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There’s no denying that we now live in a physically and digitally connected world. The benefits of being globally interconnected are visible in the growth and stability of the world economy over the past decade since the 2008 global financial crisis. But history and economies are cyclical. We were already looking at a potential downturn before the recent coronavirus global pandemic started but retailers are now looking at the most unpredictable global business environment in decades. This is where retail crisis management helps to give businesses options to manage the unknown.
For businesses that were launched in good times, owners will now need to quickly adapt to the challenges of managing uncertainty and risk. Like any other business, owning a retail store comes with its fair share of risks. Even at the best of times, store owners must deal with operational risks that impact cash flow. After all, the US economy was strong for the majority of 2019, yet U.S. retailers still lost 50.6 billion due to inventory shrinkage alone.
With the help of new technology, there are ever more ways to tackle theft and organized retail crime, but they are not the only challenges facing retailers today. Whether it’s a natural disaster in the form of a fire or flood, supply chain disruptions, or an employee ranting about the company on social media, unexpected retail risks can have a huge impact on your bottom line.
Fortunately, there are some things you can do to help minimize the risk of unexpected emergencies, plan for interruptions to your retail business, and do your best to protect your employees, assets, and reputation.
I’m not by any means a risk management expert. I am, however, a repeat small business owner. So I know what it’s like to face the terror of a sudden downturn AND not be prepared to deal with negative cash flow. If any of the tips below help others minimize their stress or better prepare for the next crisis, that’s good enough.
External Threats
Environmental disasters are external crises that are generally out of the control of any one private business. These include forest fires, hurricanes and, of course, global health pandemics. Because these are environmental and often cannot be predicted, these are often the most costly. They usually impact the economies of entire countries, can cost billions of dollars in damage to affected businesses and homes, and require a long recovery time. Besides the $1 billion in lost sales experienced by retailers during hurricanes Katrina and Harvey, these disasters resulted in $125 billion in property damage.
Business Insurance for Major Disasters
Nobody really likes to purchase business insurance but it’s often critical to the survival of a company in the face of a business-interrupting disaster. Even if you don’t live in an area that is prone to serious storms or other seasonal events, you need to make sure you have enough insurance to cover fire/water damage for your inventory, assets or property. Not only is this type of coverage mandatory on some leaseholds, it’s the only way to protect yourself against legal claims if there is 3rd party damage during an incident, which is also a key part of retail crisis management.
It’s important to remember that environmental disasters can be considered “acts of God” or “force majeure” and can nullify some insurance depending on your carrier and the type of plan you have. While some companies will step up at times of crises, you shouldn’t count on the possibility of coverage in the middle of a disaster if your plan has such exemptions. This is exactly why you should always read your insurance policy to understand what type of financial coverage you are actually buying. If the language in the fine print is too much, write to your insurance broker to make sure they give you a clear written response on what coverage you get with your insurance premiums
Technology, Flexibility and Adaptability
Adaptability for a business today is often tied to flexibility and technology. How flexible your processes are will determine how quickly you can adapt to different market environments. For retailers, this means using technology and tools that will allow you to immediately change how you are selling or taking payment with customers. The latest cloud systems not only automatically back-up your data, they work on any device and allow you to sell wherever your customer is. So when your store suddenly loses power, you can switch from your till to your mobile phone to keep selling.
For retailers dealing with the impact of COVID-19, for example, shutting down may not be an immediate option. Small businesses who cannot afford to shutdown or are looking for better ways to manage the impact are encouraged to:Download our free checklist
Add or Expand Digital Sales Channels including e-commerce for shipment or pick-up in store.
Offer Contactless “Leave At My Door” Delivery with prepaid orders online, by phone, fax or email.
Make sure you have a Google My Businessprofile and keep your store hours up-to-date.
Encourage Visible Hygiene Management in store by having all staff use gloves or wear masks. Have hand sanitizers readily available at the checkout area, near doors with handles, etc.
Encourage Social Distance In Store by increasing the space in the checkout area between cashiers and where shoppers are waiting to pay. Stop offering samples unless they are pre-packaged.
Encourage “Contactless” Payments (e.g. tap or Apple Pay) and discourage the use of cash to protect your staff wherever possible. You may want to increase your “contactless” limit with your merchant processor but remember that you are liable for any potential chargebacks on “contactless” payments.
Minimize Any Processes that Require Touch such as loyalty programs that require a tablet. Print out a QR code or signage for your web site and encourage users to sign up on their own phones.
Sell In Store Gift Cards with an Incentive (e.g. extra $15 for every $100 gift card) to encourage shoppers to come back to the store when things are back to normal.
Offer Free Pens to shoppers who don’t have their own. It’s a cost-effective gift that discourages the use of public pens and helps customers remember you. Remember to minimize touch when offering them.
Communicate Proper Treatment Procedures when staff are sick. Make sure all managers and staff know what to do when they are sick. There is a lot of information out there – be sure to refer to the most credible medical sources in your country. In Canada, that will mean the public health authorities for your province or territory. In the US, the CDC is a reliable authority for guidance. For further details, you can also review the steps to prepare worksplaces for COVID-19 published by the WHO.
Limit Stock Quantities for any essential household and medical products to avoid stock outs.
Internal Threats
Not all emergencies are external. There are a number of internal risks within a company, many of which aren’t any less significant to the survival of a business than, for example, a natural disaster. You’ll want to work with workplace safety experts if your workplace involves food, hazardous materials or any type of production but for most of us in retail, cash flow, reputation and operations crises are usually top-of-mind for small business owners.
Cash Flow is the Lifeblood of a Business
I’m not the first business owner to say that timing is everything when running a business. During good times, this can refer to being in the right place when unusual opportunities present themselves. During bad times, this refers to whether you are financially in a position to survive when there is an interruption to the business. And more often than not, retail crisis management refers to your cash flow position because you need to have access to liquidity or credit to be able to get through an unusually slow period – you can’t sell hard assets quickly or for a good price in the middle of a crisis. So yes, while a natural disaster is completely unexpected and is out of anybody’s control, what you can control is the position you are in when disaster strikes.
I’m certainly not trying to preach about the virtues of keeping unused cash in the bank (assuming there is even any) instead of reinvesting in the business, etc. But if you haven’t already, you may want to get approved for a line of credit only for emergencies when the business is booming or you have the opportunity to. The key is to get credit when you don’t need it and to not use these emergency resources for any daily operations. Yes, hindsight is 50-50, and this won’t help you if you’re already dealing with an emergency but history does repeat itself so can better prepare yourself for the future.
Operations Resilience Planning
Operations covers many different parts of a business. It’s not possible to list every area a business owner or manager can review but, by and large, most retailers should always have some sort of plan in place for:
Succession or delegation if management is incapacitated
Data loss or privacy breaches
Supply chain breakdown
1) Management Incapacitation
Nobody ever wants to think about a scenario in which they aren’t around. But the fact is, if you are a small business owner, you are likely an employer and others depend on you for their livelihood. You can plan for every possible risk but if you cannot issue payroll, approve payments or make important decisions when they need to be made, you’re exposing your business to extra risk. Make sure you have a contingency plan in place for your own responsibilities including who is authorized to access company bank accounts during an emergency. Speak to your accountant or lawyer to learn more about the options.
2) Data Loss or Privacy Breaches
Just as many people rely on smartphones to remember all of their contacts, the data you use to run and track your business is irreplaceable. In a retail business, this usually refers to your POS data. Not only is the information stored in your POS system critical to your business decisions (e.g. how much product to order based on sales, etc.), it’s also a legal requirement in most countries to both collect sales taxes and report profitability.
Not only do natural disasters damage physical structures like storefronts and warehouses, they can also lead to a loss of important company files and data. Environmental disasters aside, as a business, you are also exposed to ransomware or database hacks on a daily basis. Luckily data security is definitely something you can more affordably control now in the age of cloud computing. It doesn’t matter what type of technology you use in your business operations. Don’t take a chance with unexpected damages or hardware failure with your business data. Store it in the cloud, or better yet, use a cloud POS system so that you can run your business from anywhere. After all, even if your data is secure, you need access to your POS system and other retail management tools to be able to continue operating.
With GDPR in Europe and ever more privacy regulations everywhere around the world, it’s important for small businesses to start on the process of developing and implementing a privacy strategy to protect their reputation with customers. There’s no point stressing out over the fact that you may have missed certain regulatory deadlines. Regulators and customers everywhere would rather see that a company has a plan and is working on improving rather than giving up or saying “it doesn’t apply to me.” For some basic steps you can take to get started on how to better manage privacy in your small business, you can refer to this blog post.
3) Supply Chain Breakdown
If just one link in a retailer’s supply chain is broken, it can have a significant impact on business operations and profit. Which is why retailers need to be able to react quickly to unexpected supply chain events – whether it is a natural disaster, supplier failure, political or labour strife.
While there is no way to prevent these events from taking place, there are measures you can take internally to minimize the impact of such disruptions and be better prepared including:
Retail Crisis Management is Risk Management
Having total supply chain visibility involves looking at possible environmental, social, and political risks. Identify possible “what-if” scenarios – what happens if a supplier is facing a weather disruption and loses power? Do you have an alternative source? What if there are transportation delays? What if political events drive up prices of raw materials? These “what-if” scenarios are numerous and may seem unlikely to occur in the first place. But it’s important to know what that list looks like first so that you can start to develop contingency plans to have more options when an unexpected crisis does take place.
Look at manufacturing and distribution coverage
Depending on the size of your business, broaden your connections by reaching out to suppliers in different networks and regions. Seeking out alternate suppliers in different locations will help you re-route orders if one of your suppliers is negatively impacted by an external event.
Transport flexibility
Unexpected issues and events can arise when inventory is being transported to and from distribution centers. For instance, merchandise can be stolen, delays can occur, and weather disruptions can cause damage to roads and transport routes. To prepare for these risks, it’s important to have transport flexibility. In other words, if one avenue of delivery is disrupted, ensure that you have the capability to switch and depend on another logistics channel. If instead, you opt to go for a third-party logistic provider, it’s a good idea to ensure that they can also provide the same kind of flexibility.
Remember that changes in lead times with suppliers during a major disaster will likely change the speed and cost of transport you will need. Do a cost analysis of what your business can afford to spend to get products to you and make sure you have the credit or cash flow necessary to fund the upgrades. During an emergency, you may need to consider foregoing profits or even taking a loss simply to keep enough revenue flowing through the business to cover fixed overhead costs.
Reputation Management
Brand reputation and reputation management are critical to a retailer’s success. In fact, a report done by Total Retail shows that 90% of shoppers have chosen not to purchase from a company because of its bad reputation. Which is why consumers are increasingly relying on reviews to determine the quality of a business.
But, certain circumstances can arise that can quickly impact the viability and perception of your brand – e.g. a distraught employee publicly telling off a customer, poor management of health risks, etc. – creating distrust amongst consumers, and so on.
Help your retail business build a reputable brand and better prepare for compromising situations:
1) Be transparent about company policies and preventative procedures
In the case of an external crisis, consumers start distrusting businesses. Under these circumstances, it’s best to get ahead of the situation by reassuring employees, suppliers, partners and shoppers that you are taking preventative action or being as proactive as you can. During the recent coronavirus pandemic, StichFix made sure that members were aware of the rigorous cleaning process their clothing goes through between rentals to minimize any fears customers had about the cleanliness of renting clothes.
2) Manage negative reviews promptly
Gathering customer reviews is one of the best ways to make a good impression on a potential shopper. And even if you receive negative feedback, remember that it’s normal (and more realistic) for companies to receive a few bad reviews, just as long as you respond promptly and clearly show to customers that you are taking action. To learn more about customer review management and how to respond to reviews, click here.
3) Clearly communicate staff expectations
Setting clear company expectations with every new employee will pay off in the future when you’re trying to contain a potential public relations emergency. You may not be comfortable with the unconventional employee handbook Telsa gives its employees but the point is that you can’t expect employees to know what you expect without giving them some guidelines. Depending on the size of your business, it shouldn’t be an extensive document but it’s worth those late nights or legal fees to get one prepared since you will be sharing it repeatedly in your company. And, of course, communication doesn’t stop with orientation or handbooks. Part of retail crisis management is clearly communicating with employees and setting a good example during and after any crisis. There’s no better way for senior management to walk the talk.
Once you have successfully built your digital storefront and your physical store and products can be found online, the next step will be taking payment for orders online. This is when you will want to focus your efforts on setting up your e-commerce site.
In this blog post, we’ll go over how you can quickly set up your online product catalog for customers to see on your website and to order from.
The importance of selling online post-COVID-19
Brick and mortar retailers who are looking to sell online usually face the same set of challenges including missing product descriptions and images, incorrectly setup products or a lack of funds, resources, or skills to manage an e-commerce store.
While these challenges often prevent traditional retailers from setting up an online store, the opportunities you miss by only selling in-store and not investing in an e-commerce site are far greater. As an increasing number of consumers shop online post-COVID-19, failing to provide an online checkout experience means you are missing out on potential customers and sales
The good news is, modern day e-commerce providers have made it easy to set up an online store as they simply re-use your existing POS products. In fact, retail platforms such as TAKU eCommerce are even able to enhance product data to make your product details more e-commerce ready and more searchable on Google. By re-using existing product details, merchants using TAKU, for example, have the ability to showcase their products and take payments online in just a few steps.
To show you what this looks like, we’ll take you through the step-by-step process of re-using your existing product catalog with TAKU eCommerce so you can quickly start taking payments online.
How to start selling online with TAKU eCommerce
Many traditional retailers become discouraged at the thought of setting up an online store. However, depending on the platform, it is actually quite simple to get started.
Let’s see an example of how this works with TAKU eCommerce:
1. Decide where to add your shopping cart
As long as you are using TAKU, you have two options to quickly start selling online:
Automatically create an instant store which is a clean, easy-to-use, single page webstore that works in every screen size. This option is usually best for retailers who don’t have an existing website, need to replace an older looking site or want to just add a new Shop option linked to their store products.
Or alternatively, if you already have a WordPress informational website, you can add the TAKU eCommerce shopping cart as a WordPress plugin. This option is super fast and preferred for retailers that want their online store to automatically match the style of their existing WordPress site.
2. Add your products
Adding your products to your online store in TAKU is as easy as enabling them with a few clicks. But even if your product details are not complete (e.g. your products are very unique or require custom product descriptions or images) traditional brick and mortar retailers should not be held back from launching their online store. In fact, retailers should expect to launch an e-commerce site without their full product catalog in the beginning. As long as a retailer has, for example, 100 products with images and descriptions, she or he can still launch and add new products overtime, eventually building their full online product catalog. In comparison to a physical store, it’s perfectly reasonable to launch with several hundred products and add new ones every day. In fact, highlighting that “NEW items are being added daily” on your homepage is a great way to keep customers coming back.
3. Add business information
In general settings, make sure that your business information such as your store name, store address, phone number, work email address, currency, and language are all correct. With TAKU, some of this information is automatically available but you may want to customize it for your online store. For example, you may want to use your trade name vs. your legal business name.
4. Legal information
For any type of website, it is important to have a few basic policies setup such as your Privacy Policy or Terms or Service. If you already have these, that’s great, just paste them in legal settings. If not, it’s always recommended to have a legal advisor prepare or review these types of documents for you but if you need something quickly, you can also start with free basic legal document creation tools such as GetTerms or Avodocs in the beginning.
5. Customize the look of your store
You can use any of the existing themes as they are or easily personalize your online store using the built-in options. Remember that TAKU eCommerce web stores are built to be completely mobile responsive so you don’t need to worry about how things will look on different screens – they will always look good on any screen size.
6. Check your web address
Every TAKU eCommerce store comes with a free web address in the form of “yourstore12345.company.site”. You can either use this free URL address, buy a new domain from a third party provider, or connect an existing domain that you already own.
7. Enable payments
TAKU eCommerce supports a variety of payment providers meaning that merchants can choose or setup the payment methods that best suit their business needs. This also gives merchants more freedom to negotiate with providers and lower payment processing fees/costs. While we always encourage retailers to take payment online to minimize the risk of losing the sale or shoppers not picking up products, with TAKU eCommerce, you can even include an option for Pay in Store. If this is your preference, you can complete the payment with TAKU when shoppers arrive in the store.
Once the steps above are complete, you’re ready to start selling online!
We hope you are now comfortable with the general steps involved when setting up an online store. In the next two blog posts and videos, we will discuss how you can add fulfillment methods such as contactless curbside pickup and local delivery.
Step 1 – Be found onlineStep 2 – Online product showcaseStep 3 – Online storeStep 4 – Store pickupStep 5 – Local delivery or shipment
The next step to building your digital storefront is to showcase your products online.
With the flexibility and accessibility of online tools, even if your brick and mortar store is closed, you’ll still be able to serve your customers. The best part is, these tools are easily accessible to retailers who are not selling online through an e-commerce website. Let’s take a look at some of the ways you can list your products online.
1. Upload your products to Google
People have become more efficient shoppers in this digital world, especially when it comes to physical retail. As a result, they are now checking in-store stock availability before visiting.
To make things easier for your customers, it’s a good idea to make real-time inventory data available on Google. This can be done manually or you can do so easily by using an integrated retail software such as TAKU Retail.
TAKU’s integration with Google also allows merchants to display their products through Google “See What’s In-Store” (SWIS). With SWIS, product catalogs appear under a merchant’s Google My Business listing. This feature helps retailers attract nearby shoppers by showcasing in-store products with real-time stock updates. The best part is – there is no data entry required when uploading products to Google with an integrated solution since your existing POS data is simply re-used.
2. Free and paid Google Products Listings
Once you’ve uploaded your products to Google and are showcasing your products through SWIS, you also have the option of using Google Product listings to further increase your online visibility to local shoppers.
What are Google Product Listings?
Google Product Listings, otherwise known as Google Shopping campaigns, help retailers put their products in front of shoppers who are looking for what they sell. Retailers can use Google Product Listings to promote their in-store products and boost traffic to their brick and mortar stores.
Below is an example of a Google Product Listing:
These listings showcase your products and store information to nearby shoppers who are searching on Google. Since they appear based on what local shoppers are searching for, Google Product listings attract high value shoppers. In other words, they showcase the right products to the right people in the moments that matter the most.
When shoppers click on a listing, they will land on a Google-hosted page for your store which displays your in-store inventory, store hours, directions, and more.
Google recently announced the launch of free product listings, making it easier for merchants to display their products online. Note: While free listings are only accessible to US merchants, an international rollout is expected by the end of the year. Now, search results in the Google Shopping tab will consist mostly of free listings, helping merchants connect with more shoppers, regardless of whether they advertise on Google.
Which means that even if you are not selling online, you can still showcase your in-stock products to potential customers.
TAKU Retail POS has partnered with Google to make it easier for merchants to get started with Google Product listings. By using TAKU, product feeds are automatically optimized and submitted through your POS. To learn more, click here.
3. Adding your products to social media
Facebook is one of the most popular social media platforms with more than 2.45 billion monthly active users. Now, merchants can give customers an easy way to browse and purchase products with Facebook Shop.
Facebook Shop has expanded a great deal in the last few years and is used in 70 countries by 800 million people monthly, making it the perfect opportunity for retailers to showcase their products to millions of potential customers.
Again, you can upload products manually or with an integrated retail platform such as TAKU eCommerce that will automatically sync your in-store products to Facebook Shop. With an integrated system, your product catalog will sync every 12 hours once you have uploaded your products onto your Facebook page. This will ensure that your product information and stock levels are updated on a regular basis.
Depending on the type of products you sell, Instagram may be another essential platform for retail businesses. With more than 1 billion monthly users, your customers are already on Instagram. So make it easier for them to discover and browse your products with Instagram shopping. Essentially, Instagram Shopping allows merchants to transform their profiles into digital storefronts.
We hope Part 2 was helpful to you. To learn more about the last 3 steps to getting your physical store online, keep an eye out for the rest of our blog and video series.
To learn more about the next steps to getting your physical store online, keep an eye out for the rest of our blog and video series.
Step 1 – Be found onlineStep 2 – Online product showcaseStep 3 – Online storeStep 4 – Store pickupStep 5 – Local delivery or shipment
The COVID-19 pandemic has created a new reality for retailers and consumers alike. Now more than ever, consumers are spending their time searching online and browsing the internet. As a result, it has become increasingly important for retailers to move their physical stores online.
But going digital doesn’t have to be complicated. In fact, it’s very possible to grow your business using the internet without actually selling anything online.
While we always encourage merchants to take orders online, and an e-commerce site can be an effective way to build an online presence, it is not the only way of doing things. Whether or not you have an online store, it will be extremely helpful for you to drive more foot traffic, more sales, and brand awareness using the internet.
So even if you aren’t ready to start selling online tomorrow, you can approach the process step-by-step. The entire 5-step process will be covered in this blog and video series.
Be found online
Oftentimes, the first place that a customer learns about your business is the internet. Whether they’re searching on Google or discover you through an Instagram ad, your store’s digital storefront allows customers to interact with your business (calls, visits, or purchases etc.) even before they’re in your store.
What is a digital storefront?
A digital storefront is everything that a customer can find about your business online, including the following components:
Your Google My Business listing(s) in search results (and if your listings are complete and optimized)
Online customer reviews
Social media profiles
Your website (with or without an e-commerce component)
If your website is optimized for mobile devices (also called mobile responsiveness)
Online advertisements
Visual elements of your business including photos and videos
How your digital storefront impacts your retail business
Online and in-store shopping were once seen as separate channels, competing for traffic and sales. But this is no longer the case. In fact, the future of retail relies on the two working together to deliver a seamless and complete customer experience, otherwise known as omnichannel retail.
For retailers, the case for going omnichannel then becomes obvious. According to Google, today’s shoppers like to browse and research online even in cases where they intend to buy in-store. Omnichannel retail recognizes that shoppers often flip back and forth between multiple channels. With omnichannel retail, different channels work together and are tightly integrated; resulting in a seamless shopping experience for customers.
Even though moving towards omnichannel requires change and investment across a retailer’s business operations (technology, processes, staff etc.), it can be done in a step-by-step process. Below, we’ve outlined the necessary steps that are involved in becoming an omnichannel retailer.
The following are some tools you can use to help your business be found online:
Google My Business
Google My Business (GMB) is a free online listing tool that helps retailers manage how their business appears on both Google Search and Maps. By verifying and optimizing your business listing, you can help local shoppers find you. Retailers can start by adding basic information such as address, phone number, store hours, and website URL. Then add details such as store and product photos, store description, and services etc. It’s also a good idea to get added to other local directory listings such as Yelp, Bing Local, Yahoo, Foursquare etc.
To learn more about Google My Business and the steps you can take to optimize your listing, download our ebook here.
When shoppers search for businesses on the web, online reviews from sites such as Yelp often appear. These customer reviews (if they are positive) can help drive more people to visit your store. On the other hand, negative reviews are likely to drive them away – which is why it’s important to monitor them carefully to maintain a good image.
It’s crucial for retailers to respond to all of their customer reviews – both negative and positive. In fact, even if you receive a negative review, a quick response helps to highlight good customer service to potential customers. To learn more about how to manage online customer reviews, click here.
If you want your retail business to sell more, it’s good to collect more customer reviews. Find out how to get more customer reviews here.
Social media
Social media can be a very effective platform for increasing brand awareness and attracting new customers. However, you need to know where your customers are digitally (e.g. which social platforms they hang around) before you can begin using social media to try and attract customers.
For example, if your target audience is an older demographic (50+), you have a better chance at success if you’re using Facebook rather than Instagram.
Retailers are advised to do research and figure out the top social platform(s) that their target demographic spends time on. From there, you can figure out the best practices for marketing on that platform. Remember – it may be tempting to be on every single platform, but by focusing on one, you have a better chance of learning it thoroughly and having success.
Your website
Your website has a major impact on how shoppers feel about your retail business. From the design, site speed, and product showcase, your store’s website is often the first impression customers have of your business. Remember – an e-commerce component is not a requirement for having a website. Sure, your customers may want it or expect it but the purpose of any website is to drive traffic, sales, and awareness. Merchants should not let the fear of e-commerce prevent them from setting up at least an informational website.
The point is, building a website is an incredibly important step in establishing your store’s digital storefront. There are millions of local searches that take place everyday on Google and your business will show up higher in search results if you have a website which will drive more foot traffic to your store. In fact, 88% of people who conduct a local search on their smartphone visit a related store within a week. So, do your part by setting up your website and give potential customers a better chance to find you online before your competitors.
A website can also serve as a starting point for you to add new retail tech into your operations. For example, while customers may not be able to purchase directly from your website (if you don’t have e-commerce yet), they can still use it to browse through your merchandise. Or, you can use live chat software to answer customer questions and offer customer service in real-time.
If you would like to learn more about how to easily set up a website for your retail business, click here.
To learn more about the next steps to getting your physical store online, keep an eye out for the rest of our blog and video series.
Step 1 – Be found onlineStep 2 – Online product showcaseStep 3 – Online storeStep 4 – Store pickupStep 5 – Local delivery or shipment
Whether you sell online or in-store, returns are an inevitable cost in the retail industry. And they can be tricky – they can increase rapidly, aggressively cut into profit margins and cause logistics issues.
According to a recent study, the overall value of returned merchandise in the US during the past year was $309 billion, with online purchases accounting for $41 billion of that total. Now, the COVID-19 pandemic has complicated the issue of returns even more.
While it is an increasing problem, how retailers deal with returns can help differentiate them from competitors, reduce return costs, and even make them more profitable.
Along with higher return rates, the pandemic has exacerbated certain return challenges and created new ones altogether, for example:
Given the challenges associated with returning products to stores, retailers are having to offer extended return windows.
Increased health and safety policies require stores to set aside returned merchandise for 24 hours to reduce COVID-19 transmission. For some retailers, thorough steam cleaning has become a popular sanitation measure.
Retailers must find additional retail space and assign labour costs to their sanitation processes.
Retailers face higher consumer expectations when it comes to the efficiency of the return process and free online returns. However, the pandemic has caused reduced staffing across warehouses, delaying return processes for many stores.
Understaffed stores must find additional resources to restock returned merchandise back on the sales floor.
The overhead associated with receiving and repacking merchandise for resale along with the disposal of unsaleable merchandise is increasingly cutting into profit margins.
The good news is that retailers can take a number of steps to both reduce return rates and make the overall process more efficient and less costly.
How to Reduce the Cost of Returns
1. Clearly communicate your pre-purchasereturn policy
Establishing standard operating procedures for handling returns will make the process more efficient and less costly for your business.
Aclearly communicated return policy will enable you to treat each return the same so you can avoid treating requests on a case by case basis. Processing every return manually can be expensive and overwhelm your staff, ultimately preventing you from scaling your business.
While policies are going to vary depending on the industry and the type of retailer, every policy should include certain elements. To find out more about writing a return policy and the basics you should cover, click here.
Once you have written up your policy, you need to make sure that customers see it before they buy. This means including links to your policy in hard to miss places on your website or e-commerce site, and near checkout tills in your physical stores. Clearly outlining your return policy will help set the right expectations before purchase, reducing hours spent on customer service.
2. Accurate online product information
If you’re selling online, one way to reduce the likelihood of returns is by providing your customers with accurate product information. Depending on the type of merchandise that you sell, this could mean in-depth size guides, diagrams, or photos that clearly showcase the appearance of your products. Doing so will give your customers a better idea of what they are purchasing and they’ll end up more satisfied with their decision.
Make sure that the information you provide on a certain page pertains to that particular product, category, and brand. For example, you don’t want to provide clothing size guides on a footwear product page.
If you sell internationally, it’s suggested that you include links to international conversion charts or images of such charts on product pages as well as both metric and imperial measurements.
Retailers with physical stores may also want to provide the same product information in-store, especially if COVID-19 has impacted a customer’s ability to interact with products (e.g. if changing rooms are closed).
3. Customer reviews
Featuring customer reviews and ratings on your website can play an important role in reducing returns. In fact, online reviews carry a lot of weight during a consumer’s path to purchase. According to Google, 88% of shoppers say they trust online reviews as much as personal recommendations.
Giving shoppers access to helpful, relevant reviews can give them a better understanding of the products they are considering and can help set expectations about functionality, quality, and usability. And by learning about others’ experiences with the product, shoppers can easily discern if it is right for them.
Customer reviews are a way for merchants to have a finger on the pulse of their business as they provide valuable shopper feedback that can be used to proactively reduce returns. For instance, reviews provide important insight about customer preferences (e.g. what type of shopper buys certain products and how they use them) as well as product flaws. Store owners should constantly be analyzing and reading customer feedback to identify ways that they can improve product quality and services.
Some retailers even use reviews to make important purchasing decisions – e.g. the number of inventory items that should be bought, whether or not to continue selling certain products etc. If specific products have an overwhelming amount of negative reviews, it is time to review the products or work with the supplier.
4. Use technology to optimize the handling of returned items
Many traditional retailers aren’t using systems designed to handle online returns which have increased a lot due to the recent boost in online shopping.
For many, the issue is managing returns once they reach a retail store or shipping facility. Most traditional stores are still new to handling online returns which can include everything from where to put inventory back into stock to processing refunds for online sales in-store. And returns can get even more complicated with multi-location retailers selling on different online channels.
For example, processing returns manually will require a lot more staff hours than returns handled by a system that properly restocks returned products based on the order status. This is a flaw with many retail sales systems as the focus is often on selling as many items as possible, and less thought is put into how to handle costly back office processes such as returns which can really cut into profit margins when not managed effectively.
While some systems will utilize 3rd party apps to manage returns, a complete retail platform will include built-in return features such as:
Return Control Settings such as requiring receipts for returns, requiring return reasons that are tracked by users or a separate return screen to minimize the potential for employee theft.
User Access Controls for Returns such as restricting access to return functions.
In-Store Refunds for Online Sales at the physical location where returned products are actually inspected prior to refunds.
Omnichannel Stock Control that puts returned products back into available stock in all online sales channels and at the location where they are returned immediately once the return order is finalized.
Besides making the process smoother for shoppers, directing returns to physical stores helps retailers save on:
1) The cost of packing materials and staff time to pack orders securely.
2) The shipping fees of returns which are commonly expected by shoppers today with online returns yet doubles the shipping costs for merchants.
3) The cost of damages or lost packages during transit. Even if a merchant has insurance, there are administrative costs to making constant claims.
4) The cost of compensating unhappy customers with additional or future discounts when shipments or refunds are delayed.
5) The higher payment fees charged by processors for online refunds vs. PCI compliant in-person refunds with EMV PIN pads.
But more importantly, returns in-store are more likely to increase the chance of converting a potential refund into an exchange, or even better, a larger sale if the shopper buys more than the original order.
In this way, even though returns can be costly, they can also be a way for a retailer to really differentiate and highlight their customer service. After all, according to Metapack:
92% of customers who receive a good return experience make repeat purchases
So optimizing how you handle returns can be a chance to interact with customers, provide them with a great shopping experience, and capture their loyalty for the long-term.
6. Offer buy online, pickup in-store (BOPIS)
While there have been innovative strides taken in the retail industry to bridge the online and brick & mortar experience, even the best technology cannot replicate the in-store environment where customers can see and interact with products in person.
Oftentimes, returns are a result of customers not liking the product or the product not fitting properly. This can be reduced by providing a way for customers to touch or see the product in person before an order is complete. The ideal way to do this is with BOPIS which is also known as Click & Collect in some industries. For shoppers, it provides a convenient way for them to buy as well as return their purchases.
By offering a Buy Online Pickup In-store option, retailers provide their shoppers the convenience of online shopping with the interactive experience of purchasing in-store. And, of course, during the pandemic, this is a safer way for shoppers to buy yet still check their orders before taking them home.
Since the pandemic started this year, BOPIS orders are 275 percent higher than pre-COVID-19, even after stores reopened from lockdowns. Now that shoppers have been using store pickup for an extended period of time, studies show that consumers are unlikely to stop using BOPIS, even after the pandemic. This means that retailers need to find cost-effective ways to offer the service permanently with an omnichannel store system that can handle both sales and returns effectively based on the way people shop today.
Conclusion
Dealing with product returns is never fun, especially now with the complications brought on by COVID-19. However, when properly dealt with, retailers have the opportunity to minimize and even capitalize on returns. We hope our article outlined some of the ways to do so.
What are you doing to minimize returns in-store? Let us know in the comment section below.
With the start of autumn, retailers are beginning to prepare for the most important sales period of the year – the holiday season.
Each year, the holidays usually present retailers with the same set of challenges – increased demand, in-store and online traffic surges, higher rates of retail crime, and supply chain pressures etc.
But due to the COVID-19 pandemic, the 2020 holiday season is going to be different. The signs of a second wave means that merchants face new obstacles after arguably the toughest retail season in recent history. From physical distancing restrictions to changing consumer behaviour and a deepening recession, the next few months are full of uncertainty.
Shoppers expect a safer shopping environment: with COVID-19 cases expected to rise again this winter, shoppers are expected to avoid crowded spaces (e.g. the mall) during the holidays. In fact, 80% of planned shoppers will consolidate their shopping to make fewer trips than they did in previous years. Which means that consumers are looking to retailers to provide a safe shopping environment including: increased sanitation measures, limiting the amount of shoppers allowed in-store, and mandatory mask policies etc.
Supply chain disruptions are inevitable: factors related to COVID-19 are expected to constrain shipping capacity, resulting in delivery delays.
Shoppers are now looking for safer, digitized ways to shop in-store which means that retailers need to rely on digital strategies in order to stay relevant to their customers. Below, we discuss key trends and how retailers can respond and plan for a successful holiday season.
How Retailers can Prepare for the 2020 Holiday Season
Whether you’re just starting out or have been selling online for a while now, you need to invest in your “Digital Storefront”. But what is a digital storefront? Your digital storefront is how your business is represented online. Sometimes it is referred to as “online presence” or “web presence”. It’s very similar to the concept of a real storefront in the physical world – the way people walking by your store would see your signage out front, or where you are located in the neighbourhood. A digital storefront is the electronic representation of your business on the internet. While some might combine digital storefronts with e-commerce, we deliberately keep it separate because there are multiple stages to “being online”.
Many businesses are worried about digitizing as they are worried about the amount of time it will take to start going online. But it’s important to remember that “digitization” can actually be broken down into 5 steps and it’s possible for merchants to move online one-step at a time.
Invest in your Digital Storefront
With the potential of pandemic-related restrictions, it is crucial for retailers to be discoverable online this holiday season. Given the likelihood that the growing customer preference for shopping locally will continue into the holidays, retailers should take advantage of digital marketing strategies that target nearby shoppers.
Google My Business: The first step of going online isn’t about selling online immediately. It’s about making sure that your business can be found online by local shoppers. Make sure that you take full advantage of all available foot traffic by keeping up-to-date store hours and contact details online. You can keep this updated yourself manually or manage it directly in an integrated point-of-sale solution.
Google Retail Listings: Even if you’re not selling online yet, you can show potential shoppers what you carry in-store. Consider using an integrated all-in-one retail management platform such as TAKU to show what’s on your shelves with automated product feeds that show exactly what’s in stock without any extra work. And if you’re in an area that already offers it, integrated merchants can unlock valuable free advertising with free Google Retail Listings that show up based on what nearby shoppers search for online.
Invest in your Online Store
Being found by local shoppers is half the battle. But the pandemic has more people shopping online for the first time for products that they would normally buy in-store. Of course, depending on the type of store you have, starting an online store may not be that easy. Common issues faced by physical stores looking to sell online include:
Lack of funds, resources or skills to manage an e-commerce store
Heavy, fragile or regulated products that are unsuitable for shipping
Uncompetitive pricing and offers compared to large retailers such as Amazon
Inaccurate inventory quantities
Lack of store POS integration options
Yet according to Google, 1 in 4 shoppers went online during the lockdown to purchase something they would normally buy in-store. As a result, some retailers experienced holiday-like traffic and sales via online channels during the first quarter of 2020.
This indicates that during the pandemic – and likely once it’s over – if your store doesn’t offer online checkout, you will lose access to an increasing number of online shoppers.
At TAKU, the founders have all worked in retail and support retailers every day. We understand the struggles of trying to operate while understaffed. But just as there are ways to more easily manage your digital storefront, there are things that every retailer can do to start selling online step-by-step including:
Expect to launch with fewer products and add new items over time to build your full online product line. Many traditional merchants think that selling online is the same as loading the shelves of a physical store. And so, many of them will hold back from launching their online stores until all of their products are properly loaded with great images. If you’re running an established business, you know how long it took to build your existing product listing. So naturally, it can take a much longer time than expected to prepare product information for an online store. But in comparison to a physical store, it’s perfectly reasonable to launch with several hundred products and add new ones every day. In fact, telling customers that “NEW items are being added daily!” can be a great way to remind them to keep coming back.
Selling online doesn’t equal delivery. E-commerce is often associated with online orders for shipment but e-commerce can just be used as a way to take orders online. Delivery to local customers can be expensive (the cost of packing orders, shipping costs and the risk of damages) and a poor experience for the customer (packages frequently delayed in transit during the pandemic). Shipping online orders can also be a hassle for busy stores when you don’t have store space and materials to pack orders. This is why we often recommend that merchants start with curbside or in-store pick-up in the beginning if they don’t have the resources to handle packing, shipping issues or even local delivery.
Use e-commerce to drive store traffic. Many of our customers are established stores that have a great local customer base. Don’t encourage customers to ship products at the expense of your physical store. Encourage them to visit the store or pickup so that you can offer customer service and showcase impulse items to increase your margins.
Retailers looking to prepare for the surge in online traffic this holiday season should focus on their omnichannel strategy. This means:
having a flexible and scalable solution that will help provide shoppers with a seamless shopping experience across all channels – from online and social media to in-store.
increasing ecommerce site performance – 91% of shoppers leave an ecommerce site if the pages are too slow to load.
moving legacy systems to the cloud to accommodate higher traffic and generate higher sales. Cloud retail POS software gives retailers the flexibility to scale their operations up or down with demand peaks. And they can do so without costly upfront investments or software updates that often come with traditional legacy systems.
Optimizing website performance by focusing on the customer experience.
Improve Inventory Visibility Across all Channels
The customer journey has become increasingly omni-channel due to the pandemic. Shoppers are now using more devices to browse and are expecting contactless ways to purchase and receive their products. Specifically, the COVID-19 outbreak has given rise to new fulfillment methods such as curbside pickup, in-store appointments, contactless local delivery, and “click-and-reserve”.
With the rise in new fulfillment methods and omni-channel shopping, retailers need to improve their inventory visibility. Earlier this year, stock-outs of high demand products caused searches for “in-stock” products to grow globally by 70%. This means that customers are looking for real-time updates on store product availability.
Modern cloud software can provide real-time updates on stock levels across all channels, improving inventory accuracy and helping retailers avoid the risk of stock-outs and excess merchandise.
Prepare for Traditional Delivery Providers to Exceed Capacity
Retail experts are predicting that the ability for products to arrive on time this holiday season will be constrained by factors related to COVID-19. These factors include a surge in online orders and the implementation of social distancing measures in distribution centers.
As we saw earlier in the pandemic, surges in ecommerce impacted shipping capacity and delivery windows, creating big supply chain disruptions. Retailers need to prepare for this possibility as to not risk customer aggravation with gifts not arriving in time for the holidays.
Store owners can prepare for delivery issues by doing the following:
Providing real-time inventory visibility across all channels, as discussed earlier.
Use stores as fulfillment centres. Train employees to be fulfillment gurus – this includes training them to both pack and deliver parcels locally.
Incentivize customers to use contactless fulfillment options rather than shipping. Make sure to communicate with customers about alternative fulfillment options early on and pass on cost savings.
Conclusion
The unprecedented nature of this year is expected to produce a holiday season unlike the past. Retailers can prepare by adapting to new consumer channels and shopping habits, as outlined in this post.
