It’s been a great online Christmas all over the world, and now many retailers will be preparing for the wave of returns. Which can be up to 70% for high end fashion.
Two examples really illustrated to me the value of good product information in reducing the cost of returns. A friend returned 70% of her clothes from an online cloths store, mostly because of product information not showing crucial detail. And whilst waiting to pay in a department store last week, the lady in front took 20 minutes to return a $20 towel because the colour on the web site didn’t accurately match the product. The costs of managing these returns will have wiped out any profit on the original transaction.
Indeed, one of the greatest costs in an online retail operations is returns. The concerning thing for any online retailer, is that the true cost of a return is little known. This is because it is rare for one group or individual to have accountability for the total cost of returns, and the components of the costs of returns are spread all over the organisation and are hard to measure.
But the costs are real and significant… the wasted order acquisition costs, the outbound costs of picking, packing and shipping, the returns handling costs (of which there are many) and the product waste. Beyond that there is the reduced loyalty, and the impact on in-store staff and waiting customers, as per my department store experience.
About a year after we launched Tesco Direct back in 2006, I made a stab at calculating the cost of returns. It came to over 5% of ALL sales in direct costs alone, without accounting for store, loyalty and other harder to measure items. With “reason codes”, we estimated that poor product content contributed to 20-30% of all returns and at the time we didn’t sell any fashion. So when considering the value and business case of product content, the benefit in reduced returns is an essential part of the equation
It is very easy to understand why product content affects returns, by comparing the experience online vs offline for researching a product. Typical questions may include: Is the stitching on the product high quality, is there a feature I don’t like, does it have an HDMI slot in the back, is it dishwasher safe and will I be allergic to it? Not forgetting of course… Will my bum look big in this? These are all questions easily answered by looking at a product in store. So why not provide the same information online using images, copy and data?
At SKUvantage, not only can we construct the data models to ensure the vast majority of customer questions are answered, but also write the copy using our SKUcopy service, and capture the data into SKUlibrary for easy consumptions your web site. Contact us for a free consultation.
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