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The Dark Side of Black Friday and Cyber Monday: Managing the Surge in Customer Returns

 

 

Over the past few years America’s ‘Black Friday’ concept has begun infiltrating the UK marketplace with retailers pulling out all the stops, eager to create a gift-buying frenzy with shoppers. On the heels of Black Friday comes Cyber Monday, the day of the year that marks the highest volume of online sales, and provides even more incentive for shoppers to spend. Last year alone UK shoppers spent £3.3bn over the four-day period[1] between Black Friday and Cyber Monday, making it an incredibly lucrative y few days for most retailers. However, with all the spending and, let’s face it, impulse buying that occurs between Friday and Monday there is plenty of space for consumers to experience some amount of buyer’s remorse. In 2015 almost 5% of purchases made over the Black Friday and Cyber Monday weekend were returned to the retailer, equating to £180 million – and the number of returns is expected to rise this year. The predicted increase in online purchases, which bring with them incredibly high return rates (up to 40% in some cases), and heightened consumer expectations of relaxed return policies, will both contribute to the reason-for-return this holiday season. No matter the reason, it’s crucial for e-commerce retailers to have an efficient plan in place for returned merchandise, this includes the stock that can’t go back on virtual shelves and is slated for liquidation.

The logistics of returns

For e-commerce retailers, the complexities of managing customer returns are increased due to the logistics of trading in an increasingly global marketplace; the true cost of returns can vary greatly depending of the location of the customer. For example, it’s common in Germany for consumers to order multiple sizes and colours of clothing with the intention of returning the ones that don’t fit – as a result, Germany has one of the highest return rates in the EU: around 50% of online purchases are returned. In every country customers can return items right up until the local statutory law dictates, and the length of time it can take to get the item back and re-processed, the refund offered, and the product marketed for re-sale can be significant. It is essential that retailers account for these logistical delays in their cash flow and set up a process to recoup as much value as possible for the merchandise once it’s been returned.

An Innovative New Approach to Liquidation

A lack of innovation over the past few decades around how organisations approach the liquidation of their returned and overstock inventory has resulted in massive losses and can no longer be left to inefficient and outdated methods. For example, selling the inventory to one or two brokers typically means lower recovery amounts; brokers are experts in negotiating prices down in order to maximize their own profits. They make money by buying at lower prices, not selling at higher prices. What’s more, selling directly to a broker can mean lack of control over downstream sales and how a retailer’s brand enters the secondary market.

 

An Internet-based solution is a much more profitable option. Specifically, launching an online auction B2B liquidation marketplace that can be customized, integrated, and scaled based on a retailer’s unique inventory needs. This type of solution makes it possible to have thousands of secondary market buyers compete for inventory versus negotiating with a handful of brokers or liquidators offline. What’s more, it automates the process, ensuring a much quicker sales cycle and proprietary market intelligence in the form of real data on market prices. Now liquidation becomes a strategic asset that will benefit the retailer – and only the retailer – for years to come.

Many of the world’s top retailers, including the world’s largest retailer and e-retailer are using a web-based, technology-driven approach and increasing recovery for their returned and excess merchandise by 30-80% and sometimes much more.

Companies in today’s aggressive retail climate can’t afford to use out-dated techniques for their returned and obsolete inventory slated for liquidation. Unless there is a zero-returns policy in place – which in today’s retail environment is unlikely – there is no hiding from Black Friday and Cyber Monday returns. But, by planning ahead and putting an efficient process in place, returns can become a strategic asset for retailers, rather than a dreaded post holiday afterthought.

Sources

http://europe.newsweek.com/list-most-returned-holiday-gifts-each-year-407115?rm=eu

[1] http://www.cityam.com/229996/black-friday-cyber-monday-2015-uk-sales-figures-are-in-uk-shoppers-spent-33bn-over-the-weekend 

 

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