Emails were sent, orders processed and packages delivered. Now in the aftermath of Prime Day retailers are thinking about the next possible stage of the customer journey: returns.
According to Adobe Digital Insights, in 2018 Prime Day purchases saw 30 per cent higher rates of return than goods bought on other days, indicating that consumers are quick to buy items they don’t ultimately want or need.
Processing returns requires a clear strategy and increased operational bandwidth to match the high order volumes driven by sales events like Prime Day, Black Friday or Cyber Monday.
Ben Franzi, general manager parcel and express services at Australia Post, told Which-50 there’s a slight increase in returns following sales events.
“Fashion is normally at a 30 per cent return rate and returns are a growing component of online sales events, with a slight increase experienced during major sales events,” he said.
“We know that online retailers that offer speedy delivery and reliable returns are winning market share. For that reason, it’s absolutely vital that retailers work hand-in-glove with their logistics partner to provide the kind of seamless experience today’s consumers expect.”
Rachel Caton, sales & marketing director of logistics solutions provider Doddle, says rather than trying to make it difficult for customers to return unwanted items, retailers should leverage tools to improve service and profitability.
“There’s a perception amongst some retailers that if you make the returns process harder for the customer, you’ll see fewer returns. While that might hold some truth, there’ll also be fewer sales and lost customers,” Caton said.
Doddle aims to build solutions that make returns smarter by digitising the process to provide retailers with data and insights about the stock which is being returned.
“Understanding what items a customer is returning and why before the return parcel gets back to a DC, supports retailers to make decisions about how that return should be handled to drive maximum efficiency and profitability when it does arrive back,” Caton says.
Retailers also have the power to reduce the impact returns have on their profit margins by encouraging customers to send or drop items back to stores or pickup locations as quickly as possible, she said.
“The timer on reverse logistics starts from the moment a customer opens their order. Communicating with them to understand their intention to return or keep an item can help to get a full priced item back out for resale, faster.
“The difference between an item returned on day one of a returns window against day 28 can be up to 30 per cent of RRP – that’s 1 per cent of value for every day in the returns period. Therefore making it easy for the customer to return that item quickly by offering convenient drop off points or free returns in-store is also important in reducing the duration of the reverse logistics cycle.”
Supply chain challenges
The growing popularity of online sales events and the cost of rising customer expectation is creating a market for technology solutions which provide visibility across carriers, reduce error rates and improve efficiencies to enable faster deliveries.
Paul Soong, regional director, ANZ of supply chain software company BluJay Solutions, says sales like Prime Day can pose “a risk to revenue rather than an opportunity to profit” if retailers don’t have a clear view of their supply chain operations.
“High volume of transactions in such a short duration, coupled with intense pressure from consumer expectations, mean that Prime Day can be ‘make or break’ for small to medium businesses,” he says.
“Prime Day has become such a big event in the retail calendar that some businesses are feeling pressured to get involved, or risk missing out. But without an efficient and streamlined logistics operation, they may struggle to deliver the fast, convenient delivery modern consumers expect once the order is in.”