Three Returns Strategies for Improving Omni-channel Retail
Omni-channel retail involves much more than efficient order fulfillment. An easy returns policy is just as important—so much so that it can be the deciding factor for a purchase. That said, it's one thing to enact a favorable returns policy, and quite another to execute it efficiently.
Thanks to omni-channel expectations, shoppers want the ability to return their purchase through different channels—whether that means returning the product to a brick-and-mortar store or shipping it back to a central returns center. This creates an omni-channel returns environment, which complicates the reverse logistics stream by adding to the frequency, variability and cost of returns.
To cost-effectively leverage an omni-channel strategy, it is vital to proactively plan for returns and align your operations accordingly. Otherwise, the returns process can be detrimental to your customer's overall experience—and put a dent in your profitability. With that in mind, here are three returns strategies to consider for improving omni-channel retail operations.
- Drive continuous improvement throughout your reverse logistics stream.
When processing returns, time is your enemy. The longer a returned good sits on a shelf, in a truck or in the backroom of a store, the less value you can recuperate. The cost implications become more severe when you consider the potential for duplicated labor and transportation along an omni-channel returns channel. For instance, even if you manage to return a product to stock and sell it for full price, that value may be negligible compared to the cost to get it back on the shelf.
A data-driven approach to returns is required to drive continuous improvement. This starts with standardizing processes and establishing baseline key performance indicators (KPIs) for those processes. With those in place, areas for improvement can be identified and projects implemented to reduce the time, labor and transportation required to recuperate value from a return. Developing a working culture focused on continuous improvement is also important, so projects that drive efficiency can be incentivized appropriately.
- Foster collaboration between in-store operations and supply chain management.
There are times when organizational silos can hinder informed decision-making about returns. Break down those silos by fostering collaboration and communication between supply chain management and in-store operations. Educating store personnel about your returns strategy and its overarching disposition logic is key. By developing performance standards and training in-store employees, you can better prepare them to redeploy as much product as possible at the store level. In addition, in-store employees should understand what products are unsellable, recyclable or too low-cost to transport, and have the ability to dispose them on-site. That way, only products designated for re-stocking, refurbishment and return-to-vendor will be transported to a centralized returns center.
- Work with vendors to reduce returns.
If there is one thing that both manufacturers and retailers can agree on, it is that returns are major cost centers. Employing evaluative processes, such as damage research activities and returns report cards, can be effective measures for minimizing returns. Information from those processes can then be shared throughout the retailer's supply chain to help remediate issues, whether it involves inconsistent material handling processes or defects in packaging. The communication process can then be taken a step further by informing the manufacturer's product development and marketing teams to improve the product and better manage customer expectations.
Coping With Omni-channel Complexity
Making your reverse logistics channel work for you can be a real challenge—particularly as omni-channel continues to complicate retail supply chains. To better handle omni-channel returns, implement standardized, data-driven processes across your supply chain to eliminate redundant processes, improve product disposition and maximize the recouped value of your returns.