June 29, 2020
Instore returns technology will be instrumental to deal with stockpiled returns
Unsurprisingly, the COVID-19 pandemic pushed online shopping to unprecedented levels. The challenge for omnichannel retailers is that as their stores now re-open, they’re opening the floodgates to a returns deluge.
eCommerce spiked during COVID
The impacts of the pandemic were not evenly shared, with major grocers and mass-market retailers benefiting far more than verticals such as apparel and jewelry. For example, Target reported a huge 141% increase in digital sales. That said, overall ecommerce volumes appear to be up around 40% compared to benchmarks, and 55% of online shoppers have placed more orders online as a result of coronavirus.
While slimmer margins online and the precipitous drop in offline sales are of course major concerns for retailers, there’s another hidden impact to this shift towards online purchasing.
eCommerce purchases are returned at a higher rate than in-store
Buying online can make it harder to know what you’re getting. That’s one reason why ecommerce purchases are significantly more likely to get returned. The Reverse Logistics Association estimates that an ecommerce purchase is over 3 times as likely to be returned compared to an instore purchase, with estimated return rates at 25% online compared to just 8% from instore purchases.
The implication is clear – the movement of demand online is also likely to incur a sizeable increase in return rates. The question, then, is how retailers will be able to effectively process, track and turn these returns to their advantage.
Customers prefer to return goods in stores
To answer that, let’s take a look at the potential channels for returns. 77% of surveyed Americans prefer to return in store, per Inmar research. Of course, if the stores aren’t open, this might not be an option. That said, many retailers have actually extended returns policies with the explicit aim of allowing customers to return items to their stores.
- Gap will let customers return items purchased at any time in the first three months of 2020 until July 1st
- Kohl’s 180 day return window is extended to 30 days after store re-openings
- Sephora accepts instore purchases 30 days after reopening and doubled its online returns window to 60 days
- Victoria’s Secret added 30 days to its returns policy
Consumers are creatures of habit. Most people won’t return something until they need to – especially if there’s a global pandemic occurring, encouraging them to stay inside as much as possible. It seems likely then that much of this pent-up returns volume will come through stores eventually, as customers become more comfortable visiting stores again.
Right now, shoppers are worried about coming back to stores, naming crowded stores as a key fear in research by Wells Fargo, though 40% still expect to spend the same amount as they usually would, indicating that while uncertainty remains, retailers who can reassure customers that they’re safe and welcome will be able to maximise the value of their stores once they reopen.
Stores need returns technology
All of these factors mean that stores are going to face a high volume of returns and customers who are unsure about spending time in stores. This is where automation and returns technology can make a big difference to retailers, enabling them offer their customers safe and convenient ways to hand over returns.
Automated self-service returns kiosks mean customers spend less time standing in lines waiting to hand over returns. Checkout lines will be an area of pressure for stores, as shoppers maintain distance between each other, significantly increasing the length of lines. Some customers just want to drop off a return – enabling them to skip the wait and instead use a self-service kiosk gives them both extra time and valuable space that will help to reassure them of their safety against infection.
Of course, enabling the process of instore returns is essential, but retailers should also see this as an opportunity to better understand and market to their customers. Using digital kiosks allows retailers to accurately capture returns data, from return reason to customer profiling, and helps provide an overall picture of the impact of returns on the business.
While some will see the incoming returns as a challenge to defend against, leaders in customer experience are seeing this as an investment in the lifetime value of customers.
“Some brands make it complicated and difficult for the consumer, but that is a short-term vision… They won’t come back.”
Melanie Travis, Andie CEO
At a time when consumers are experiencing high levels of uncertainty, delivering a great customer experience when they return to stores again will be crucial, and product returns will be a key aspect of their next shopping journey.