Retail’s exchange opportunity & six other predictions for 2020 and beyond
The future of returns is an exchange opportunity. Last year, Happy Returns’ executive team brainstormed what retail will look like in 2020 and the years to come—specifically through the lens of returns and reverse logistics. Following are our favorite seven predictions.
Prediction #1: Retailers will create Key Performance Indicators (KPIs) for exchanges for the first time.
Large numbers of retailers are evolving beyond simply tracking their return rates. Contrary to conventional wisdom, these companies view and treat returns as untapped opportunities to build customer lifetime value by delighting shoppers—and to retain revenue (rather than give refunds) with intelligent software that suggests exchanges.
Retailers of the future will emphasize increasing their exchange rates without creating friction for the consumer, predicts Happy Returns CFO Andrew Pease. And the use of software with one-click exchange suggestions will become widespread.
A new priority metric will emerge: The exchange rate.
Happy Returns’ data shows nearly half of shoppers use an in-person return option in the first year it is provided. Relatedly, our retail customers report significant reductions in the overall volume of calls that their customer service teams receive.
Prediction #2: In-person will eclipse returns by mail as the preferred method.
If three of four customers said they wanted something, would you deny them their request? That’s how many shoppers prefer in-person returns, where they can drop off items without boxes, packaging, labels, or tape—and where refunds or exchanges are initiated immediately.
Retailers with in-person returns will increase purchase frequency and retain more customers. Why? Because shoppers who know post-purchase activities like returns and exchanges are frictionless will shop more. Predict Happy Returns’ cofounders, David Sobie (CEO) and Mark Geller (COO): All retailers will soon offer at least one label- and box-free drop-off option, as an alternative to returns by mail.
Prediction #3: Retailers will begin charging again for returns by mail.
In-person return networks enable items to be shipped in bulk, rather than individually. Aggregation reduces shipping costs by at least 20%. It also provides an eco-friendly alternative to cardboard when reusable packaging is used.
Sustainability is a word that echoes through every retail boardroom, conference floor, and store. Retailers will begin charging for returns by mail to incentivize their shoppers to select the less expensive alternative that is better for the planet, says David. (Curious what you would save? Use our ROI Calculator here.)
Prediction #4: Retailers will celebrate near-term, quantifiable wins in sustainability with investments in more efficient reverse logistics
Companies will emphasize sustainability in returns as a near-term way to make meaningful progress for the planet, says Andrew. Focal areas will be aggregated shipping and reusable packaging. National media will celebrate these retailers as leaders in sustainability for making their entire product life cycles eco-friendly.
Prediction #5: Brick-and-mortar retailers will embrace third-party return networks as valuable customer acquisition channels
As third-party networks like Happy Returns grow, the location partners who offer in-person returns for other brands are getting smarter about tactics to convert this foot traffic.
For example, one national chain that hosts Happy Returns Return Bars in their stores reported converting 23% of shoppers after experimenting with different in-store offers and communication tactics.
Their recipe for success includes greeting customers with returns the moment they enter the store and promoting an $5 dollars-off purchase offer as a first impression. They’ve found this up front communication encourages more browsing, buying, and conversions.
Prediction #6: Truly comprehensive reverse logistics will enable new insight into increasing customer lifetime value.
Returns will continue their journey away from being the Achilles Heel of retail and toward their role as a valuable step in the customer journey toward maximizing lifetime value. Retailers will embrace the next-level insights that they can receive from end-to-end reverse logistics solutions. It’s not uncommon for Happy Returns’ customers to discover new insights from return and exchange data — for example, that the shoppers who buy the most also return the most, and are the most likely to shop again if the return experience can be improved.
Prediction #7: Returns will improve the natural distribution of inventory.
Imagine a day when shoppers initiate exchanges online and receive instructions to wait a day or two until they can receive their new exchanged item at the same time they drop off their return. The day is coming, predicts David, when a third-party returns network will embrace forward logistics for cost-effective distribution.
It doesn’t take a crystal ball to see why forward-thinking retailers are no longer running from returns, but rather embracing them as a strategic opportunity. This is the clear future of retail, and the future starts now.
Caitlin Roberson
VP of Marketing
Caitlin Roberson is the Vice President of Marketing at Happy Returns. Previously, she served as Director of Enterprise Marketing at Lyft and partner at top-tier venture capital firm Andreessen Horowitz. Before that, she started and sold a content marketing agency.
