Online Retail Faces Big Problems with Returns

Online retail seems to face a litany of problems. A very prominent one among them is the return of goods. To put it simply, returns are disproportionally common with online shoppers. In fact, it’s so disproportionate that it’s really costing the online retailers and it is starting to bear down on profits.

While sales themselves are growing exponentially (at nearly three times the rate of brick-and-mortar shops) almost one-third of online orders are being returned. Compared to the 9 percent of merchandise that is returned to physical stores, that huge discrepancy comes at a big cost. With free shipping, and often free returns, the cost of processing it all can reach up to 65 percent of the total cost of the goods sold.

How Online Retail Can Prevent the Problem

Retailers aren’t happy and they are working against this trend in a variety of ways. Some companies try to address the reasons that make customers send things back directly. Most obviously, this includes clothes that don’t fit and items that don’t look as expected because of misleading or lacking information. Companies like Dockers.com and ModCloth have taken measures that include encouraging customers to share pictures of themselves wearing the clothes to show how they look on “real” people. They also provide more and more info about their sizing—inches for example, in addition to the sizes themselves.

Other companies like Amazon.com have different ways to return goods that cut down on their costs. Amazon offers lockers in stores and gyms for returns, as well as a new partnership with Kohl’s Corp that lets customers return goods without the associated shipping costs. Customers choose a return facility near them and drop the product off there at a time convenient to them.

According to a study done by UPS, 75 percent of online-shopping Americans have returned merchandise this year by shipping it back to the merchant. This is hugely disproportionate to the goods bought in a store. Another drawback of returns with online shopping is that while roughly two-thirds of people that return items in physical stores make another purchase during their visit, this does not at all apply to online retailers. As a result, it’s starting to affect the business model.

Decline

Alternative Methods to Fight Back

Other companies offer benefits for buyers who waive their right to a free return. For example, Wal-Mart offered lower prices on items in 2016 if the customer agreed to opt-out. Should they then change their mind after all and wish to make a return, they pay a $5.99 fee and 5 percent of the item price.

There are various different ways companies are using returns—and a lack thereof—to both cut costs for themselves and to appear more appealing to the customer base. Best Buy Co. offers longer return windows through its loyalty program. The company allows customers that spend more than a certain amount per calendar year double or even triple the return window—up to forty-five days instead of the usual fifteen. In contrast, other companies try to get returns back as quickly as possible in order to resell items that are not damaged or otherwise faulty. This allows them to make more sales before price lowering.

Best Buy offers customers a prepaid shipping label for easy returns; however, the fee is deducted from the refund amount the customer receives. This is another way to save money for the electronics giant. Last but not least, a new way of returning goods has recently popped up. Start-ups like Happy Returns accepts returns for online retailers like Tradesy Inc. and Everlane, hinting at the possibility of returns not only becoming cheaper for companies, but also easier and more convenient for the customer.

Time will tell what innovative return policies work best with clientele, but one thing is abundantly clear – adaptation is key to survival in the retail world.chalkboard

Millennial Women Tell Retailers How to Improve the Shopping Experience

The twenty-first century has had a significant impact on the way people shop, especially when it comes to clothing and accessories. This leaves retailers asking more questions about how they can improve the shopping experience, often without concrete answers.

At Alert Tech, we recently hired a retail technologist to answer many of the pressing questions retailers have. We conducted an informal survey involving Millennial women between the ages of nineteen and thirty-three, and what was uncovered about their shopping habits and retail preferences was quite surprising.

Most Women Go Online Before They Buy

Over 75 percent of the women surveyed stated that they go online and choose what they want to purchase before they go out, suggesting that most purchases are pre-meditated and not a spur of the moment decision.

All participants agreed that they went shopping with a specific product in mind. However, they also admitted that each trip typically ended with multiple purchases being made – the majority being goods and accessories that would complement their primary purchase.

Shopping Can Be a Frustrating, Time-Consuming Experience

All participants agreed that upon entering a store they begin to browse through the store’s offerings, hoping to stumble upon their pre-meditated purchase while moving through the racks and shelves.

Because the presentation of goods differ from store to store—some arranging items by color (which each of the twenty-two ladies agreed they hated), some by season, and some by designer—the participants said that they find themselves aimlessly wandering through a store feeling confused. They felt lost and frustrated.

Other retail issues voiced by the participants were:

  • They are unable to find the product they want. As a result they head to a competitor’s store to find an alternative product despite several other alternatives likely being available in the store they are in.
  • They are unable to find the product in the correct size. They then visit different stores in hopes of finding a product that will fit.
  • They find the right product and right size but they don’t like it. They give up on that store and head to another.

Approximately one-third of the participants said that they would consider continuing to browse through the products of the store, but their feelings of disappointment lessens their desire to buy. The remaining two-thirds stated they would go to another store and start the purchase process all over again.

Your Product Is Not Worth the Wait

Each woman agreed that after finding the right size she would head to the fitting room to try it on. Eighty percent of the time the participants said they would buy the product.

The issue the ladies had was having to wait to try it on. The participants all agreed that unless the product was for an important event (i.e. for a wedding or as a gift) they would not wait:

  1. For a fitting room
  2. In line to purchase the product

One solution may be to allow consumers to buy a product online and try it on at the store. Twenty of the twenty-two participants said that if they see a product they like online, they would head to the store, walk through the door, and try it on immediately—that is, if there wasn’t a wait for the fitting room. If it fit they would keep the item and if not, they would exchange it.

Here’s more good news for retailers: the participants said that if complementary products were also available to try on at the same time, there was a 90 percent chance that they would make more than one purchase and they would not head to a competitor’s shop. This can be even further enhanced if a retailer had the ability to check into the purchase history (i.e. style, color preference, size, etc.) of a shopper so that sales staff can make more intuitive product suggestions.

Personal Service Dramatically Increases Chance of Sale

Each survey participant had visited Victoria’s Secret at one point, though only eight had used the fitting room. These participants were particularly appreciative of the call buttons available in the fitting room to call an attendant when they needed a different size, color, or product (especially in this situation, where she would otherwise need to completely re-dress to find another garment). Each woman agreed that personal service significantly increased a retailer’s chance of making a sale.

Personal service can also eliminate the aimless wandering women find themselves doing when in a store. Customers are busy people. If you save them time by offering what they want when they want it, you are more likely to make a sale on either the original product or the complementary product(s) offered.

Understand Buyer Behavior with Alert Tech

Retailers can enhance their buyer’s experience from the beginning through to the end with Alert Tech’s innovative retail solutions. With over twenty-five years of experience in retail and actively present in over seven thousand stores, our platform has been proven to boost sales, improve the customer experience, and give retailers the insight they need to survive and thrive in today’s retail industry.

How Retailers Are Answering the Age of Consumer-Driven Retail

The retail landscape today looks quite different than it did a decade ago. How customers are making purchasing decisions and buying items has changed significantly. Customers will often be physically present in a store, yet still consult their smartphone to complete the buying decision. They will read product reviews, compare pricing, take pictures, and sometimes even purchase the product itself.

Rather than struggling with this consumer behavior shift, successful retail companies are coming out on top by embracing technology and blurring the line between the online and in-store shopping experience.

Delivering a Seamless Customer Experience Throughout All Retail Channels

From discovery to being ready to buy, next generation shoppers want to be able to do it all with minimal effort.

Retailers are responding to this demand by investing business capital into syncing systems. Global inventory management, merchandising, and logistical data meets with online platforms to provide a true omnichannel experience. This gives customers the information they need to know at their fingertips, such as real-time item availability and shipping times. Multi-channel communication also means that a retailer can eliminate overselling by viewing unified sales and inventory information across all stores and retail channels.

Empowering Employees and Customers with Technology

As global trends have shown, the prevalence of smartphones in brick and mortar stores is only going to increase over the next several years. Forward focused retailers have accepted this fact and have shifted their focus to providing a more mobile-friendly customer journey. Some examples of this which can be found in several stores today include:

  • Customers can bypass the traditional time-consuming checkout process and by using optimized websites and native smartphone apps.
  • A growing number of retailers are integrating in-store pickup or BOPIS (buy online, pickup in store) technologies.
  • Retailers are providing customers with “call” buttons which allow them to receive service-on-demand from a sales associate.

Today, customers have a higher expectation of sales associates than ever. This new engagement technology means that employees can quickly respond to the needs of a customer, help them find the most suitable product, and increase the likelihood of a customer walking away with a purchase.

Gaining Better Business Intelligence to Drive Sales and Loyalty

How customers research and buy items is becoming more technologically driven, but it still does not compare to being able to physically touch and try on items. This creates an opportunity for retailers to utilize technology in order to deliver the ultimate customer experience.

Retailers now have the resources available to keep up with consumer-driven retail. With access to these tools, they can deliver a better and more memorable customer experience while driving sales and profitability.

4 Reasons Brick-and-Mortar Continues to Win Over E-Commerce

Even in an age where technology rules, people prefer shopping in store. Long live Brick-And-Mortar.

Read more

How to Reduce Retail Apparel Returns

Each year, The Retail Equation releases a survey covering “Consumer Returns in the Retail Industry.” In 2015, perhaps the most notable stat was “Returns as percentage of total sales,” which came in at 8% according to the National Retail Federation (NRF).

That is of particular significance when you consider this: the total industry sales as tracked by NRF equated to $3.256 trillion. Which means that 8% of that sizable figure is $260.5 billion. Now, imagine if the industry could get even just some of that money back.

That’s an industry average; what are your annual sales figures and revenues? Are you hitting your targets and goals for growth and earnings? What would it do for your company if you were to add back even half of that 8%?

Read more

The Power of the Customer’s Journey (& How You Can Use it to Fix Your Fitting Rooms)

How intimately familiar are you with your customer’s journey? Do you know what brings your customer into your store? Do you know what happens while she’s in your store to make or break her decision to buy from you? What about after she leaves – what can you do to help ensure she doesn’t return her purchase?

An analysis of your customer’s journey can leave you with valuable insights into areas of weakness/opportunity.

Read more

Just How Important is Human Touch in the Shopping Journey

A new survey released by Mindtree challenges the idea that most shoppers do not like to be disturbed by sales associates, and highlights the power of human touch to boost sales (view the full infographic here).

With the growing importance of eCommerce, it’s easy to lose sight of the one thing every sale has in common: people. And people really do like to buy from other people. Not long ago, brick and mortar retailers were casting glances over their shoulders, worried about what the rise of online shopping would mean for their sales. It turns out some of those fears were unfounded as the majority of shoppers still prefer to do their shopping in the store.

Read on to learn more about how the human touch helps to turn shoppers into customers.

The Human Touch Matters to Shoppers

Personal interaction is one of the most effective ways to encourage a shopper to become a customer. One needs to look no further than the results of Mindtree’s 2016 shopper survey for confirmation. The study found that:

  • 70% of shoppers want to interact with sales associates;
  • 34% of customers sourced information from sales associates, and 28% asked associates about offers and discounts;
  • Sales associates are a close second to websites and online reviews as sources of customer information;
  • 40% of shoppers decide to make a purchase following a positive interaction with a sales associate, versus 28% who make a purchase without any interaction.

When it comes to making a purchase decision in the store, the value of personal interaction with a member of your team is undeniable. However, the same study observed that 40% of shoppers say they are “never able to find a sales associate” when they want assistance. Clearly, there is some room for improvement when it comes to meeting shoppers’ expectations!

What Does this Mean to Retailers?

In-store sales and human touch boost the bottom line for a few reasons:

  1. Cross-sell and upselling: A sophisticated algorithm can make recommendations based on what’s in an online shopper’s cart, but it can’t make judgments based on what the customer is wearing, or register their look of delight or disgust at suggested items. An in-person connection with a sales associate lends itself to unparalleled upsell and cross-selling opportunities.
  2. Increased sales, decreased returns: Customers who have had the chance to touch and try on merchandise are more confident in their choices. As an example, let’s look at apparel shoppers. When they’ve interacted with a sales associate in the fitting room, shoppers are three times as likely to buy products from that store, and their return rates are dramatically lower.
  3. Associates can do their job even better when supported by technology: When sales associates are empowered to do their job with helpful technology, the benefits of in-person interaction can be significantly enhanced. For example, fitting room call buttons allow sales associates help customers in the fitting room on the customers’ schedule – without disruptive and ineffective door-knocking.

As it turns out, there really is no substitute for the hands-on nature of personal service. This is an area where traditional retail stores continue to maintain an edge over eCommerce.

The Human Touch Contributes to Retail Success

The majority of shoppers want to interact with associates, and shoppers who have this interaction are far more likely to make a purchase. Smart retailers will do all they can to ensure that when a shopper visits their store, that individual experiences a positive human connection.

Can a Fitting Room System Really Boost the Bottom Line?

Increasing store revenues is a challenge you can approach from any number of perspectives.

How can you adjust operations to increase revenue? One answer is a targeted customer service process that supports the customer purchase journey.

But how can you prove that such a process has an impact on revenue? What metrics will actually show a link from the changes to increased revenues?

Data-enabled fitting room systems offer a solution. These systems leverage technology to make your store more adept at serving customers and meeting their needs. Fitting room systems can provide improved customer service as well as increased revenue.

Read more

Just How Important is Human Touch in the Shopping Journey

A new survey released by Mindtree challenges the idea that most shoppers do not like to be disturbed by sales associates, and reveals the highly positive influence sales associates have on shopper purchases.

mindtree-shopper-survey-sales-associates-influence-in-purchase-journey

Liked this Infographic? Click Below to Share It

 

Want to Learn How to Increase Shopper and Associate Interaction in Apparel Stores? Download a Sample Chapter of ‘Fit Happens’

 

Download A Free Chapter of Fit Happens!

5 Brilliant Ways to Use the Cloud on the Sales Floor

When it comes to retail success, the sales floor has always played a pivotal role. This hasn’t changed, but the sales floor itself has transformed dramatically since the rise of the digital age. Using new technologies, retailers can now use software to track data, and real-time analytics to maximize salesHere are 5 brilliant ways cloud-based systems create a more efficient sales floor.

Read more