Managing Omni-Channel Holiday Returns

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The demands on retailers to develop true omni-channel capabilities lead to all sorts of technological and strategic challenges. In the long run, they’re worth figuring out because the customers demand a seamless and flexible shopping experience. One of the most critical aspects of being an omni-channel retailer is to provide flexible fulfillment. But the lifecycle of a sale doesn’t end once the transaction is processed. Whether you offer guaranteed returns, product warranties or gift receipts, consumers still need to return items from time to time.  That becomes more important and more challenging when omni-channel fulfillment is in full effect.

The bad news is that research shows the rate of returned items is spiking, especially during the holidays. Naturally, reasons for this is that people are given gifts that they don’t like, don’t fit, don’t need, don’t work, etc. However, as more and more orders are processed for products on markdown – the rate is up 34% in 2016 compared to 2015 and a whopping 56% for holiday purchases – and free shipping continues its slow creep to mainstream (up 3% YoY), the traditionally deliberate nature of gift-giving has given way to more opportunistic gift-giving. Hopefully your own gifts won’t be any less meaningful this year, but someone’s will be, and those items are going back where they came from.

OD instorepickupOf a retailer’s total holiday sales, it can safely be expected that almost 10% will be returned. So how can you ensure that your returns policy keeps customers as happy as your fulfillment policy? How can you protect your own operation from the negative impact of returns?  How can you ensure that your POS and Order Management Systems (OMS) are making your job as easy and profitable as possible? As the forward supply chain must rely on the combined capabilities of POS systems and advanced order management systems in order to be effective, so too must the reverse.

The intersection of POS and OMS

POS systems have long been relied upon to be the single most important inventory management system, and for good reason. They naturally fill the role of managing sales and aggregating data at macro and product levels. But POS systems can’t perform all of the tasks an OMS can; just as an OMS wouldn’t be relied upon to track sales (although it could), POS shouldn’t be expected to manage the movement of items, warehousing and distribution strategies, or manage the re-distribution and re-shelving issues that come along with omni-channel returns.

Yes, many POS systems alone give you the chance to accept returns in the store for items ordered online, return money to the consumer and get the item back on your shelf. But POS systems often lack the combined depth of inventory visibility and management that OMS has built in. OMS allows your stores to act as significant value generators, allowing retailers to put returned items back to work, without having to sell them from the location they were returned to, shipping them back to the original store, or stashing them en masse in a warehouse. POS and OMS should work in tandem, as complementary solutions that are allowed to focus on what they do best: manage sales and manage inventory and fulfillment, respectively. 

OD Inventory Manager ScreenShot on Apply MonitorLeverage your best weapon: the store

Allowing for an omni-channel returns process will help you realize many of the same benefits as your omni-channel sales process, including improved customer satisfaction and loyalty.

With the physical store acting as a retailer’s most important competitive advantage over Amazon, it needs to be leveraged wherever and whenever possible. While Amazon is one of many retailers who have launched a network of drop-off lockers at convenient spots in cities and towns, the store continues to be a more complete option. What if the consumer wants to exchange the item? What if they’re hoping to use store credit or even a cash reimbursement to buy another item on their wish list? A pick up locker is a good start and a convenient option for many, but doesn’t allow a retailer or a consumer to take advantage of any other part of the retailer’s value proposition.

You can’t manage what you can’t see

Yet for all the benefits of allowing shoppers to return products in-store, any store, regardless of origin, retailers need to have real-time, complete visibility and control of these products. Inventory visibility needs to span stores, warehouses, supplier networks, and even inventory in transit from DCs to stores or from suppliers to stores. Tracking individual products with certainty allows inventory managers to make smart decisions on their next inventory orders, allows redistribution of goods to meet demand locally and provides valuable data to the teams tracking trends for optimal sales tactics down the road. Without real-time visibility, products get lost in the shuffle and their margin potential erodes quickly.

Beat return woes with an omni-channel order management system

To manage the influx of returns during the holiday season, and to lay the foundation for effective inventory management down the line, implementing a true omni-channel order management system is critical. Between managing the flexible fulfillment options that consumers demand, to having real-time insights into inventory activity and locations, to managing returns without any fuss or financial loss, there is no better way to avoid the holiday blues and ensure that your company continues to see plenty of green.

About the Author

NickMcLean CEONick McLean is the CEO of OrderDynamics, a leading global provider of omni-channel order management systems. McLean joined the OrderDynamics group of companies in 2010, and has more than 20 years’ experience in developing and implementing strategies for growth, steering product management, marketing, and partnership activities on both a domestic and global basis.

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