Return to sender, dress is a no. Not my style — even with a discount code
Welcome to the busiest time of the year for retailers
This week marks one of the busiest sales periods for retail, with Black Friday being a central focus for consumers and the media alike. During the holiday period it’s estimated that most traditional retail brands will make between 70% and 90% of total revenue in-store during this period. But if you’re like me, I can’t think of many more things worse than being stuck in queue this Friday, and it seems that many other consumers also agree. According to Adobe, last year Thanksgiving and Black Friday netted $4.45 billion in U.S. online purchases, with smartphones accounting for a record $1.5 billion of that amount. This year, it’s predicted that Black Friday will be bigger than ever, as for the first time, sales are expected to exceed $3 billion, an increase of 11.5% over last year with online and smartphone-based sales smashing all records.
There’s no doubt that the retail sector is at the forefront of digital transformation. Mobile is now an integral part of the shopping experience in areas ranging from fashion to sporting goods. The focus for retail this year has been on how to utilize digital technologies to personalize omni-channel customer experiences in order to ensure that products, offers, and content remain relevant.
So, all’s good in retail in regards to digital transformation then?
The stats above are compelling, and many retailers will have a bumper holiday period this year, but all’s not rosy. Why is this the case? The clue is in my “digitally transformed” Elvis quote at the start of the post. You see, online and mobile channels have made shopping seamless, convenient, and with flexible delivery options. It means that you don’t have to wait very long for your bargains to arrive.
But that’s not all — in the search for differentiation and customer loyalty, many digital retailers have now shifted focus to providing seamless and convenient returns. For example, Zappos, a subsidiary of Amazon and an online shoe and clothing shop, have led the way with a 365-day returns policy and free two-way shipping. Today, if you don’t like a product you’ve bought, it’s simple: just return it, or even better — if you can’t decide which new sweater to buy, then just buy five and send the four back that you don’t want. Shoppers have never had it better.
But for retailers, this is where a new challenge caused by the digital transformation begins to emerge. According to the National Retail Federation, the total of U.S. annual returns in 2015 reached $260.5 billion, and in the UK, £600m of products bought over last year’s Black Friday and Cyber Monday entered into returns processes. The obvious immediate impact for retailers is on revenue, but by the time these returns go through the process of being repackaged, the costs of being redistributed correctly to either distribution centers or back to store increase, especially during the holidays. By then, many products become out of season, cannot be sold, or must be discounted even further — thus magnifying the impact on retail revenues and profit even further.
What’s the solution to the returns challenge?
According to Shorr, who conducted research into the returns challenge last year, returns are increased by poor product portrayal or fit, especially in fashion. So, the first rule is for retailers to make sure that their online channels accurately portray size, colors, and other product attributes clearly. Beyond this though, it’s about digital retailers making sure that they have full visibility of the customer journey. Visibility into all transactions up to the purchase is essential, whether online or in-store, followed by visibility through the entire returns process.
Today, this journey happens through interconnected applications, increasingly via mobile apps for the customer and via returns or supply chain apps for the employees managing the returns process. This means that the adoption of an intelligent application performance management solution that can provide end-to-end transaction performance visibility of these applications is critical, as any slowdown causes customer experience issues and impacts directly on revenue. On top of this, utilizing deep application analytics like Business iQ can help digital retailers to understand in real-time where products are being returned, by which customer, and at what value — helping them to improve and fine-tune their returns process for future holiday seasons.
So, while the world will be watching the revenues generated this Black Friday and Cyber Monday, I’ll be on the lookout for this year’s returns figures to see how retail is adapting to the new challenges that digital transformation brings. But I wish all retailers a great holiday season, and as for me, I can’t wait to bag a bargain this Friday!
To learn more about the challenges that digital retailers face, please download our report, An App Is Not Enough.