PAIN WITHOUT GAIN?
Conventional wisdom says that while “going
omnichannel” helps keep customers happy,
it’s a notoriously tough way to make a profit. Retailers are well aware of that. When we
asked respondents why they participated
in omnichannel commerce, the top three
reasons were to increase sales ( 63 percent), increase market share ( 57 percent),
and improve customer loyalty ( 47 percent).
Coming in a distant fourth was to increase
margins. (See Exhibit 1.)
And the cost of returns only adds to the
pain. When shoppers return merchandise,
a complex, labor-intensive process is set
in motion. At the very least, someone has
to collect, evaluate, and sort the returns,
deciding whether each item should be put
back on the retail shelf; returned to a DC
for cleaning, refurbishing, and/or repackaging; sold to a clearance reseller; or recycled.
The process requires time, training, and
money—three resources that are in short
supply in any retail organization.
As for who performs the actual work,
that varies from retailer to retailer. Our
study found that the majority ( 64 percent)
of respondents have opted for the DIY
approach, processing returns themselves
using in-house labor. But not all of them
choose to go it alone. A sizeable percentage
( 40 percent) said they contracted with a
third-party logistics service provider (3PL).
Still others said they arranged for returned
items to be sent directly to the manufactur-
er or a clearance reseller. (See Exhibit 2.)
Despite the considerable expense involved,
retailers are disinclined to pass those costs
on to customers. When survey-takers were
asked what types of fees they collected to
recover supply chain costs, the top two
responses were fees for expedited delivery
ABOUT THE STUDY
This year’s omnichannel study was con-
ducted by ARC Advisory Group in con-
junction with DC VELOCITY. ARC analyst
Chris Cunnane oversaw the research
and compiled the results.
The study explored the details of DC
operations that support omnichannel
initiatives as well as how companies are
handling the challenge of reverse logistics and returns. The findings reported here are based on 142 responses.
Respondents included logistics professionals from a variety of industry verticals, who submitted answers during
July and August 2017.
As for the demographic breakdown,
the majority ( 56 percent) of respondents sold goods through a combination of direct and indirect sales channels. Another 31 percent sold merchandise through direct retail only, and the
remaining 13 percent through indirect
sales channels only.
A report containing a more detailed
examination of the omnichannel survey
results is available from ARC for a fee.
For information, visit https://www.
arcweb.com.
