It’s never easy to put the perfect present under the Christmas tree, especially when shoppers make last-minute purchases! Whether it’s the color, size, model, or brand — at the beginning of each year, consumers return a flood of unwanted products to the stores’ reception desk or send them back to e-merchants via the post office. This phenomenon will grow even more this year as eCommerce sales are expected to grow between 14 and 18 percent, higher than the 11.2 percent in 2018¹. According to the same research conducted by Deloitte, two-thirds of consumers intend to begin their holiday shopping journeys at online retailers with few or no physical locations. The period that follows is known as the Retail Vortex. How can we fight this post-holiday phenomenon of increased returns? The shrewdest of eCommerce merchants rely on decisive purchasing support via messaging to help shoppers find the best gifts.
Product Returns, an eCommerce Pitfall
The digital transformation has changed the rules of commerce by putting brands in direct competition with each other. This transparency has generated a frantic race for low prices that drastically reduces the eCommerce websites’ margins. Other factors, amplified by the holiday season, also challenge profitability for eCommerce websites:
- Shipping costs: 81% of American online transactions included free shipping during the 2018 Christmas season according to Comscore². In the meantime, 33% of distributors say that the fulfillment costs per order increased from 2017 to 2018³;
- The costs of goods returned: more often than not at the websites’ expanse. Across the Atlantic, one out of eight (12%) online purchases are returned in Germany according to a study conducted by the digital association Bitkom last December⁴.
And the phenomenon, particularly common in the ready-to-wear industry, is accelerating. Two years ago, only 10% of orders were returned. And goods returns do not only negatively impact the platforms’ revenue, but they also represent logistical difficulties.
“Returns generate personnel and organizational costs as products need to be examined and sent back to the warehouse,” says the Bitkom study.
Often unpackaged and damaged by shipping, the products returned cannot be resold using the same distribution channel, especially when it comes to furniture and consumer electronics. Online retailers turn to second-hand websites, repair stores, and discount channels, but sometimes they stll cannot remarket the products. Because sometimes gifts do not please (they are not the right size or arrive in duplicate), the days and month following Christmas represent a dark period for e-merchants when it comes to package returns. While some platforms integrate the cost of returns into their business model, like Zalando does with its Try First Pay Later service, most websites are now trying to decrease this very expensive, seasonally intensified, cost.
Prepare For the Christmas Vortex
The term vortex was introduced by distribution analytics experts, DynamicAction when referring to the post-holiday infernal spiral for e-merchants⁵. Several phenomena take place during this particular period:
- A higher number of new customers
- Higher marketing costs
- Increased returns
- A rise in inventory
These four difficulties cause harm to the platforms’ operating costs and squeeze their profits at the beginning of the year. According to DynamicAction, product returns were already taking place as early as December 25th in North America last year, and they were on average, until mid-January, 26% higher than in 2017. In addition to a drop in profits, these goods returns inflated inventories by 9%. Most of the products returned required significant discounts or were simply unsaleable.
How can this phenomenon be limited? By adopting a customer-centric holiday strategy, targeting your high-potential buyers, and offering them a qualitative shopping experience to:
- Retain them and limit re-acquisition costs thereafter
- Support them by multiplying the number of touchpoints and relevant advice communicated
- Doing this especially during shopping peaks in the evenings and weekends
It is worth repeating that 4 out of 10 consumers would like to share digital interactions than currently offered by brands⁶, and that 70% of consumers would rather use messaging than call the customer service teams over the phone⁷. Therefore, online conversations offer an optimal communication channel for useful and non-intrusive purchasing support. They represent a great asset to avoid many bad choices and, consequently, goods returns.
24/7 Availability that Makes a Difference
We don’t search for our Christmas presents or purchase them during store opening hours or business hours during which online customer service teams are available. In fact, the lunch break, commute back from a busy day of work or the weekend are strategic periods during which your brand must be present. Two options are then available to websites:
- Leave consumers on their own. Then your brand risks seeing them contact a competitor who knows that 70% of purchases are made in the evening and weekends and has, therefore, answered their question at the right time.
- Engage in conversation with online shoppers even when your teams are unavailable. This way, you allow your website visitors to ask their questions without delay. But how? Chatbots will be able to answer simple questions and direct online shoppers to the best respondent: a professional customer service agent on a deferred basis if necessary, or an ibbü expert on a live basis when immediate responses are decisive to finalize a purchase.
Driven by their enthusiasm, the members of the ibbü community advise buyers during their free time. Thus, they are available precisely when their peers, other consumers, make the majority of their purchases: in the evenings and weekends.
This innovative option allows your brand to combine the best of both worlds: professional and peer-to-peer interactions with certified experts to provide authentic conversations. Teaming up with independent experts, loyal users of your products will allow you to provide decisive purchasing support at the right time and, therefore, minimize order returns.
Expert advice for online shoppers to make the right choice
As the years go by, it becomes more difficult to find a gifts that everyone will love. In November, and up until 24 December at the latest, a real hunt for the ideal present is on. A retailer’s mission is to seize all sales opportunities by guiding visitors towards the best-suited product!
But it may be difficult for consumers to choose what to give loved ones, especially when trying to balance their interests with what is available this season — for the entire family! With most shoppers — the investigation starts online. Consumers frantically browse websites in search of ideas, and are often lost as they face an abundance of items, sales, and *exclusive* opportunities. It is at this key moment, when consumers have a purchase intention but hesitate, that your brand can make a real difference! eCommerce has not yet succeeded in precisely mirroring the experience provided by physical stores. A size is specified on pants but I don’t know what to do as all brand’s sizes are different! Will this sweater fit a skinny and short woman? In these situations, consumers will seek the advice of their peers to avoid any disappointment.
While customer reviews allow consumers to share their experiences, they are not enough to trigger a purchase. 75% of online shoppers would like to exchange more human interactions⁸. Independent experts from the ibbü community provide a perfect solution: offering shopping support via messaging for their favorite brands. Whether they are enthusiastic about running, high-tech or cooking, these savvy freelancers share their expert advice and guide visitors throughout the website of brands such as Leroy Merlin, Onatera, The Kooples or Back Market to help them find the best Christmas gift for their loved ones. The presents have been so well chosen that you can bet they won’t be returned!