How can 8 people handle product returns of 5,000 product lines?

With the incredible ease of online shopping comes a huge retail and CPG problem – a growing rate of returned products. It’s not uncommon to see return rates of 30% or more for merchandise that’s bought online. Clothing returns can be around the 40% mark.

In total, Americans returned $260 billion!!! in merchandise to retailers last year, or 8% of all purchases, according to the National Retail Federation. That 8% grows to 10% during the holiday season.

 

With eCommerce now an inseparable part of every retailer and CPG maker, how can you effectively understand your returns to battle the trend and lower the rate of returns?

In a recent article, Tom Enright, supply chain research director at Gartner commented on this phenomenon saying, “Retailers are not very good at managing returns right now, and so unless they invest in their ability to manage returns, the volume of returns coming back will cause problems in their overall supply chain,”. He warns retailers that dealing with returns the old way is a “ticking time bomb turning into a major cash hole.”

 

To lower returns you need to know your data

To battle your returns, no matter if you’re a CPG maker or a retailer, you need to understand the reasons for the returns so you can take action. In general returns are around the following reasons:

  1. Product fit / Product doesn’t match the description

The customer may have bought the wrong item or bought an item that doesn’t fit his exact need. This is more common for ecommerce as consumers can’t physically see or feel the product.

  1. Gift returns

This is pretty obvious, you get a gift that you don’t need or can’t afford to keep

  1. Product defects

This is the area that is most controllable. Since if you know what the defects are you can fix them or work around them to reduce returns

 

Where does the data about return lies? If you’re a retailer you should have

  • In store data from the return desk
  • Online data from online returns
  • Call center data
  • emails

If you’re a CPG maker sources vary slightly:

  • eCommerce comments and reviews on sites like Amazon or major retailers websites
  • The CPG website comments and reviews
  • Call center data
  • emails

 

The challenge with all this data is that it’s very hard to mine it. It’s a lot of data, and mining it relies on having a team of experts using text analytics software to look for keywords and terms. Its been done quite a bit, though its challenging as it’s a high effort low return exercise as you need to guess quite a bit:

  1. Guess ALL the different ways that people talk about the same return issue or product defect: Imagine how kids, teenagers, boys, girls, adults of different ages all speak about the same topic. If we take the example of an electrical appliance battery, you’d need to look for all negative expressions about it such as “mine doesn’t hold charge” or “battery is weak” or “it dies on me after minutes of usage”
  2. Guess the topics that are not on your mind: How can you guess ALL the different topics consumers talk about? The short answer is you can’t, which means you will miss quite a bit
  3. Guess the next hot topic: With new products comes new issues. You’d need to know something has come up in order for you to look for it, and then obviously you need to guess the different keywords used by to describe it

 

So how can you make it work across lots of data

At Revuze we offer the first all automated, zero setup, consumer insights solution:

  • It is self training
  • It automatically identifies topics and interests
  • It automatically understands that different terms talk about the same topic
  • It learns new terms that surface and their meaning

Around this we built other capabilities that help CPGs and retailers understand the key product issues out of heaps of data and handle them effectively:

  • Alerts for new major issues when analyzing your data
  • Deep analysis of the product issues description to suggest root cause
  • One click reporting to share the issue with product or return teams

 

With the above capabilities a Fortune 500 CPG maker is able to identify product issues with a team of 8 people that manages issues across 5000 product lines:

  • New issues are surfaced automatically through alerts
  • The person getting the alert analyzes suggested root cause
  • One click reporting sends the information onward to product or logistics teams

 

Conclusion

Product returns is the new epidemic for ecommerce and is hitting retailers and CPGs hard. To battle it they need to be able to control their data, and it can’t be done with humans, experts or data scientists. Its just not good enough.

Revuze is an innovative technology vendor that addresses just this with the first self training, zero setup, low touch solution that mines the data for you, and it does it without humans. Ping us to learn more…

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