Reinventing Retail - The View from Optoro
This year has been the year of the pivot for retailers as the pandemic reshaped consumer behaviors and the customer experience, most likely permanently. As we look to 2021, retailers need to focus on planning for the future with strategies that meet both the immediate and long-term needs of their customers and maximize the potential of all their sales channels. SmartBrief spoke with Larisa Summers, senior vice president of marketing, Optoro, about what changed this year for retailers, best practices for 2021 and the role returns can play in helping retailers succeed and build brand loyalty.
What have been the biggest changes in the retail industry this year and what's been driving those changes?
Retail digitization has been advancing for the last several years as e-commerce continues to grow. With the COVID-19 pandemic shuttering stores and driving shoppers online, e-commerce accelerated rapidly this year. According to data from IBM’s U.S. Retail Index, this acceleration may have propelled e-commerce five years forward.
Given this change in consumer buying behavior, retailers were forced to consider new technologies and innovations that could support a significant increase in online shopping. For example, we saw many retailers struggle with shipping and delivery challenges as they were inundated with online orders. In 2021, we’ll likely see a lot of retailers invest more heavily in logistics to support e-commerce purchases.
Stemming from the rise of e-commerce, we also saw an associated rise in returns. Because e-commerce returns can be up to 3x higher than those from brick-and-mortar, many retailers saw a significant increase in volume. In early 2021, we’ll likely see retailers grapple with the highest amount of returns yet as holiday gifts come back. In a survey Optoro ran after the 2019 holiday season, we found that 66% of consumers had returned at least one holiday gift. And in October of this year, we ran a survey that found that 80% of consumers plan on doing the majority of their holiday shopping online. To add on to that, we’ll also see the prevalence of gifting items rather than experiences, result in higher rates of returns as gifts to concerts and sporting games will be replaced with products.
How can the move to BOPIS and curbside pickup help retailers connect with customers, make their brands memorable and cultivate customer loyalty?
Many retailers adopted buy-online, pick-up in store (BOPIS), buy-online, return in store (BORIS) and curbside pickup and returns processes prior to the COVID-19 pandemic. In doing so, they were well positioned to drive significant improvement in customer satisfaction. Our research in early February showed that 66% of consumers preferred to return items to stores.
There is also a lot of research that shows that the average conversion rate in stores (35 to 60%) is much higher than the 3% seen in online purchases. As a result, retailers should try to drive customers into the physical store as often as possible.
After the onset of the COVID-19 pandemic, the retailers who had already enabled BOPIS, BORIS and curbside pickups had a clear advantage over the retailers who didn’t. Moving into 2021, consumers will be used to this level of convenience and continue to demand it — making these offerings table stakes for omnichannel retailers.
How can a strong returns offering help inspire confidence among consumers in the new retail normal?
Customers have accepted making a return as an inevitable part of their shopping experience. And because that customer experience is paramount, retailers need to treat the post-purchase journey with equal importance to the pre-purchase journey by offering a returns experience that delights consumers.
Optoro’s research shows that 97% of consumers will return to shop with a retailer that provides a positive returns experience, but that 42% of consumers have had a return experience that was so bad, they never returned to shop with that retailer again.
So how can retailers provide a positive experience? Consumers are looking for convenience and safety above all else. They want an easy, contactless way to return an item that doesn’t involve packaging it up, printing off a return label and bringing it to the post office. According to our latest consumer research, the majority of consumers rank online return portals and packageless return drop-off options as the most convenient part of a return experience.
Retailers should invest in online return portals that allow consumers to easily initiate a return, receive an immediate credit that allows them to repurchase or exchange that item, and then drop off that return at a third-party location.
How can technology and analytics drive retail success in the new year?
E-commerce accelerated rapidly in 2020, and will likely continue to in 2021. Retailers will need to invest in technology that not only makes online shopping easier for consumers, but also more profitable.
To help give consumers a seamless online shopping experience, retailers should invest in tools like fit finders that allow shoppers to find the best size or product recommendation engines that suggest additional purchases related to what they add to their carts.
And as ecommerce growth leads to increased returns in the new year, retailers need technology that provides shoppers with a positive returns experience that fosters loyalty and repeat purchasers. On the back end, returns technology allows retailers to automate returns routing to the most profitable channel and recoup revenue while also providing data on return reasons that can inform the forward supply chain.
What advice would you give to retailers to help them succeed in 2021 and beyond?
E-commerce and contactless commerce is certainly here to stay. Retailers need to make the right investments that allow them to cater to the online shopper and account for an increase in returns. And even more than that, retailers should rethink every step of their customer journey to adapt to ever changing consumer behavior. They need to predict and critically assess both the pre-and post-purchase journeys to ensure they’re making investments in the right areas. Customers are trying out new brands as they adjust to their new normals, and the ones who are served with a positive experience from start to finish are the ones who will stick around.
Larisa offered more great insights into the future of retail during the "Reinventing Retail: How Retailers Should Embrace the New Normal in 2021" webinar. Watch it now.
Larisa Summers began her e-commerce career in 1999 with industry pioneer Buy.com, where she launched their first advertising sales capability. During her 7-year stint at the company, she oversaw all of their online and offline as their Vice President of Marketing. Larisa then moved to Silicon Valley, where she served as Vice President of Marketing for shopping search engine TheFind.com (acquired by Facebook in 2015). Larisa got her first taste of the reverse logistics world when she joined Best Buy and led both their direct-to-consumer and wholesale Secondary Markets online businesses.