Retailers are striving to provide online shoppers with options to only pay what they decide to keep, but how can supply chains cope with the influx of returns? Will Lovatt, VP EMEA, Llamasoft
Retailers could begin to face floods of returns that compromise the efficiency of their supply chains in the wake of a growing ‘try before you buy’ trend.
The trend stems from the likes of ASOS and Topshop rolling out the option for online shoppers to order multiple items to try on, only paying for the items they choose to keep. The unwanted items are returned in their original packaging which is supplied with a free postage label.
Other retailers endeavouring to compete could experience severe disruption in their supply chains unless they make the appropriate preparations for coping with the inevitable influx of returns.
That’s not to say supply chains aren’t already evolving. This latest trend is simply another development in the drive towards fulfilling the consumer demand for precision in the last mile. For so long retail businesses operated under the assumption consumers wanted speed, but being able to choose how and when they receive their items has emerged as the true measure of the retailer’s worth.
While the optimum approach is yet to be determined, many retail businesses are fashioning a more agile approach. Satisfying the urge for precision among online shoppers is being achieved by breaking down bulk stock that can be picked directly from shop floors and stock rooms, or distributed between ‘dark stores’ that exclusively fulfil online orders.
While precision in outgoing orders is still being perfected, many retailers are only just beginning to contemplate how they will cope with the ‘try before you buy’ returns.
Return to sender
‘Try before you buy’ for online shoppers may seem like a madcap idea but the retailers pioneering this are being smart with their inventory management. Predicting which items will be returned provides the retailer with another source of inventory that they can still sell through, even before they have been returned.
The tricky part is providing a rapid turnaround between receiving returns and sending them back out, ensuring the next customer still experiences service with precision. Ultimately, they need to strike the right balance between the least costly and most efficient options in terms of the free returns service provided, the processing of the returns and the re-delivery of each item to the next customer.
The answer can be determined by drawing data from multiple points across the supply chain (including stores, stockrooms, delivery hubs, warehouses, manufacturing sites), providing retailers with a global view of inventory across the entire supply chain.
With this level of visibility, retailers can asses where individual pieces of stock can be best placed. With the right SCM solution in place, retailers can drill down into the data to understand which stock is more likely to sell in certain areas and can direct returns to the appropriate stores, stock rooms, warehouses or delivery hubs.
The power of predictability
If retailers can leverage the available data to predict which product attributes are most likely to sell – or which sizes, colours and styles are preferred by existing customers – they could find that customers become accustomed to ordering items they will be happy with, and the retailer might see returns rates decrease as a result.
On the other hand, retailers could leverage high return rates to better manage supply and demand. With greater visibility on returns data and predicted return rates, retailers could sell through their existing stock more effectively, resulting in less new inventory having to be manufactured only to end up sat in a warehouse waiting to be sold at a reduced price.
If retailers can strike the right balance between the both, they can find the optimum solution to successfully accommodating the ‘try before you buy’ trend. With the right SCM software in place, retailers won’t just survive this trend but they can thrive from it too.
Will Lovatt, VP EMEA at LLamasoft, is an experienced senior technology industry executive with over 25 years of experience growing businesses by delivering high-impact supply chain solutions to the retail, manufacturing, public sector financial services, telecommunications and publishing industries. Will also has extensive experience with emerging markets and understanding the unique considerations for businesses not only operating in Europe, but globally.