New consumer research from JDA Software is demonstrating the importance of putting effective reverse logistics processes in place.
Black Friday and Cyber Monday are becoming large sales events globally, with spending in Australia expected to reach over $1billion this year and, according to new consumer research from JDA Software and Centiro, nearly three quarters (74 per cent) of Australian shoppers admit to spending more than anticipated during big sales events.
However, we know that, inevitably, not everything shoppers buy during the sales periods will be kept, and we often see a large number of goods being returned across the country after such sales events. For example, customers might buy a couple of different sizes of the same product and then return the sizes that don’t fit, creating a rush of unwanted goods back into the warehouse.
The way retailers manage this process is actually extremely important for the shoppers we surveyed, as the results demonstrated that 80 per cent said the ease of returning goods bought online factors into their decision before they even buy a product.
“Inevitably, not everything shoppers buy during the sales periods will be kept, and we often see a large number of goods being returned across the country after such sales events.”
Getting it right
We believe the first step for all retailers is to provide a simple way for customers to return their purchases in store. Demand on store employees increases during sales events and pressure on customer service teams also increases, so it’s vital to ensure there are clear processes around the returns service. Store assistants need to know what to do when a return comes into store and then how to ensure it goes to the right person in the warehouse.
Having a slick returns process is the difference between retaining a customer and losing one as over three quarters (83 per cent) of respondents said they would switch to an alternative retailer if they received a poor returns service.
But how can logistics managers also handle this effectively? In the warehouse as well as in store, it is vital to have effective returns processes in place as most returned goods will need to be identified as faulty or repackaged and resold in store. Most warehouses have a quarantine area, and we often see this is where ‘goods go to die’ as they are sometimes not processed for weeks or even months later!
Warehouse operatives need to be aware of whose responsibility it is to manage the returned stock, where the goods go and how the next steps are managed. If the items are indeed genuinely faulty then they will need to be returned to the manufacturer in exchange for a credit note, but otherwise if there’s nothing wrong with them, there’s no reason why they can’t be repackaged and resold.
Ensuring the goods are available for resale within a very short timeframe is going to be crucial. Decide whether to ship them back into store or whether to make them available in the warehouse to support online sales. Particularly in these busy sales periods, the key is having warehouse returns processes clearly defined and, ultimately, the products processed in a timely manner.
“There’s no need for anyone in the industry to fear the process of returned goods in busy sales periods or at any other time of the year.”
Avoid stock underfoot
Having worked with both large and small retailers, I’m able to recognise one of the biggest bugbears in the industry – obsolete inventory – and the aim is to avoid this outcome at all cost. We see many logistics managers up in arms when products are discovered sitting on a warehouse shelf for three weeks when, if they had simply been processed in a day or two, they could have been back in store available for sale.
It’s really important to enable visibility of the inventory levels through a warehouse management system, especially to track the stock in the quarantined or damaged areas. This visibility should be shared right across the business from logistics managers to inventory managers, so they can manage the process of going through those goods and making them available for sale.
For example, when dealing with inventory with particular size and colour considerations, let’s imagine a blue dress in size 10, 12 or 14 (which could be your most in-demand sizes). If it has run out in store but knowing there’s stock in the warehouse, this can help speed up the process of helping the goods get back to store. Even more critically, as we get towards the end of the season, moving as much stock as possible out of the warehouse and into the store is essential to avoid the items hanging around post-season.
In summary, there’s no need for anyone in the industry to fear the process of returned goods in busy sales periods or at any other time of the year. In fact, handled effectively and with the right systems, processes and visibility in place, it can actually be the difference between gaining loyal customers or losing them.
Patrick Viney is the head of retail strategy, APAC, at JDA Software Australia. For more information call + 61 3 9225 4200 or visit www.jda.com.