Hello, everyone, and welcome to the final episode of this series of herbs hot takes, we've been talking about returns and the issue of returns for retailers. We've covered a lot of ground so far with our expert guest. Herb Billings is the VP of technology strategy at data skin herb. Welcome back! Final episode of the series. Yes thanks, Tyler. It's been fun. Well, we've covered a lot of ground in this series so far. Just talking about returns outlining the problem, what happens to inventory once it's been returned, and also some best practices for handling returns. And today we have a lot more ground to cover talking about what retailers can do on the front end to minimize returns, but just bring us up to speed on some of the high points of what we've talked about in the series so far. Sure well, we've certainly talked about how returns are a growing problem and they're growing right alongside online sales. The more online sales you have, the more returns, you have not only in number, but the cost of those returns are much more expensive than a brick and mortar return. The retailers are also being faced with an environmental impact with the returns that are thrown away. 25% of them are thrown away into landfills, another percentage are incinerated, and these things are of concerns to consumers now. And there are also concerns to governments who are starting to enact laws to force donations or reuse of these items. So we've covered a lot of ground up to this point talking about returns, but all of our conversation has been with the assumption that returns happen. And of course, there in inevitability returns do happen. But what sorts of things can retailers do on the front end to maybe prevent returns from happening in the first place? Certainly well, it's very important. Our last episode was to talk about best practice, best practices to make it free and painless for the consumer, which does increase the likelihood that items will be returned. How do you decrease that likelihood without making it painful or expensive for the consumers? Just as a reminder, up to 30% to 40% of items can be returned, depending upon the category. Apparel and footwear seem to have the highest rates. This is a tremendous impact to your profitability. You have a lot of labor handling. The returns can result in markdowns, if not a complete write off. And then you have the return shipping charges that you also responsible for what they found. One article that I read said 65% of the returns are actually the retailer's fault. So in order to address those impacts to profitability, the retailers can really look in the mirror and see what needs to be done. It's a big opportunity to study and improve this process, gather as much info as you can. So the first part of the returns process is to find out why. Take that information, encourage the honest answers from the customers. Make sure that they're not pencil. Whipping it by some burdensome, burdensome form and a simple and easy policy is goes a long way for that. But then study results and identify your top priorities just like you would with any other potentially problematic process. So once you've analyzed this and ask those important y questions, what's the next step? Well, I like to think of these problems by busting them up into smaller problems or at least smaller components and study each one. Here, I like to think of each phase and the items life from start to finish, but finishes, not when it leaves the retailers door. Let's start with the design process. You can have a design flaw that could cause returns, something that is just not. It's impossible to know until it actually gets out into the field. So that's one thing to look at. Another is your manufacturing facilities and process. Is it a material problem? Do you have substandard materials? Is it a workmanship problem? Are there processes in the manufacturing process that need to be updated, fixed or changed? From there, it's in the supply chain. So when the item travels from the manufacturer to the retailer, it's now in the supply chain. And typically what happens there is related to the packaging or the handling of the items. You know, it could be something as simple as this is up. Keep all of these boxes faced in this direction, right? And it not be readable for it to be a significant change to improve items getting damaged in the supply chain. From there, you have shipments to the customer. Where can that go wrong? Well, there are a number of ways. The pick process could be wrong. You might get the wrong item. Is it core? Is it orange? Are you double checking the skus? You can have damage in shipping and then that would be a function of how the product was either packaged in the first place or how the shipment was prepared. And then you can have late shipments and that is all dealing with your, your shipping provider or the last mile, if you know you're dealing with that. So let's assume for a moment that nothing with the supply chain went wrong, that everything from beginning to end of the process went smoothly. It was delivered to the customer in a timely manner and all of that sort of thing, everything went well. Are there other things that could still trigger a return? Yes so we talked in a previous episode about how fit feel, color description of these can be problem areas that could cause a return. In this regard, you really want to over describe the product if it's too small a detail in your mind. It is not too small to include on the website, right? Color, size, shape, weight. All of those are obvious. How the item is used is not so obvious, and that's a good one. To include washing instructions for apparel is my example that I'm going to go with. I looked at my very first item to look up for. This was like a shirt and it said machine washable. Oh, that sounds great. But if you're in the store, you're looking at the tag and you see that it is machine washable, cold only and do not tumble dry. So those are the kinds of things that were not in that description. And you might find when you get home and you say, I'm not dealing with that. Yeah, that's not how I do laundry. Reviews, obviously, everybody checks reviews. Your average star rating is an important one. But some of the other newer items that I've seen are keyword indexes. So when you go to a site and you see an item that's really, really popular and it's got 2000 reviews. Which ones do I read and did I get the ones that are important to me? Well, the keyword index of the reviews is a really helpful piece of information for the consumer. You know, another issue is, is this review useful? So when you read it, sometimes you see the joke reviews online, so maybe that one's not so useful, but it was funny to read. It's interesting how the e-commerce sites now are asking you to review the review. Yeah, and so those will have a higher priority for the next person. Again, that's where we all pitch in and crowdsource the usefulness of these things. Questions and answers. I really love those because very often I'll find the very question I have, and that's answered by somebody who has the item and I trust those generally. Certainly, pictures are important, but but need to think about them from every single angle. It's also helpful to see the item and use short video clips are useful for every angle and in use information. But there's another one that's becoming really popular is a product live stream by your brand ambassadors. So these days, with Instagram selling, Snapchat selling and Facebook and all of the others, it's helpful to have somebody that you trust because you liked them on this TV show or you liked them in those movies. And whatever it is that gives you an affinity for that person also gives you an affinity for those products, not just a picture that says drink this water, but also how it's used. And that sort of water is probably not the best example for that, but some other item that might be useful. So what about emerging technologies? We've seen some with Ar and vr, things like that might be exciting to discuss and explore as it relates to how you can potentially see and experience a product before you actually have it physically in your hands. Those are really, really exciting to me, and I'm looking forward to what comes next. Augmented reality and virtual reality are two things that I think will really benefit retailers in the long run today. Right now, you can use augmented reality to place furniture in your own room, so you take a picture of the room and you say, I want this piece of furniture. And then you move it to that spot and you see exactly how it will look, and it will be the size that it's supposed to be in that room. You'll see if it fits and if it makes sense. Sephora and L'Oreal allow you to apply makeup to your virtual image. And so that is a big benefit to see how that color is going to look. Warby Parker is the go to DTC brand for eyeglasses. So what we have right here? Awesome will they allow you to see what those frames will look like on your face? So this really is a huge benefit and reduces the returns a significant amount. Now, virtual reality is a little bit more difficult to implement. It's a little bit, you know, you don't have anything to augment, you're actually completely creating reality from scratch. I understand Lowe's has a virtual reality tool that allows you to practice using their equipment that you can buy there. So if you want to practice with a table saw and learn how to use it and see what's important, how you can do those things. I expect to see more virtual reality coming to a website near you. And what about maybe other tools for sizing that being a big issue, especially as it relates to apparel like we've talked about in the past? Yes, apparel with the 30% to 40% return rates. Sizing there is no standard model. Everybody knows that. You know that an Excel and this brand is not an Excel in that brand, right? And then it gets worse with women's dresses and the sizing. Their vanity sizing has come into play where we've all grown over the years. And so to make us feel better about ourselves, they might say that what used to be a small is now, you know, I mean, I'm sorry. What used to be a medium is now a small right. All of that is playing into this. There's some creative solutions that are here now and coming. Some companies that come to mind are true fit, fit, analytics, virtue, size. Yeah, these gather measurements from you in one of three ways that I can tell. One is direct measurements. They tell you, please measure your waist, please measure your neck, please measure your chest size, and then you put it in. Now that you know, that can be a difficult thing. The person at the store who's helping the tailor, who's measuring you for your suit to fit does it all day long and knows exactly how to do that. That can be a challenge for an at home person, but still, it's better than nothing. Another site I noticed asks you for your favorite fitting items and then you input the brand and the size that item is. So from there, they know your size and then a third option, which is also very interesting. They tell you to dress in some form fitting clothes and then take pictures in various poses, and a smart application will measure you from those pictures and determine what shape you are from there. There are these databases that cross-reference that information to the sizing information of individual items. So if the item you're looking for is in the database, then they can recommend a size for you. That's how that works on these websites, and it is really very interesting now. You know, it's kind of difficult to find some of these items sometimes, but I'm expecting them to grow significantly over time. Well, as technology continues to grow and develop, we anticipate there will be new, fun and exciting ways for people to experience products as online shopping continues to be a growing trend in as we expect to continue to see that in the future. I think technology will continue to enable people to experience these products before it actually arrives at their home, hopefully lowering and limiting the amount of returns that we need to make sure, you know, the returns process. Studying that and improving that is definitely hard work. But the investment will pay off in the long run. Getting the right size. Is going to be an absolute huge win. In fact, snap, the makers of snapchat, bought fit analytics that I previously mentioned earlier this year, so they recognize that getting the right size and lowering returns for their customers. The retailers who are advertising on their site will be a big win. There we go. That's pretty much concludes our four part series on returns. Herb, is there anything you want to say in closing to wrap up the series as a whole, perhaps to give people something that they should walk away with? Yeah, I would say that make sure you invest in the returns process. Think of it as part an integral part of the entire purchase process. Returns are important to consumers. They've become more important with online sales. Online sales have become much more important as a result of the pandemic, and I predict that while we will pull back some, we will not pull back all the way. It's advanced online sales tremendously, her Billings from data scan. Thank you again. So much everyone for tuning in to this series on returns. We appreciate it very much. Again, if this is the first episode you're tuning into to go back and check out the three earlier episodes in the series where we dive into the basics, explain the problem and get much more into the nitty gritty of returns. Thank you again. So much for joining us for her Billings. I've been your host, Tyler Kern. We will see you next time on her website takes.
