The evolving retail landscape brings about exciting innovations in technology, creative in-store experiences for customers and many more fascinating new trends. However, the fast pace at which consumer expectation is driving this change can also can be burdensome for retailers.
Consider the issue that arises with e-commerce returns. The return rate for online purchases ranges between 15% to 30%. Consumers are expecting brands to keep up with a "try and return" dynamic regarding online shopping, which also highlights the need for retailers to come up with try-before-you-buy or virtual try-on types of services. However, when the logistics behind these returns are not well managed, the returned merchandise can turn into a break-even or lost revenue scenario, as the items are often not sold at their original price. Last year for example, retailers “missed out on $300 billion in revenues… due to markdowns,” according to the Retail Dive.
The need for a more streamlined reverse supply chain process will only grow stronger as the explosive growth of e-commerce continues to outpace physical retail, which inevitably will mean more returns. This is a double-edged sword as retailers must offer consumer-friendly returns in order to stay competitive, but the compounding numb er of returns combined with poor inventory management can come at a significant cost. Making investments in more robust technology platforms and partnering with smaller, savvier companies to outsource the returns management process could prove to be a successful strategy and might offer solutions for monetizing returned merchandise.
One thing is clear: continued engagement is essential for retailer’s wellbeing, as Neiman Marcus' decision to overhaul their store’s customer experience makes evident. As consumers demand hassle-free and convenient shopping options, it will be interesting to see how a more robust and flexible last mile and first mile logistics platform might be integral in delivering these unique post-purchase experiences that build engagement and loyalty.
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