Navigating the Challenges of Buy Online, Return In-Store: Insights for Retailers

Table of Contents

1. Key Highlights:
2. Introduction
3. The Burden of Increased Return Rates
4. The Perception vs. Reality of In-Store Returns
5. The Need for Process Overhaul
6. Leveraging Opportunities in the Returns Process
7. The Role of Infrastructure in Managing Returns
8. Real-World Examples of Retailers Adapting to Change
9. The Financial Impact of Inefficient Returns Management
10. Best Practices for Optimizing the Returns Process
11. The Future of In-Store Returns
12. FAQ

Key Highlights:

• A recent survey reveals that 43% of retailers struggle with managing in-store returns from online purchases, highlighting rising costs and operational challenges.
• Despite 72% of retailers believing in the sales potential of in-store returns, only 17% of shoppers make additional purchases during returns.
• Retailers are urged to rethink their returns processes and invest in infrastructure and personnel to mitigate the financial impact of returns.

Introduction

The retail landscape is undergoing a seismic shift as e-commerce continues to redefine consumer behavior. With the rise of online shopping, the convenience of returning items in-store has become a popular option for many customers. However, this "buy online, return in-store" (BORIS) trend is proving to be a double-edged sword for retailers. While it offers a streamlined return process for consumers, it also comes with a myriad of challenges that threaten to erode profitability.

Recent research conducted by Retail Systems Research and commissioned by Jumpmind sheds light on the burdens faced by retailers as they navigate the complexities of in-store returns. The findings indicate that many retailers are unprepared for the operational demands that come with the increasing volume of returns, leading to concerns about cost management and customer satisfaction. This article delves into the intricacies of BORIS, discussing the challenges retailers face, the opportunities that lie ahead, and strategies for improving the return process.

The Burden of Increased Return Rates

The survey highlights that 43% of retail executives identified processing online returns in-store as a significant challenge. This reflects a broader trend where online shopping is associated with higher return rates, largely due to factors such as sizing issues, product mismatches, and consumer indecision. As e-commerce continues to grow, retailers find themselves grappling with the higher costs associated with managing these returns.

The primary concern among retailers is that their stores were not originally designed for the sophisticated customer service functions required by omnichannel retailing. A staggering 21% of respondents cited inadequate store design as a barrier to effective returns processing. This inadequacy can lead to longer wait times for customers, decreased satisfaction, and ultimately, lost sales opportunities.

The Perception vs. Reality of In-Store Returns

While 72% of retailers believe that in-store returns present an opportunity to drive additional sales, the reality is starkly different. Only 17% of shoppers actually make a purchase after returning an item in-store. This discrepancy indicates a potential disconnect between retailer expectations and consumer behavior.

One of the most significant findings from the survey is that 43% of shoppers leave the store immediately after processing their returns, without spending any additional money. This trend raises questions about how retailers can incentivize customers to make purchases during their in-store visits. It suggests that simply providing a convenient return option is not enough; retailers need to create an engaging shopping environment that encourages additional spending.

The Need for Process Overhaul

Steve Rowen, managing partner at RSR, emphasized the importance of modernizing returns processes. Many retailers are still relying on outdated systems that were hastily put in place during the pandemic. As return volumes have surged, these makeshift processes have proven inadequate for the current scale of operations. Retailers must assess their returns strategies and implement comprehensive changes to address these challenges effectively.

This means investing in technology and training to streamline the returns process. For instance, retailers could benefit from implementing advanced inventory management systems that provide real-time data on returns, helping to reduce inaccuracies and improve stock management. This investment will not only enhance operational efficiency but also contribute to a better customer experience.

Leveraging Opportunities in the Returns Process

Despite the challenges, the BORIS model presents unique opportunities for retailers willing to adapt. The potential for impulse purchases during in-store returns can be capitalized on if retailers create an environment that encourages additional spending. Techniques such as offering promotions or displaying complementary products near the returns desk can entice customers to make purchases while they are in the store.

Additionally, the rise of omnichannel retailing demands that retailers rethink their approach to inventory management. The complexity of managing returns requires a strategic focus on improving the customer experience while maintaining profitability. Retailers who can successfully navigate this landscape may find that returns can become a profit center rather than a cost burden.

The Role of Infrastructure in Managing Returns

A comprehensive study conducted by academic researchers in the UK highlighted the need for retailers to adopt strategic approaches to returns management. With many retailers lacking oversight of their returns processes, it has become challenging to track crucial metrics such as return rates and handling costs. The study recommended several strategies, including expanding physical storage space, hiring additional staff, and investing in IT systems for better returns tracking.

The implementation of designated areas for handling returns can alleviate congestion in stores and improve the customer experience. By streamlining this process, retailers can ensure that returns do not disrupt the overall shopping experience, thereby increasing the likelihood of additional purchases.

Real-World Examples of Retailers Adapting to Change

Several retailers have begun to implement innovative strategies to manage the challenges of BORIS. For instance, Kohl’s recently tested the suspension of Amazon returns in specific locations due to complaints from store associates regarding the added workload. This decision underscores the need for retailers to balance customer service with employee well-being, demonstrating that the returns process must be manageable for staff to be effective.

Similarly, companies like Target have invested in technology to improve their returns process. By utilizing mobile point-of-sale systems, Target has optimized the checkout experience for returns, allowing associates to process transactions more efficiently. This not only improves the customer experience but also enhances employee satisfaction by reducing wait times and chaos.

The Financial Impact of Inefficient Returns Management

The financial implications of poorly managed returns processes cannot be overstated. As reported in the 2023 study, retailers are facing declining profitability due to rising return rates, particularly from online sales. This trend necessitates a shift in how retailers perceive and manage returns. Instead of viewing returns as merely a cost, they should be seen as an opportunity to enhance customer loyalty and drive repeat business.

Retailers must prioritize understanding the costs associated with returns and develop strategies to mitigate these expenses. For example, analyzing return data can provide insights into the most common reasons for returns, allowing retailers to adjust their product offerings or improve sizing information on their websites.

Best Practices for Optimizing the Returns Process

To navigate the complexities of BORIS effectively, retailers should consider adopting several best practices:

1. Invest in Technology: Implementing advanced inventory management systems can help retailers track returns more accurately and reduce the risk of inaccuracies in stock levels.
2. Designated Return Areas: Creating specific areas for handling returns can minimize congestion in stores and streamline the process for both customers and employees.
3. Employee Training: Ensuring that staff are well-trained in returns processing can enhance efficiency and improve the overall customer experience.
4. Incentivize Purchases: Offering promotions or discounts to customers returning items can encourage additional spending during their visits.
5. Data-Driven Decisions: Analyzing return data can provide valuable insights into customer behavior, enabling retailers to adjust their strategies accordingly.

The Future of In-Store Returns

As the retail landscape continues to evolve, the BORIS model will remain a critical component of omnichannel strategies. Retailers who can successfully address the challenges associated with in-store returns will be well-positioned to thrive in a competitive environment.

By adopting a proactive approach to returns management, retailers can transform a potential drawback into a strategic advantage. This shift requires a commitment to investing in technology, training, and infrastructure, as well as a willingness to adapt to changing consumer expectations.

FAQ

What is BORIS?
BORIS stands for "buy online, return in-store," a process that allows customers to return items purchased online at a physical retail location.

Why are retailers struggling with in-store returns?
Retailers face challenges due to rising return volumes, inadequate store design for handling returns, and outdated processes that have not kept pace with the growth of e-commerce.

How can retailers benefit from in-store returns?
Retailers can leverage in-store returns as an opportunity to drive additional sales by creating an engaging shopping environment and incentivizing customers to make purchases during their visit.

What are some best practices for managing returns?
Best practices include investing in technology for inventory management, creating designated return areas, training employees, incentivizing purchases, and making data-driven decisions based on return metrics.