International Trade

Season’s Greetings, Many Happy Returns?

Black Friday and Cyber Monday are upon us, but in the retail world, a season forgiving it’s not. The National Retail Federation (NRF) noted that Americans returned $260 billion in merchandise last year, nearly 8% of all purchases. Many of these returns remained unsold causing retailers to forfeit around 10% of their profit. The supply chain also takes a hit as it recoils from unwanted gifts that vendors must now deal with. Holiday shopping in the best of both worlds This year the NRF projects holiday sales to reach $466 billion as retailers blend in- store sales with on line promotions to balance inventory. Offering material product alongside internet access, shoppers can match physical purchases with on line ease. Third party deliveries and greater return options lend themselves to a richer shopping experience. Fulfillment centers double as product exchange points and return facilities allow inventory to remain in the system longer. But there is a cost! During last year’s holiday season CNBC reported that a return rate of 30% for online purchases was not uncommon. Store returns typically go first to the store’s resale center where they are offered again on line. Gartner Inc., a Connecticut based research firm, indicates that less than half of all returns are resold at full price. Unsold or damaged goods may be sold off to a liquidator at discounts of as much as 66% of the retail price. Unless better ways are found to manage returns this volume will come back to haunt profit margins and clog supply chains. Black Friday followed by Bleak Sunday. UPS estimates they will return over 1.2 million packages to retailers on December 31 (National Return Day) and in the first week of the New Year they will move an additional 5 million returns. The last week of December also marks the beginning of an after Christmas feeding frenzy where 48% of all shoppers return to stores seeking refunds and exchanges, or redeeming gift cards and bargain hunting for after holiday deals.
There’s an art in the return for retailers. Retailers are attempting to minimize the impact of merchandise returns in various ways. Many have extended the return period but also placed restrictions on how purchases may be given back. Store receipts and pre-approvals are two ways of requiring buyers to think through their initial purchases. Some high-end fashion retailers offer “store credit only” to discourage impulse buying. Because Amazon acts as a platform for many on line retailers they often defer to the actual vendor’s policy. Their return page however offers customers the option to resell or trade items on Amazon with no additional listing fee. Clear and direct return policies can actually build customer loyalty if the buyer feels that he or she will be treated fairly if a return is required. It’s all in the package Protecting merchandise from damage in transit has become the number one priority for retailers. It not only guarantees that products arrive at the buyer in good condition, but re-useable packaging also assures that goods may be resold if the vendor sees them again. Attractive packaging which is easy to open and reseal also creates a positive impression on the buyer. It may make the difference between a sale and no sale. UPS notes that 60% of buyers surveyed prefer pre-paid return labels included with the order. The easier it is for the customer to open and reseal exterior packaging the more likely he or she will buy the product. Sealed Air makes compression packaging under the Korrvu Lok trademark. Shipping cartons utilize a “low slip film” which secures the product packaging to the outer corrugated box. Reinforced lightweight materials eliminate the need for excess packing material. Sealed Air believes Korrvu Lok will strengthen product brand image and enhance the customers purchasing experience. Custom printing is also available for exterior packaging. Carpe Diem sales Did you ever get a sweater with reindeer and snowflakes on it? Yeah, I did too! Some people may like that sort of thing, but well, that’s just not me. So, what’s wrong with telling my friends and family what I really want for the Holidays? If you know what I want, it’s highly unlikely that I will be returning it on the 31st. Short of a lengthy e-mail trail “Checked” has come up with the Holiday Gift Registry. And why not! Your sister got the dishware she wanted off her wedding registry. Checked Twice has simply extended the idea for the holidays. I signed up, and even added a list for my son and daughter in law, so now everyone knows what to buy me. Registering is easy and Checked Twice allows you to cut and paste merchandise from any retailer with a website. No website? No problem, use a custom form and simply describe what you want and perhaps upload an image. Unlike Amazon, Checked Twice is not a vendor. Links to on line product take you directly to the vendor or send your family to the brick and mortar store for a more hands on experience. Keeping the lines of gift communication open is what Checked Twice is all about. The Holiday Return Game The FedEx Small Business Center offers shipping programs centered on retailers wishing to develop customized return programs. They quote a conScore study which confirmed that 63% of on line shopper’s review return policies before committing to a purchase. RJ Metrics reports that 43% of an online store’s business comes from repeat customers. Customer loyalty centered on a fair return policy would seem to be the key to getting and keeping clients. Retailers who rethink their customer loyalty and return programs are likely to see increased profits through reduced damage and better return management. With innovations in customized returns and gift specific listings to prevent the need for them, what will be the next new twist in the Holiday Return Game?
Matt Guasco
Matt Guasco


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