Not-So Festive Returns!
Christmas always seems to arrive earlier every year, and it will be here before we know it. For online retailers in particular, planning now to capitalise on the festive spend will mean SMEs can celebrate harder in January 2018!
The continued march of the digital revolution ensures grater online spending year-on year (14.1 per cent increase versus just 1.1 per cent for store sales, in 2016,online sales rose by 12.9% compared with only a 1.9% increase for total retail sales over Christmas; total sales (traditional shop retailers plus online retailers) was £77.6 bn, of which online sales were £21.0 bn – 27% of all retail sales; (Shopping for Christmas 2016 – Centre for Retail Research)
The importance of the Christmas shopping period cannot be underestimated for many retailers; advice would certainly be to organise thoroughly and early enough with delivery companies or your own delivery process to ensure you can fulfil both UK and any international orders efficiently – likewise for controlling the inevitable returns from Boxing Day onwards (avoiding any frosty retaliations!). Adequate processes need to be box-ready to handle, check or test items and pack them for mailing. (Alex Littner, Business Matters)
Handling the Gruelling Serial-Returner
There is some evidence to suggest that profits of UK retail SMEs dented by online shoppers exploiting a mostly free returns policy? Fittingly, Consumer Rights are a key element of the relationship between retailer and consumer and fair and just procedures are clearly beneficial for both.
However, the on-going rise in the rate of online returns is resulting in reduced profit margins and difficult operational activities for retail SMEs with certain (reports suggest 30%) consumers even abusing the opportunity to return multiple (over-ordered) items for free (sometimes, keeping none of the original purchases). Whilst this is their ‘right’ of course, retailers find their ability to keep an accurate eye on stock and logistics gruelling, with the festive season stressful enough as it is. Some store retailers are even reducing or curtailing their online platforms all together; the rise in returns is a hidden cost of e-commerce and when it hasn’t been factored into costs, has caught many out. (The Guardian)
Research via Barclaycard analysing this rise of “serial returners” has identified that it is a factor impeding growth of retail SMEs. Approximately 30 per cent of companies have reported that the returns process is affecting profit margins; with the concern that the problem is very likely to continue.
“Today’s time-pressed shopper expects the process to be fast, easy and free – and that applies to both buying goods as well as returning them,” said Sharon Manikon, director of customer Solutions at Barclaycard global payment acceptance. . . with more choice than ever before. . . it’s hardly surprising that this new breed of online shopper – the serial returner – is starting to emerge.” Zen Terrelonge
Seasonal Stock Management
A major area of stock management to give any retailer a headache is seasonality. Whilst the retailers of seasonal stock may predict highs and lows, even the use of historic sales data to calculate an average turnover ratio, can often still result in a disappointing and costly sold-out situation. Effective-inventory-management-for-small-business might be part of the answer – even for seasonal or other fluctuations – like perishable or on trend items or any white elephants! Effective management software applications can enable SME’s to avoid spending too much money on stock – which will just take up stockroom space or never see the light of January or remove the danger of retailers disappointing ‘eager- for-more’ customers!
Mr Monaghan of Business Doctors Support Network says, “Never take your eye off stock levels. Do you do an annual stock take? Is it accurate? How are you valuing your stock? Is old stock still saleable? Are you writing off obsolete stock in your accounts? If not, you are over-valuing the company.”
Whilst stock awareness may be a major factor in keeping liquidity – in the small to medium business – healthy; there are other factors that are continuously squeezing cash flow – such as external market forces and previous conceptions of accounts managers or owners who may or may not be making appropriate judgements. There is no doubt, however, “Liquidity is a matter of life or death for the small business”, (John A. Welsh, Jerry F. White)
Pass the Retail Agility Contest 2018
The question therefore mus be how to get on top and keep on top of financial and other assets? Digital, cloud-based inventory and financial data bases are one of the obvious providing easily accessible and relatively low-cost solutions for SME, and even micro retailers.
“Retail Agility” is the true digital strategic path for most business enterprises, not just simply ecommerce, big or small. It is forecast that the digital revolution now accelerated by IoT, will demand that a successful business is an ‘Agile’ one. (Thought Works)
Asset tracking, auditing stock control /counting stock can all be streamlined in a user-friendly cloud application. Some applications are tailor made to meet specific requirements, others generic and rudimentary – all aimed at a positive ROI and an investment in time saving – based around the use of Smart technology.
RFID technology – with its ability to track and trace individual items efficiently and economically – can be implemented into the above applications, with a relatively simple reader and set-up. Accuracy in stock control is possibly the key driver in handling returns, and having RFID technology in place can allow the space and time to deliver and meet customers’ expectations and on time and be package ready!
Nearly 75 percent of surveyed retailers in Kurt Salmon’s 2016 RFID in Retail study said they were currently implementing or piloting RFID, and more retailers are discovering the technology can offer worthy results: 90 percent said they were measuring their return on investment by inventory accuracy with an average improvement of 25 percent.
Take a look at what RFID can do
Put Your Returns Policy Through a Get Fit Campaign!
The conclusions must be, for retailers to get ready to meet the unparalleled increase in returns (bearing in mind, reports have estimated that the cost of returns will amount to approximately £60bn a year for UK retailers – and that figures in 2018 will be higher).
Needless to say, an important final thought on the ‘to do’ list is to ensure any Returns Policy is accurate, compliant with the law and any regulations – remembering distance-selling and high street have different rules. Getting the packages to customers on time and processing the returns smoothly and accurately will only be an advantage to all!
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