As retail purchases increase, so do returns – but how many returns you can expect depends on the type of transaction. A recent study from Forrester Research reveals that while the average return rate for in-store purchases sits at 8%, one out of every four online transactions is eventually returned. That means eCommerce returns happen at three times the rate of in-store purchases!
So for this holiday season, we’re taking a look at the top two ways retailers are handling the triple threat of 2019 online returns: Competitor merchandise and physical locations.
Retailers Accept Rivals’ eCommerce Returns Merchandise
In April 2019, Walgreens announced that it would accept returns from partner brands like Levi Strauss and Anthropology. Even though Walgreens’ 8,000-plus locations don’t sell jeans, a customer can still return them at the local pharmacy.
Why? Alex Gourlay, co-chief operating officer of the Walgreens Boots Alliance, told The Wall Street Journal that the arrangement “will drive more footfall into Walgreens.”
Far from a one-off phenomenon, other retailers seem to be adopting this service-first strategy, too. In September, luxury department store retailer Nordstrom began accepting competitors’ returns to increase convenience for customers at its brick-and-mortar locations.
As Jamie Nordstrom, president of Nordstrom stores, explained to Fortune: “Everything that we sell, you can buy lots of different places. Our service offering and focus is on engagement and convincing the customer that we’re a better alternative.”
In keeping with its engagement focus, Nordstrom will evaluate success of the initiative by increased market share of the retail stores, instead of the more traditional sales-by-square-foot metric.
Customers Prefer Convenient Return Options — Including Physical Locations for Online Returns
Kohl’s, too, has joined the competitor online return game. It now accepts Amazon purchase returns at all 1,150 retail locations, without requiring a box or label. Kohl’s hopes to increase its foot traffic and relevance to customers, and it seems to be working. Early program data showed that revenue, sales, transaction and customer base all grew faster at pilot locations than comparable Kohl’s locations.
Kohl’s isn’t the only physical return location Amazon’s developed for its online returns. It’s expanded its store Hub Locker program to more than 2,800 lockers across more than 70 “major metropolitan areas,” according to Amazon.
Amazon has also built new brick-and-mortar retail pickup locations – which accept returns, too – that are like a post office for Amazon purchases. These 30 “Hub Locker+” locations feature free packaging materials like boxes and return labels to ease online return friction.
Initially, Amazon’s move toward in-person return options for online purchases may seem strange. After all, 75% of Americans shipped returns directly to the ecommerce retailer. However, according to recent research from UPS, the majority of Americans – 58% – would prefer to return their online purchases at a convenient physical location instead of mailing them.
It’s not just Amazon, either. Many traditional brick-and-mortar retailers now accommodate online returns at storefront locations, from Ace Hardware to Walmart.
Of course, this trend is particularly useful for those retailers that already possess a broad geographic footprint that make the returns process convenient. Simply optimizing your current returns process may smooth over this customer satisfaction roadblock.
For example, a recent survey of online shoppers found that 61% were frustrated when they had to pay additional fees for returns shipping. Building these costs into your forward flow business model may allow you to offer the convenience of shipping returns without the headache and frustration of paying for it.
Leveraging These Online Return Trends in the 2019 Holiday Season – And Beyond
These two online returns trends are worth keeping an eye on for the 2019-2020 holiday shopping season and beyond. If you’re thinking about implementing similar strategies, consider:
- Do your current storefronts have enough space to accept and store more returns for any length of time? If not, consider outsourcing the returns management process to an expert partner for fewer headaches and greater cost recovery.
- Can your current workforce efficiently process increased ecommerce returns? Tracking these returns will be a nightmare if you don’t have the right reverse supply chain logistics tools and software.
- Do you have a plan for recovering revenue from your competitors’ online returns? At the very least, you’ll need a way to quickly list returns on marketplaces with informed buyers who want your competitors’ returned stock.