Page 32 - May2021

RLI RETAIL INSIGHT

The Online Reality

Alan O’Neill, author of ‘Premium is the New Black’ and ‘Culture
Matters’, and Managing Director of change agents Kara, takes
some time out to speak to RLI about the matter of returns, an
unfortunate reality of online retail sales.

efore the pandemic started a year ago, digitisation (the descriptions, so that customers can make better
conversion from analogue to digital) and digitalisation decisions. If the brand that supplied you with the
(the use of digital technologies and digitised data) was merchandise doesn’t have good photography, then you
Bemerging to support the fourth industrial revolution. should consider doing your own. I appreciate this can be
Over the past year both have increased in importance costly, so consider it carefully.
exponentially. Digital platforms have saved the day for many 3. Sizes can vary across brands. When buying a pair of jeans
businesses, both B2B and B2C. Digital is no longer the future. a few months ago, the assistant presented me with two
It is now. pairs of different brands. Despite both being the same
measurements for waist and leg, they were dramatically
Online In Retail different in fit. So you can multiply that issue when you
While online is now a must for all of us, let me say, online is not think of women’s, men’s and children’s brands. Virtual
fit applications will become more available but in the
a low-cost model. One of the biggest costs for fashion retailers meantime, improve your descriptions. Don’t just copy
in particular, is returns. In the US market alone, online returns and paste from the brand’s catalogue.
more than doubled in 2020, at an estimated cost of $550bn. 4. Chatbots and virtual human assistants that interject while
But what’s the impact of this for your business? Think of your the customer is online will help to create a dialogue
overhead costs of re-handling, re-packaging and the general between the retailer and the customer. They can aid
administration costs associated with all of that. Consider also customers to select the right size and style based on
the extra stock holding required to cover for all this stock. The your available product selection.
costs of returns are now so significant that some online retailers 5. Use analytics to understand and categorise returns to
just dump the returns into landfill. Amazon and other big names identify those products with high-return frequency in
have algorithms that determine whether the customer should order to better understand why. The analysis can then
even return the product, or simply dump it. be used for corrective actions aimed at reducing return
Now let’s park the issue of waste and landfill for another day, as rates in the first place.
that is really upsetting. But think of the emerging commercial risk
where customers get to keep their reject and the replacement.
Customer behaviours change. For example, free deliveries were The Last Word
introduced three years after Amazon first offered its Prime What Amazon and others have now started with this returns
membership subscription in 2005. Other retailers then had no model is a real problem. And it’s not just an issue for fashion
choice but to do the same. Customers learned to expect it merchandise. They are educating customers with a new
from every site and indeed made purchasing decisions based on standard that they will come to expect across the board. Once
sites’ delivery rules. Similarly with Black Friday, what started out the toothpaste is out of the tube, you can’t put it back in.
as an American phenomenon linked to Thanksgiving, has now But even with the ferocious might of Amazon, it has only
become an annual retail norm around the world. Consumers recently started to make money after 25 years. Most of its
are now well-used to the discounting madness that it brings. $10bn profit comes from their B2B web and advertisement
How we manage returns is a business imperative that requires services business. Take care that you do the best you can to
effort to prevent them in the first place. mitigate the risks of an emerging phenomenon.

Tips to Mitigate Returns
Retailers have to accept a certain level of returns and account
for it in their margin. But additionally, they should explore what
can be done to prevent it in the first place. We know that some
customers are naughty. They buy multiple colours or sizes of
an item, knowing that they can send them back. Let’s assume
that accounts for some, but not all.
1. Audit your own website. Ensure your website is well
designed and laid out, with a primary focus on adaptability
to mobile devices. Mobile first should be your mantra.
2. Put more time into quality imagery and sufficient

32 RETAIL & LEISURE INTERNATIONAL MAY 2021