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How Important Are Merchandise Returns to Omni-Channel Shoppers?

This is an archived post from OrderDynamics, now Tecsys retail division.
How Important Are Merchandise Returns to Omni-Channel Shoppers? Merchandise returns are important to all shoppers. Retailers honed in on this fact long ago. From a look at the OrderDynamics Omni-1000 study, the good news is that retailers have generally done a good job fixing their returns terms and conditions. Unlike the days of the past, online returns policies are clear today. They largely avoid confusing jargon and wording that only lawyers (barristers) understand. In fact, 80.9% and 86.3% of e-commerce equipped retail websites had clear and jargon-free returns policies respectively. However, how important are returns capabilities really for omni-channel shoppers?

Important to Omni-Channel Shoppers?

The OrderDynamics Rise of the SuperConsumer research shows that returns are very important to all shoppers. In fact, 47% of shoppers rated the importance of returns at the highest level on the rating scale - very important. Highest (52%) among them was the shoppers who occasionally use buy online pickup in-store (BOPIS) services (tried it once in the past 12 months).  This followed by the Click and Collect SuperConsumer who uses in-store pickup repeatedly. Here 50% stated that returns are very important to them. Non-Click & Collect Customers rated the returns process as very important 40% of the time. Finally, the lapsed consumer also rated the returns process as very important 39% of the time. The lapsed consumer group characterizes the consumers who have tried click & collect services in the past but had not tried it again in the past year.  

Making Returns Easier

Knowing that returns are very important to all shoppers, are retail websites keeping up? As outlined at the top, e-commerce sites have generally been doing a good job. Retailers have learned that a clear returns policy that avoids legal sounding terminology, is a smart. 82% of shoppers will make their purchasing decision based on whether there is a retailer provides a favourable and customer friendly returns policy.  Around the world, the Omni-1000 study found that the US scored second lowest with 85.2% of US retailers having clear return policies. Of the US retailers, 76.1% also have Jargon-free sites.


Merchandise Returns Process

On the process customers prefer for transacting their returns, 60% of online shoppers preferred to returns goods in-store, in person. This has very strong implications for all retailers. It means the multi-channel idea that a customer should return goods to the same channel by which they purchased, is flawed. Customer’s don’t care about channels. That’s why the ability to complete a buy online return in-store (BORIS) transaction, is a key component of omni-channel retail. 67.6% of all retailers offer the Buy Online, Return in Store option, with 66.1% of US and 70.7% of Canadian retailers offering this return method.  

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Merchandise Returns for SuperConsumers

Given that consumers are much savvier to return policies than they used to be, not having the ability to return goods in-store – regardless of purchase channel, will become a show stopper. To break it down further, 70% of Super Click and Collect Consumers prefer to complete a merchandise return in-store, in person. This is exceptional news, given that the SuperConsumer is the ideal omni-channel shopper for retailers. They are typically more affluent, shop more frequently, and spend more when they do shop. Surprisingly, we expected that SuperConsumers would also be the most likely to complete a merchandise return, but not so. Non-click & collect shoppers returned goods an average of 8.3 times per year. Although the SuperConsumer was much higher at returning goods 18.6 times per year, this was distantly outpaced by the shopper who only used click & collect services occasionally (once per year). Occasional Click & Collect shoppers claimed to return goods an average of 38.8 times per year. Regarding the SuperConsumer, there is a significant advantage for retailers to want to encourage many more such shoppers. When these consumers want to return items, they prefer to return it in-store. As a retailer, that means you are not faced with the additional cost of returns shipping charges. It also reduces some of the unpacking work, and shipping carton waste disposal costs. Married with the fact that the SuperConsumer returns items far less frequently than the Occasional click and collect shopper; this is a major bonus to retailers.

Why do SuperConsumers Return Less?

Why Super Click & Collect shoppers return fewer goods comes down to the in-store experience. When the shopper completes an in-store pickup, they have the opportunity to experience their goods. They can open the box, touch, feel, smell, see, and try it on. Face it, we are sensory beings, and make many of our decisions on an item after we experience it. In many cases, the shopper can change the item for the same one, but in a different colour, size, or style. This second opportunity to make a decision on the purchase accounts for the significantly lower return rate of the SuperConsumer compared against the Occasional Click & Collect shopper. Occasional click & collect shoppers skew toward making more online purchases, that don’t have the advantage of experiencing the item before choosing to keep it. This maps with the much higher standard rate of merchandise returns for pure online purchases. Typical rates for pure online returns range between 20% - 30%, as shown in the Returns Brief. However, claims of up to 40% return rates, are not unheard.

Retailer Lessons

The two research studies, OrderDynamics’ Omni-1000 and Click & Collect SuperConsumer, paint an important picture for returns. Not surprising: In-Store returns are important to ALL shoppers Only 67.8% of retailers allow in-store returns for online purchases (BORIS) In-Store returns are particularly important to the Click & Collect Superconsumer (70%) From a returns perspective, more retailers need to embrace omni-channel practices. Omni-channel shoppers want to return goods in-store. It is more convenient for them. It is also cost-effective for the retailer. Yet, 32.2% of retailers still do not expressly allow BORIS transactions (buy online return in-store). That is a turnoff for many consumers. Specifically, that is a turnoff for the SuperConsumer. And, she is the ideal customer that all retailers want to pursue. She is a more affluent customer. She shops more frequently than other consumers. She spends more. She likes in-store pickups. Best of all, she isn’t a heavy merchandise returner. Retailers – take heed. Winning in the retail marathon comes down to bringing in the most Click & Collect SuperConsumers!   Author:  Charles Dimov is VP of Marketing at OrderDynamics. Charles has 23 years experience in Marketing, Sales and Management across various IT and Technology businesses. Previous roles include Chief of Staff, Director Product Marketing, and Director Sales. Charles has held roles in brand name firms like IBM, Ericsson, HP, ADP, and OrderDynamics.
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