Margins on online sales are of significant concern to retailers because compared with selling via stores the delivery of goods to the home and via Click & Collect are somewhat slimmer.
Profitability via non-store channels is a sensitive and problematic issue and one of the key components of this are returns, which are the bane of many retailers. According to a survey from Barclaycard as many as 31% of retailers say managing the returns process has as an impact on their profit margin.
And a hefty 57% say that dealing with returns has an adverse effect on the day-to-day running of their business. This is because it is a time-consuming, labour-intensive, costly exercise. What is making things worse is the rise of the serial returner. A sizeable 30% of shoppers deliberately over-purchase and then return the unwanted items.
In the recent Customer Pulse Report 2016 from JDA/Centiro it was found that 4% of consumers had returned more than 10 items over the past 12 months. The reality is that there are some individuals within this returners category that are very costly to retailers when considering the value of the actual purchases they make versus the costs they incur to retailers.
According to a logistics specialist, retailers are fed detailed information on the most frequent offenders of returning goods. But this data is not utilised because there is unwillingness by merchants to single out individuals and potentially impose restrictions.
Even though it will be abundantly clear that these people are sucking the margin and profitability out of retailers’ businesses the prospect of the aggrieved customer turning to social media to vent their anger on the company is a sufficient deterrent to them taking any action to address the issue.
Instead retailers are presently considering various options to bump up their margins for online sales by increasing the threshold at which customers qualify for free deliveries and Click & Collect services.
There is some reluctance at this stage to segment customers – whether that is to offer different levels of delivery charges for specific groupings based on their lifetime customer values or to penalise the most persistent of serial returners.
But as increased sales are derived from non-store channels it seems inevitable that retailers will have to think more intelligently about how they deal with their increasingly acute returns problem and those individuals who inflict the most, unprofitable, pain.
Glynn Davis, editor, Retail Insider
K3 Retail deliver multi-channel solutions that enable retailers to create joined up shopping experiences for their customers whether they choose to buy on-line, direct, in-store or via mobile. It has over 20 years’ experience delivering award winning solutions, to more than 175 internationally recognised retail brands.