Tag Archives: product returns

Online Retailing – How Profitable are Impulsive Shoppers?

Impulsive shoppers are customers of online retailers that don’t think twice to buy a product online. For that reason they are targeted by most online retailers. However, the same characteristics that make behaviour of certain customers impulsive, may also affect their post purchase behaviour.

So let’s have a look at impulsive shoppers. Who they are? What motivate then? And how online retailers should manage them?

What is impulsive shopping?

Impulse shopping occurs when a consumer experiences a sudden, often powerful and persistent urge to buy something immediately 1. Impulsive shopping is part of the consumer buying behaviour process. Yet it differs from the traditional model, because impulsive shopping in contrast with ‘normal’ shopping is usually unplanned.

Who are impulsive shoppers?

How many times have you returned from the shopping center with products you don’t need or didn’t intent to buy. Similarly, when the doorbell rings and you receive a packet, and shockingly only remember then that you’ve bought something online only a couple of weeks ago.

Don’t stress, you’re not alone. It is estimated that impulsive shopping in the USA accounts for 80% in sales of certain product categories 2. Also that impulsive buying is more prevalent with new products. Here are more facts about impulse shoppers 2:

  • Gender – women tend to be more impulse shoppers than men;
  • Age – people under 35 years are more impulsive shoppers than older persons;
  • Culture – individualistic people are more impulsive shoppers than people living in collectivist cultures.

The mood and personality traits of people also affect their urge to do impulsive shopping. People with positive moods love impulsive shopping. In the same way, people with negative moods may use impulsive shopping to feel better 2. Also, people who enjoy a pleasant experience whilst shopping, tend to be impulsive shoppers 2.

A study to investigate the relationship between personality traits and compulsive shopping indicated the following 3:

  • There is a positive relationship between people with emotional instability (anxiety, moodiness, irritability, and sadness) and impulsive shopping;
  • People that are more imaginative, cultured, curious, original, broad minded, intelligent and artistically sensitive are more likely to display Impulsive-buying behaviours;

So that’s your impulsive shopper. No let’s do business with them!

Targeting and managing impulsive shoppers

If you take into consideration the traits of impulsive shoppers that were discussed under the previous heading, you may match your product, brand and content with you customer’s gender, age, culture, mood and personality.

However, to target and manage impulsive shoppers successfully, you need to know their shopping behaviour. It’s therefore very important to gather and analyse your customer’s data. Or, if you are a start-up, buy external data (customer lists) to analyse and use.

You can create a profile of your impulsive shoppers using the answers that the data provide. So, you need to communicate brands, products and content to the customers you target to trigger their urge to shop. Also important is to find out where they hang out online (social groups, Facebook pages, etc) to publish your content there.

How profitable are impulsive shoppers?

“As of now, e-commerce has already become a part of our online agenda, mainly because of how easy and hassle-free it is to go shopping online”, said Catalin Zorzini from Ecommerce Platforms.

The internet has made it easier for people to shop. Everything is so simple. You’ve got large variety products to choose from and it’s easy to compare prices.  After all, the sale is just a click away. Retailers have never had is so good…

But, there is the other side. Now the customer has received the stuff he bought online, it’s a week later, and he decided the buy was a bad decision. So, after reading the retailer’s return policy, he just do that – return the product.

And now your impulsive buyers that you’ve spend many dollars to find on Facebook, is costing your money. The solution – rather build a solid relationship with loyal customers. Loyal customers that are impulsive shoppers are profitable.

Conclusion

Every shopper is unique and therefore behaves differently under similar conditions. Nevertheless, the internet gives us the opportunity with big data and web analytics to know each customer personally and how he behaves when he is shopping.

Best is to make every impulse shopper a loyal shopper by personalizing their content and product offering.

Read also: Hi I’m you emotional customer. Can you please help me?

Notes

1 Verplanken, B. and Sato, A. 2011. The psychology of impulse buying: An integrative self-regulation approach, Journal of Consumer Policy, 34(2):197-210.

2 Kacen, J.J. and Lee, J.A. 2002. The influence of culture on consumer impulsive buying behaviour, Journal of Consumer Psychology, 12(2):163-176.

3 Shahjehan, A., Qureshi, J.A., Zeb, F. and Saifullah, K. 2012. The effect of personality on impulsive and compulsive buying behaviors, African Journal of Business Management, 6(6):2187.

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Pixabay

 

Product Returns may Destroy Small Online Retailers

Product returns is getting unaffordable for most small online retailers. However, online retailers who don’t accept product returns will hardly sell any products – especially if it is clothing. That is because retailers need to accommodate the risk of their customers for buying their products online.

A reasonable return policy will give online customers ‘peace of mind’ since they can return products that they don’t like or can’t use.  Yet, this reassurance that retailers give their customers usually comes at a high price.

Retailers spend big money to get unwanted products back from their customers because the “last mile” of fulfillment needed to be reversed. As a result retailers must arrange for the collection of unwanted products from customers.

Also they need to dispose of the products or, alternatively, refurbish, restock and resell them through their own channels or through an inventory liquidator. And they’re losing lots of money and time in the process.

Moreover, there are criminals that can use your lenient product returns policy to their advantage. The costs are sadly for your account…

The cost and occurrence of product returns for online retailers

The occurrence of product returns is indeed a big headache for online retailers. Adam Minter, a columnist at Bloomberg reported recently that about 25% of all the products that are sold online are returned. And, continues Adam, 50% of these returned products are clothing.

In fact, online retailers have little choice but to offer lenient return policies to their customers. They can’t expect buyers to take the risk of buying clothes or shoes online that doesn’t fit. Moreover, the shape and color of clothing looks sometimes much different in real life as what it appear on a computer screen.

Therefore some online retailers receive as little as 15 c to a Dollar spent back on returned good (Bloomberg).

Reasons for product returns

So why is the incident of product returns so high with online retailers?

  1. Customers aren’t happy with the merchandise because it looks and feels different as what they have expected;
  2. With clothing, it may be the wrong size or colour;
  3. It may be an unwanted gift from somebody;
  4. Or it may be that a wrong product has been send;
  5. Or, more sinisterly:
    1. The customers are wardrobing – they purchase the product, use the item once only to return it again to the retailer (e.g. an expensive evening gown);
    2. Sometimes criminals return stolen goods to retailers that are willing to accept goods without a receipt.

How can online retailers solve the product returns problem?

The occurrence of product returns can impose substantial costs on online retailers. If the returns are getting out of hand, it may even cause the closure of the retailer. Here are some suggestions to tackle the problem:

  • Get a physical store – if you are a pure play online retailer or if you plan to include the online channel in your retail start-up. A Bricks and Mortar store can serve as a place where online customers can return their purchases and gives them a chance to try and buy other product in the store.
  • Use outsourced drop-off spots – it’s a service that most Logistic Service Providers offer;
  • Identify those customers who tend to abuse your return policies. Don’t sell anything to them. However, make sure you don’t penalize customers who have legit reasons to return their products.
  • Make your return policies more stringent. You will most probably have fewer returns and unfortunately also fewer sales. Your customers won’t take the risk of buying your products online if they can’t return it.
  • Charge for returns. It seems the logical answer to all your product return problems. However, one comment read the following “Unless amazon takes away free returns I doubt anybody else will be able to.” And that says it all…
  • Incorporate the cost of your returns into your pricing. You can do it only if you run your business cost-effectively. If you price your products too high, your customers will find the same product at a better price online.

Concluding

Much has been said about how the advent and growth of online retailing have caused the demise of Brick and Mortar retailers. The huge cost of product returns may however prove to be the greatest leveler in the retail industry.

It’s no surprise that pure play online retailers, for example Amazon, are now acquiring physical stores.  They’d realized that their customers need to feel and fit their products and a Brick and Mortar store may at the same time serve as a collection hub for returned products.

Lastly, if your competitor doesn’t charge for product returns, so should you.

Read also: Order Fulfilment in Omni-Channel Retail – the “Last Mile Delivery” most Retailers Fail to Complete

Note:

Laseter, T.M. and Rabinovich, E.  2011. Internet retail operations: integrating theory and practice for managers, CRC Press.

Image:

GetThatWholesale.com

How online fashion retailers can reduce returns

 

Christopher Ratcliff in EConsultancy suggests that online fashion retailers should be helpful, flexible and clear about their return processes to ensure that they keep their customers. A return policy that is customer focus will not only help to keep your customers, but also win customers from your competitors.

Ways to reduce returns

Another way Christopher suggests to reduce returns is to help your customer to buy the correct size. A virtual fitting solution called Virtusize allows customers to compare the specific measurements of an item they are looking to buy with an item they already own.

It displays and overlays 2D silhouettes of both garments so customers can easily compare sizes. The customers can then choose the item that fit them best. This fitting solution may reduce the online returns for fashion retailers by 50%.

The Shoefitr app developed by Running Warehouse uses a database of internal shoe measurements, acquired using 3D imaging technology. It compares the size and shape of a shoe a shopper is currently wearing, to one she wants to buy. The returns of shoes due to size have reduced from 65% to 20% when customers use this app.

Innovations to reduce returns in the online fashion retail market may convince more customers to buy clothing and shoes online.

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Image: Virtusize