UK shoppers will spend £5 billion in a four-day internet shopping frenzy from Black Friday to Cyber Monday. However, according to predictions by innovative retail data intelligence specialists, Clear Returns, £1 billion of these products purchased online will be returned by shoppers.
The report found these returns will result in tying stock up for around three to four weeks in the supply chain returns loop, with goods not being back on sale at full price in time for the Christmas shopping rush.
On any one day there is £978 million worth of ecommerce stock tied up in the returns cycle and this ‘stock on loan’ to customers will cost retailers £245 million this Christmas in refunds, cost of returns and good being out of stock.
Recent research from Barclaycard highlighted the scale of this problem for retailers, but didn’t offer a solution (‘Retailers stuck with unsellable stock’ – 20/12/16), quoting that “retailers are struggling to cope with the volume of refund requests they feel obliged to grant, despite items being unfit for resale”. Clear Returns is able to offer retailers a solution to this growing issue by using their data to confidently predict and prevent the customer returns that are costing the industry around £70 billion each year, £25.5 billion of which is being generated purely by ecommerce returns.
Clear Returns has analysed data from tens of billions of items returned worldwide to identify the common causes of customer returns. The company uses this data, taken from ecommerce, stores and warehouse systems, to give retailers clarity on where and how to increase their margin by tackling fixable return issues caused by the customer, the product and/or their marketing. This insight from Clear Returns helps retailers grow revenue, delivering at least £1 million of additional retained revenue for every £10 million refunded and the difference to the bottom line from Clear Returns intervention can be seen within 12 weeks.
Vicky Brock, CEO at Clear Returns commented: “If retailers can understand at the moment of purchase if a customer will keep or return the items bought, it can change everything that happens next and returns are no longer about a salvage operation, but about helping direct stock and marketing messages to the customers who will buy more and keep on buying.
“We provide that understanding to retailers, delivering a measurable and quantifiable impact on the business bottom line by reducing costs, retaining revenue and making stock available to be sold to people who’ll keep it.”
The most common reasons for returned items that Clear Returns can predict and prevent include the product not being as expected from the online description and images; scarcity buying that leads to buy first and choose later behaviours; general quality and fit problems and buyer’s remorse. In electronics, products are frequently returned and reported as faulty even though when tested back at the warehouse, less than one percent actually have any fault. In addition, over the Black Friday weekend, £800 million of returns will be caused by just 20% of shoppers, who buy first then select at home and return the excess items ordered.