Tough times ahead

This article is brought to you by Retail Technology Review: Tough times ahead.

ePOD could mean 67% more shoppers go online to buy 

Internet shopping is pretty much mainstream nowadays.  Every year the Christmas sales figures highlight a huge increase in the numbers of shoppers choosing to buy online, and this provides a yardstick for the industry.  With 2008 showing every sign of being a tough trading year, retailers need to be smart in identifying ways they can maximise both sales and margins.  And keeping the customer exceptionally happy is always a good place to start.

As a channel, online is very cost efficient because there are no store costs to maintain.  But for goods which would traditionally be tried on first clothing and fashion items for instance, it suffers from the perception of being a bit of a hassle.  Who wants the bother of having to queue at the Post Office to return something via the web?  Wouldnt it be better if the goods could be returned another way?  There has been a lot of talk around customers being able to drop them off at the high street equivalent?  According to one survey I saw publicised in the trade press, more than half of online shoppers said they wanted the convenience of being able to shop online but also wanted to use local centres to return or collect goods as they preferred.   And this should result in more business.  In a recent survey conducted by YouGov for Zetes, up to 67% of respondents said they would actually buy more online if returns were made more convenient. 

On the surface, having drop off points sounds like a great idea and the ultimate in multi channel retailing.  Buy some new clothes from M&S online and then if they are no good, just take them back to any store for a refund.  And the theory can translate well into practical strategy as Next Directory customers will vouch for.  But whilst this seems the ideal solution from the shoppers perspective, closer examination soon uncovers plenty of potential problems for the retailer. Firstly there is the immediate issue of a branch having to provide a refund on something they didnt sell in the first place, which could affect store profitability levels.  But there are ways around this and many multiples do cope easily with the flow of goods in and out of different branches.  More problematic is the question of where these unwanted goods should go?  You could possibly have a secure drop off zone in stores for depositing pre-packaged online returns.  Although this would be great for the customer, its not as attractive for a retailer paying premium rents and trying to maximise its selling space.  The next issue is where do they put this space?  Customer service is an obvious location, but then the customer is again required to get in a queue, as they would ordinarily with a return going via the post office.  And in fact this is exactly what happens at Next.  So theres no real advantage there.  Although the concept of a drop off zone sounds good in principle, upon further examination it is easy to see that many retailers must have ruled it out.

The main problem with doing store drop offs is that it takes the customer away from the channel in which the goods were originally bought.  If goods are bought and supplied via a particular channel, it is best if they are returned using the same means.  Multi-channel is about giving the customer a consistent brand experience via different media, but this doesnt have to include buying from the web and returning to store.  And research we have conducted would indicate this is what the customers want too.  Returning to our recent YouGov survey, 71% of shoppers said they believed e-retailers should offer the option to have returns collected from their home or workplace as an alternative to returning them via the Post Office.   

So how can the issue be resolved?  Many retailers already use ePOD (electronic proof of delivery) systems to give their online customers better service levels.  The goods are shipped out to the customer and their whereabouts can be traced throughout the supply chain by the customer (who could be a purchaser or a different recipient) via a secure portal.  At the other end a handheld computer captures a signature to confirm receipt of the goods.  A two way system would operate in exactly the same way as an ordinary ePOD (electronic proof of delivery) system currently works.  It would be very straightforward to close the loop and, when the customer gets the goods, be given a time period during which they can go back online to their secure area and literally book a collection slot if they wish to return any items and specify the collection address.  The necessary paperwork could be pre-printed and supplied with the order, and the customer could even set up a number of different addresses to tailor delivery and collection to their individual needs. ePOD is definitely the most effective technology for achieving this.

Smaller retailers dont necessarily have to invest in ePOD solutions directly.  This is because many couriers already use wireless ePOD systems to give the customer traceability of goods as they leave the warehouse and during transit.   To really implement an effective multi channel experience, the service retailers should really be thinking about a full return to warehouse process so the customer doesnt have to leave home to do anything connected with their purchase from retailer Xs online store.  IKEA has understood the importance of reverse logistics and implemented a two way ePOD system for their e-tailing customers which include a home pick up service for unsuitable items.  

So going back to a store might be handy if you are in the middle of a big city but actually having a home pick up option is far more convenient.  And such a system neednt be expensive to operate either.  Using GPS, retailers could also incorporate location tracking and have a delivery schedule of both drop offs and pick ups.

Internet shopping is supposed to make life easier because you dont have to go out to the shops.  So, why make customers go to the Post Office or a store if their items need returning?  The technology exists to create a very effective combined delivery and collection service for customers.  

In fact, looking ahead there is no reason why retailers couldnt appoint a dedicated courier company to manage all their returns to warehouse, and factor this overhead into the overall purchase cost.  The customer could either pay a set rate to cover them for both delivery and the possibility of having to make a return, or, pay separately for a return to be collected if they didnt want to queue at the post office.  If multi-channel retailing is all about giving customers more choice, the introduction of processes such as these would mark a great leap forward.