Executive Briefings

The 'Ticking Time Bomb' of Multichannel Retailing

Tom Enright, research director with Gartner, talks about his recently completed survey on the challenges that are confronting multichannel retailers today, with a particular focus on the issue of returns. He offers his view on what constitutes excellence in the returns process.

Gartner surveyed approximately 300 companies in late 2014. Most were retailers, with some consumer packaged goods (CPG) suppliers that had a direct-to-consumer channel via the internet. They were asked a number of questions about their experiences in multichannel retailing, with an emphasis on returns.

Worrisome signs included the inability of retailers to quickly get returns back into the selling channel at full price. Gartner also identified what Enright calls an “almost anti-consumer” returns policy, which is designed to suppress the number of returns. And the firm looked at online cart abandonment, a practice that is driven in large part by retailers’ inflexible returns policies.

Managing returns can be a challenge for retailers, especially in areas such as apparel, where consumers might purchase four items and send three back. A flexible returns policy would appear to encourage such behavior, but retailers must also factor in the long-term benefits of satisfying customers’ demands.

The “ticking time bomb” in question arises from the interrelationship of multiple events – specifically, the clash between retailers’ need to attract customers through a generous returns policy, and their ability to handle the resulting flood of returns. “Unless the retailer can offer a holistic process,” Enright says, “the consumer will go elsewhere.”

These days in retailing, an attractive returns policy is every bit as important to the seller’s success as free shipping for the initial purchase. “Nearly two-thirds of consumers will review the returns policy before they buy anything,” Enright says. “The days of being surprised by a returns policy are rapidly disappearing.”

To view the video in its entirety, click here

Gartner surveyed approximately 300 companies in late 2014. Most were retailers, with some consumer packaged goods (CPG) suppliers that had a direct-to-consumer channel via the internet. They were asked a number of questions about their experiences in multichannel retailing, with an emphasis on returns.

Worrisome signs included the inability of retailers to quickly get returns back into the selling channel at full price. Gartner also identified what Enright calls an “almost anti-consumer” returns policy, which is designed to suppress the number of returns. And the firm looked at online cart abandonment, a practice that is driven in large part by retailers’ inflexible returns policies.

Managing returns can be a challenge for retailers, especially in areas such as apparel, where consumers might purchase four items and send three back. A flexible returns policy would appear to encourage such behavior, but retailers must also factor in the long-term benefits of satisfying customers’ demands.

The “ticking time bomb” in question arises from the interrelationship of multiple events – specifically, the clash between retailers’ need to attract customers through a generous returns policy, and their ability to handle the resulting flood of returns. “Unless the retailer can offer a holistic process,” Enright says, “the consumer will go elsewhere.”

These days in retailing, an attractive returns policy is every bit as important to the seller’s success as free shipping for the initial purchase. “Nearly two-thirds of consumers will review the returns policy before they buy anything,” Enright says. “The days of being surprised by a returns policy are rapidly disappearing.”

To view the video in its entirety, click here