If you are a retailer in 2021, product returns are a simple fact in life. For a long time, brands such as Amazon have regarded free, unlimited and seamless returns as a key part of their service value proposition. This model has brought them great success and made it clear that consumers want to be able to return products without question. The giants in the retail industry still maintain sufficient profitability, and returns are not a problem. But not all companies have this experience.
Unfortunately, this trend has put countless retailers into trouble. As the holidays approach, stores are facing considerable challenges in dealing with the upcoming wave of returns. Read on to learn more about these super-high return rates, the reasons behind them, and how retailers can handle excess inventory as efficiently as possible.
How many returned goods are we talking about?
With so many products, shoppers, retailers and manufacturers participating in the market today, this is a number that is difficult to accurately estimate. The best guesses of industry experts indicate that 15% to nearly a third of all items purchased online are returned. In 2020, this is equivalent to an online return worth more than 100 billion U.S. dollars.
Even if the return rate remains the same, the problems caused by the mountain of returns will continue to increase. This is because online shopping as a whole is growing. For example, in the apparel industry, e-commerce has increased by 35% in 2020. McKinsey Research.
Foolproof, E-commerce surges in the fourth quarter, Which means that purchases and returns are particularly concentrated in just a few months. In fact, holiday retail sales in 2021 are expected to hit a record high, with a year-on-year growth of 8.5-10.5%. The total amount of all online and in-store purchases will be between $843.4 billion and $859 billion. Assuming that the average return rate for all these items is 13.3%, retailers can expect to recover approximately $11.114 billion worth of merchandise during this holiday season.
Lasting changes after the pandemic?
There is no doubt that the pandemic is the reason behind the massive growth of e-commerce. At the peak of social distancing, items from previously personally read pants to family’s weekly groceries were put into virtual shopping carts and delivered directly to buyers.
But now that this attraction is known and understood, face-to-face shopping may never fully recover. Even if we emerge from the pandemic, online shopping seems to be higher than ever, continuing to rise for a long time.
Why do customers return goods?
There are many reasons why a customer might choose to send something back. The following are some of the main reasons for product returns.
Quality or condition issues
Great manufacturers and stores support their products, so when they think of returns, this is what many people think of. If the product does not meet expectations, is damaged when it arrives, or has a factory defect, shoppers have good reasons to send the purchased product away.
Wrong size or not fit
There is no way to know whether certain purchases meet your needs until you see it with your own eyes.even though AR stepped up to help For this problem, this is a difficult problem to solve.A lot of people Resort to parentheses, The purchase of multiple sizes and colors is to return most of them.
This is most common in clothing, but can also occur in furniture, appliances, and other categories. In this case, there is absolutely no problem with the product itself.
From wedding dresses to the new Super Bowl TV, many items are time-sensitive purchases for buyers.If the window of demand passes, a perfect product may be useless to shoppers
considering 33% delays Due to courier and delivery services, this problem is almost beyond the retailer’s control. Despite this, retailers expect that many holiday items and gifts will not arrive on time and will eventually return to their warehouses.
Wrong item received
Whether it’s a store or a shopper, errors will happen. When the wrong item arrives at their door, consumers usually send it back immediately. If the problem is caused by chaos at the store, consumers are particularly unwilling to bear the cost.
Better pricing elsewhere
Physical stores have long provided price matching guarantees. However, through direct home delivery, online shopping makes these policies somewhat outdated. Usually, shoppers will see better deals before they start using the items you ship. In this case, they will not hesitate to move their business to other places without having to consider how the returned goods will affect the business.
The recipient of the gift may already have something similar. Maybe the gift is not as popular as the giver hoped. In addition, any of the above reasons may also apply to gifts.
Although large gift returns are quite unique during the holiday season, retailers will have to deal with them the same.
Estimated by 2020, 7.5% of online returns are fraudulent to some extent. Although not an overwhelming percentage, retailers still have to factor it into their operating costs.
Unfortunately, there is little retailers can do except to make the return process significantly increase costs for them or tighten policies for honest customers.
What’s wrong with the return?
If this inventory is in good condition, resale should be quick, right? Not so-retailers also know this.The steps required to put the original product back on the shelves are There are many, and often too expensive.
Collect and transport
Handling large quantities of returned goods requires transportation, special facilities, specialized scanning and sorting equipment, and employees. All of these represent important resources.
Check and repack
The condition of the item can range from perfect to broken, so it needs to be inspected and repackaged. Sending broken items or damaged packaging to a few customers may lose your life’s business.
Inventory management and tracking
Today, most operating departments use electronic inventory management systems to track products for financial, logistics and forecasting purposes. Even with modern tools, this can be a time slot.
Re-listing and regrouping
Whether it is a physical store or an online store, the store needs to accurately place the returned goods back into the correct shelf or trash can to ensure that shoppers find and receive the goods they need.
Between the looming holidays, the peak return journeys that follow, and Current labor and supply chain issues, These steps may not be feasible for previously affordable stores.
How to deal with customer returns: status quo solutions
As you can see, sometimes retailers and manufacturers are responsible for today’s high return rates. Other times, this is an opportunistic shopper who abuses the system. But like many other conflicts in life, most returns are faultless. However, regardless of the blame, it is the retailer who has to deal with the large amount of returned inventory in the end.
The business has not lost this problem. In fact, according to McKinsey’s research, 83% of retailers view returns as a continuing threat to their overall profitability.
Sadly, a large part of–Up to 25%-When returned goods are deemed too expensive to be processed, they will be destroyed. Whether it is incineration or landfill, these strategies are not conducive to corporate and brand reputation.
Traditional liquidators remove from returned goods
If the retailer does not resell, recycle, destroy or store it indefinitely, the company is likely to sell its returns and backlog to traditional liquidators.
These operations provide the lowest price for the retailer’s surplus items, usually only a few cents per item. Then, they sell these commodities to small businesses or other liquidators to profit from them. Each layer will get a share of the value of the inventory. Counting on retailers eager to sell fast-aging goods, any negotiations these liquidators make tend to drive down prices.
How to deal with customer returns: B-Stock solution
Retailers who find themselves in need of some support in managing holiday returns are asking for help from strong, Extensive online auction platform.
Intermediaries who skip the traditional liquidation process, B-Stock’s online private auction is the fastest and most effective way to inject your products into the secondary market. That’s because B-Stock connects retailers No matter the size of the company with Smaller size and volume A direct network of over 500,000 small business buyers who have made a fortune through resale returns, inventory backlogs, and scratches All categories of items.
These entrepreneur Will be happy to take your merchandise and deal with the above steps-inspection, repackaging, etc.-while you recover more than you think. how? Unlike liquidators who lower prices to increase their own profits, live auctions create competition. This will push up prices and ensure the highest willingness to pay for each item you list. In fact, many B-Stocks partners have increased their recovery rate by 30%, which is 30% higher than their income from traditional liquidation, and have cash on hand in just 15 days after registration.
But B-Stock is more than just high recovery and quick liquidation. You can even implement a seller agreement to specify how and where your products are sold.This is a key method Protect your brand’s hard-won reputation And your main sales channel.
The benefit of B-Stock is not only to clean up the space in the warehouse, but also to help you start 2022 with victory and maintain the high spirit and efficiency throughout the year.
To learn more about how B-Stock can significantly reduce the time and effort you spend processing returned items this season, please contact us immediately.