How can retailers avert a holiday returns catastrophe?
Holiday returns can strain retailers in the best of times. Thanks to the still-raging novel coronavirus pandemic, retailers are facing down what promises to be an unprecedentedly e-commerce-heavy holiday season, and experts are predicting that the returns situation could be even tougher.
In a BrainTrust Live session on LinkedIn discussing the challenges retailers face this holiday season, both Shelley Kohan, associate professor at Fashion Institute of Technology, and RetailWire contributing editor Patricia Waldron, founder of Vision First, pointed to significant returns problems that retailers are likely to face come January.
“When we talk about reverse logistics, when we talk about all the merchandise coming back if we think about just being able to get the products back in stock once they’re there, they’ve missed their prime selling season, how’s that going to impact the margins?” said Ms. Kohan. “And also looking at having all this merchandise come back, now that adds to your book inventory.”
“I’m wondering if sending things out free on e-commerce and taking returns with free shipping, if we’ll ever even get to black this year for some retailers,” said Ms. Waldron.
Retailers have been working to address the latter concern by establishing more options for returning merchandise other than the mail, as CNBC reports. A few third-party returns processors are teaming with brands to open pop-up kiosks specifically for product returns in shopping malls and at retail locations like Walgreens and FedEx.
Mall owner Simon Property Group is setting up its concierge desk at six major malls to receive returns from 12 big-name retail brands, including Levi’s, Gap, Vera Bradley and Dockers. The brands will direct customers to a nearby mall via their online return forms to encourage a physical return rather than a more costly shipped return.
While free return shipping may be rough on retailers, it remains a customer expectation, with 34 percent of consumers reporting lack of free returns shipping as a top reason for cart abandonment, according to new research from FedEx.
“No one has figured out reverse logistics in terms of returns for the digital business,” said Ms. Kohan.
DISCUSSION QUESTIONS: Do you see retailers being able to effectively push customers to managing returns in person rather than via return shipping? How might retailers mitigate other costs that come with an influx of holiday returns?