As ecommerce continues to grow it is also experiencing growing pains.
Increased sales are good but all the enticements of free shipping and more also lead to something that most online retailers dread: returns.
The Wall Street Journal is reporting on how this is impacting the online industry
Free shipping and lenient return policies have given online retailing a huge boost. Now, chains are mining their order data to get shoppers to keep more purchases.
Behind the uptick in e-commerce is a little known secret: As much as a third of all Internet sales gets returned, according to retail consultancy Kurt Salmon. And the tide of goods flowing back to retailers is rising. Shipper United Parcel Service Inc. expects returns to jump 15% this season from last year, making them a significant and growing cost for retailers.
The stakes get even higher during the holidays, when return volume peaks. So this year, chains are digging through past transactions to weed out chronic returners, train shoppers to make better decisions or stem buyer’s remorse.
Ahhh yes, the never ending quest to ‘train shoppers’ continues. Here’s the rub with that one. Shoppers have to WANT to change in order for them to change. The only real way to change their behavior is to make the ‘negative’ behavior more difficult. The problem here is that the online industry has created this monster and it is simply reaping what it has sown. Online shoppers love the thought that if they screwed up an order it can always be sent back for no charge. Sure, it’s not the best case scenario but it sure beats having to deal with stores and those nasty by-products of being out and about……people.
But never fear, the geniuses of business have options that include annoying pop-ups that impede progress and treat the shopper like they are an idiot. Way to go!
Fashion discounter Rue La La, owned by Kynetic LLC, is testing a program that gives customers access to their own purchasing history, and also access to sizing data across its customer base, to help them make better purchases the first time around.
For instance, a customer who has continuously bought the same brand of dress shirts in both a small and a medium might see a note pop up saying: “Are you sure you want to order the small? The last five times you ordered both sizes, you only kept the medium,” Chief Executive Steve Davis said.
Sure that’s a bit of an exaggeration but retailers do assume that most shoppers are idiots because they can’t seem to figure out poorly designed sites with terrible UX but, hey, it’s not the retailers fault that they make bad sites (I know that reads ‘stupid’ but I really think that many companies simply turn a blind eye to terrible site design and experience because some ‘expert’ sold them what was cool versus what actually works).
So what to do about the returns concern? Whatever the answer it’s not going to be easy.
Retailers say people who return a lot also typically buy a lot. But that isn’t always the case, and the burden appears to be growing. In the current holiday season, that is something retailers can ill afford, when many are already discounting heavily to win over cautious consumers. Holiday sales are expected to rise by 3.9% from last year, according to the National Retail Federation, a Washington trade group.
There is more to examine here and I recommend you check out the WSJ article which covers more ground than this post allows. In the end, as an online retailer the real trick is a balancing act by which you give consumers what they want (convenience, free shipping, free returns, good prices etc) without actually giving them what they want because what they want can kill profits. Sounds like a difficult situation doesn’t it? Any thoughts on a solution?