Using technology in the warehouse is one of the most effective ways to improve inventory management and reduce returns. Since returns represent a significant cost to companies, it is imperative for retailers to take steps to improve inventory management and manage returns. Gaining control over returns is easier when systems are in place to automate the returns management process. Unfortunately, consumers can still return products without necessarily initiating the process online, such as returning a product to a brick-and-mortar store after making an online purchase. Supply chain leaders should begin by understanding the true cost of returns.
The Unbearable Cost of Returns
According to Lisa Terry of Samsung Insights, up to 17% of consumers will abandon a company after a single bad experience. After two negative experiences, 59% of consumers will walk away. The problems only grow worse from there. Consumers with bad experiences spend 140% less than those with positive experiences, and companies that seek to reduce returns through stringent return policies will likely alienate customers. Retailers typically recoup a maximum of 25% of the original purchase cost since each return represents a lost sale and an opportunity to create a life-long consumer. Ultimately, poor returns amount to lost customers and opportunities.
Improving Returns Management Begins With Creating the Right Experience.
Take a moment to think about the causes of returns. Chances are good returns are the result of three key factors: buyer’s remorse, product defects, and failure of the product to meet customer expectations. While companies cannot successfully control customer actions, supply chain leaders can ensure products are defect-free and meet customer expectations. Improving returns management by taking control over inventory management begins with ensuring customers get what they want and expect when making a purchase, which creates a positive experience for customers. Companies can use data to gain insights into what drives customers’ returns. In fact, up to 63% of customers are willing to share data freely if it creates better shopping experiences, says Terry.
How to Improve Inventory Management Through Technology
Meanwhile, in the case of returns that result from buyer’s remorse, retailers can also deploy technology to automate the returns process, such as giving the customer the ability to easily print a return shipping label, scheduling the order for return shipping online, and more. As noted by Cate Trotter of Insider Trends, additional steps to reducing returns and improving inventory management include:
Using technology to improve inventory management and expedite returns is much simpler than many companies realize. On the surface, vast analytics platforms and the need to collect and analyze data can be overwhelming. However, advanced, modern systems are designed to run these processes simultaneously, presenting actionable insights to warehouse managers and marketing professionals in your organization. Therefore, your company can gain control over preventable returns.
- Get to know your customers.
- Apply data to ensure adequate, lean inventory levels.
- Take advantage of virtual reality tools, especially for high-variety items, such as clothing and personalized products.
- Implement transparent shipping and last-mile delivery policies.
The Digital Supply Chain: The Landscape, Trends, Types, and the Application in Supply Chain Management
Choose an Experienced Partner to Optimize Inventory Management and Reduce Returns
Optimizing inventory management and reducing returns are effective ways to gain control over your operation. Stop wasting time with inefficient returns processes and poor visibility by implementing the right technology and procedures to manage inventory and returns successfully.