One of the biggest challenges that retailers are grappling with are the returns, that can go upto the tune of 25% of the total orders (TOI). One out of every four products sold online gets returned, a study by logistics firm Gati showed. Roughly a lakh shipments are returned every day! So while this is a good cash cow for the logistics firms, it might not be a sustainable one for the cows, per se!
The situation is not so bright outside India as well. Zalando, a big German Retailer, used to promote with the slogan, “SCHREI vor Glück oder schick’s zurück!”, i.e. “Scream for joy or send it back!” But so many people took up the second half of the slogan that Zalando now uses just “Schrei vor Glück! ” in its marketing.
Return rates can be alarmingly high: for some online retailers up to half of everything they sell comes back. More so, the regulations seem to favour these impossible-to-please customers. In 2014 the European Union will adopt a law similar to Germany’s, obliging online firms to offer a no-questions return period of 14 days. American law is not so generous, but online firms there still face hefty costs from customer returns. In India, it is still in its initial stage. Known players, Jabong and Myntra offer returns with 30 days, and the new biggie Amazon allows various return policies
- Mini-warehouses for fast running items could be rented out at locations where there are high returns, and a grace period for repeat orders of the same items could be given, post which the stock could be returned (most items don’t have an expiry!)
- Incentives to reduce return rates to your loyal customer base is also suggested – but intuitively, this might not be hitting the right channel – as the highest incidents of returns would come from first time consumers.
- Analytics would play a key role for loyal customers, which would entail lower returns for them as well.
- And finally, the ‘evil hand’ step still not being considered in the fledgling E-commerce space is to bid adieu to some customers! Mollifying sacked customers to come back might be a better option that retaining them in the fear of reprisal.
Some studies have shown that without the returns, the retailer’s profits almost grow by 50%! So there IS merit in controlling this big ‘expense item’! Incidentally, as per a recent study of top 10 retailers, like Amazon, Walmart, Sears, JCPenny, the best ones don’t usually do good on returns [Source] – there might be a implied pattern here to infer 🙂
But that’s where the maturer markets are moving towards. Closer home, the Indian Clone of Zalando, Jabong.com is following her elder sister.. Not very far from SCHREI vor Glück, Jabong’s campaign of ‘go crazy shopping’ aimed to delight customers with the range and offers at Jabong.com. Results are for everyone to see! Undoubtedly, like Zalando became one of the most memorable brands in Europe, within a few months of its launch, Jabong.com became the most trafficked e-com site in India (Google.com traffic stats).
The best part about the campaign is what is mentioned in the brief…
This commercial showcases a situation where in the middle of a bank Robbery, a fashion conscious female staff member is seen talking to her female colleague about shoes and dresses available on Jabong.com showcasing the strong fashion connect among shoppers…. The concept has been artistically developed by Jabong.com in-house.
Yes! Absolutely! Well, the ‘in-house’ seems to include the entire house of Clone King, Rocket Internet! [BusinessWorld]
Both companies are funded by Rocket International
On a serious note, returns are a challenge in the nascent e-tailing space, but innovations around reducing returns and not just customer acquisition, would define ‘the last survivor‘ in this online game!
And by the way, did you think that the customer is a nincompoop, and will smile at the goodies you throw at her? Though all these innovations are to build customer trust, am not sure if it is taken in similar light everywhere and by everyone!
Like physical stores, online clothes sellers suspect they have a hard core of habitual returners. Interestingly, some consumers have identified a superb opportunity to abuse this ‘consumer-centric’ policy of the e-commerce industry. In Germany there has been talk of “Zalando parties”, with giggling teenage girls ordering crateloads of stuff for a big weekend, only to send it all back (complete with forgotten car keys and other such stuff in the pockets) [Economist]
Can you avoid Jabong parties from happening? Well, with the current return policies, and the focus of the companies on ‘building’ the industry, you might just be part of one!
So imagine a world where you select your favorite weekend outfit out of thousands of choices available online, from your bedroom, get a 65%+30% GOSF discount on fashion as part of Big 5 Days, get it delivered the next day by a drone at your doorstep for Cash on Delivery, celebrate the weekend with your friends and return it to the retailer the next weekend – all at the cost of the ‘return’ hungry investors!
By the way, do you know if they sell cars online? 😉