customer data, which contains information around sales transactions, return rates/patterns and related information regarding seasons, payment times, categories etc. Overlaying these with up-to-date and innovative technologies, such as artificial intelligence and machine learning can help them create a returns process tailored for today’s consumers. The future lies in offering value to customers which can reduce returns substantially. Where returns happen, the objective should be to minimize handling costs and maximize resale value. A returns experience that keeps in mind the shopper preferences, can help increase loyalty, differentiate the brand and sustain the enterprise.

Gopi Krishnan is Wipro’s Global Head of Industry Domain & Consulting Services Group; Siddharth Raghuvanshi is Wipro’s Domain & Consulting manager.

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