Want to learn more about what SHIFT can do for you?
Contact partnerships@shiftretail.com or call 0800 302 9464

Want to learn more about what SHIFT can do for you?
Contact partnerships@shiftretail.com or call 0800 302 9464

Request a brochure

Insights

Could Amazon make packageless returns the new norm?

Amazon's initiative to remove packaging from its returns process may be the perfect way to cut costs, but it's also a great way to respond to consumer demand for less waste – and make one big-box retailer in particular more popular at an incredibly critical time. Will packageless returns become a new retail norm?

Icon read pink Read 6 mins
Could Amazon make packageless returns the new norm?

Packaging is at the forefront of retail. The wasteful use of plastics and cardboard has forced many companies to make major changes to their practices, if only to serve their bottom line. Furthermore, a collective moral consciousness is increasingly gripping the world regarding climate change and renewable practices.

It’s great news to hear, then, that Amazon – itself the creator of thousands of tons of packaging each week – is beginning to cut down on its use through its new returns process.

How it works

Amazon’s new service is simple and uses technology that’s been around for years, making it a surprise that it’s taken this long to roll out. By getting hold of a QR code from the Amazon Return Center website and taking it with them, shoppers can simply hand packages to store staff without a label or external box – the product boxes, of course, need to be used. From here, staff pack and ship the product back to the warehouse for free.

Explaining its motives, the company explained: “We understand that finding a box and tape and printing a label for a return can still be a hassle. Now, most Amazon returns are easier than ever with no box required.”

sm0036-amazon-returns-3

On a brand level, the idea has been made a standard: the service is available at a number of stores run by Whole Foods Markets – itself a subsidiary of Amazon since 2017 – alongside every one of Amazon’s physical stores (Amazon Books and Amazon 4-star). This isn’t exactly a huge portfolio of real estate – there are under 20 Amazon Books and just four 4-stars – but it more than makes up for it with its wider affiliates.

A further 5,000 or so UPS stores are also in on the plan, but the most interesting partnership is undoubtedly with Kohl’s.

Rescuing relevance from the jaws of defeat

For a big-box retailer like Kohl’s, it’s a coup. The department store chain is partnering with Amazon in 1,150 locations across the US, following a limited trial run in 100 stores. Each one operates a separate line at the customer service area just for Amazon returns, from which they'll pack, label and ship your return without charge.

sm0036-amazon-returns-2

Massive competitors like Macy’s, JCPenney and Sears have been steadily winding up their portfolio of stores; Kohl’s itself has withdrawn from a handful of mall locations. However, it’s still weathering the storm and maintains a major presence: according to its CEO Michelle Gass, “80% of America lives within ten miles of a Kohl’s”.

The convenience and certainty of the Amazon returns process is guaranteed for a huge chunk of US shoppers. Rather than fighting the online giant, it’s leveraging its assets.

Most Kohl’s stores already offer free parking, and extra convenience is being afforded to anyone returning Amazon packages with designated parking spots close to the store entrance. It’s for obvious reasons, as Gass explained: “This new service is another example of how Kohl's is delivering innovation to drive traffic to our stores and bring more relevance to our customers.”

With its “adapt or die” mentality, Kohl’s is both remaining competitive and giving a real boost to Amazon’s initiative, which has every reason to become the new norm in business.

sm0036-amazon-returns-6

What’s driving demand for packageless returns?

Breaking Amazon’s packageless returns concept down, it’s hard to find a criticism – it fulfils so many demands across all levels.

Meeting customer expectations

Amazon’s no stranger to delivering what customers want – it wouldn’t be where it was without this focus. Yet once again, it’s proving how many omnichannel businesses in the UK are failing to meet modern consumer demand.

As we found in last year’s Retail Experience Score 100, 73 of our selected 100 retailers didn’t offer free postal, collection or drop-off returns, despite the fact that 76% of respondents to a poll in our State of Retail Report 2019 believe that postal returns should be free.

Meanwhile, a shocking 14% of our RES 100 retailers didn’t offer the opportunity for their own online-bought products to be returned in store – a shocking disconnect between online and offline channels, and one that only makes high-street locations more irrelevant and inflexible.

Responding to moral concerns

Consumers are attracted to businesses that demonstrate a commitment to the environment. According to a recent poll by Dotcom Distribution, 80% of respondents claimed to be “bothered by excess and wasteful packaging”, and a further 38% “said they were extremely bothered by it”.

What’s more, it’s growing increasingly important with younger demographics. In the same survey, 62% of all shoppers “said they prefer to purchase from brands that use sustainable shipping materials”, and for those between the ages of 18 and 29, this sentiment rose was 74%.

By providing an opportunity like packageless returns, Amazon and like-minded competitors are adding another string to their promotional bows, and for all the right reasons.

sm0036-amazon-returns-7

Simple business

Kohl’s’ attempt to reverse the fortunes of massive losses to department stores is admirable, with footfall certain to rise with the certainty and convenience guaranteed by the partnership. According to the same Dotcom poll, 84% of shoppers would be more likely to buy online if they could return or exchange unwanted items in store – 10% up on the response last year (74%).

These consumers, who may simply visit Kohl’s to return something, are immediately a captive audience for carefully curated shop floor. The packageless element removes yet another boundary and expense to the shopper. It’s certainly something that the likes of Debenhams, Marks & Spencer and John Lewis could stand to benefit from in the UK.

Two steps forward, one step back

There’s no doubt that this initiative is a fantastic one, responding to the requirements and beliefs of countless modern shoppers.

However, Amazon is far from perfect; rather ironically, the packageless returns showcased in the US is yet to cross the Atlantic, and in the meantime, Amazon is instead causing controversy with its UK packaging. The white plastic envelopes regularly used to deliver smaller purchases or clothing are “not widely recycled” in Britain, despite regularly being assumed as such by shoppers.

It may take time for Amazon to get its act together beyond the US, but it’s a start – and there’s no doubt that other retailers will support or mimic the concept – otherwise it’s just another reason for them to fall behind the long-established competition.

Insights

In-store optimisation: Treating physical stores as real-life websites

Retailers need to treat stores like websites. Just as developers use technology to evolve the quality of a company's online offering, businesses can use the same approach to gather insights on the high street and deliver a best-in-class brand experience.

Icon read pink Read 6 mins
In-store optimisation: Treating physical stores as real-life websites

Retailers should be making their stores work harder. Now, more than ever before, technology can empower businesses to act on the insights they can gather – and the reward is a best-in-class brand experience for the customer.

Stores are closing at an alarming rate. To date in 2019, Debenhams has announced 165 closures, Boots has axed 200 locations and Oddbins has shuttered 100. These are just the tip of the iceberg; in the US, 7,500 stores are set to close in 2019.

There are, of course, plenty of reasons behind these closures: economic difficulties, major shifts in customer behaviour, price-driven marketplaces and online competition to name just four. Yet regardless of what’s to blame, the message is clear: stores must work harder than ever to succeed.

We firmly believe that physical stores are still a huge part of the retail picture, but we also believe the way they work is going to have to change for them to survive – and much of this comes down to how they implement and use data.

Physical stores, like no other corporate asset, provide an opportunity to create a positive brand experience that creates brand ambassadors from customers that feel excited to come back time and time again. Once a customer is in the store, they’re a captive audience. They’ve actively taken the time to see what a business has to offer. It’s a fair assumption that they want to purchase something, and the role of the store is to make it as easy as possible to delight and convert them.

sm0033-in-store-tech-5

Stores are living websites

How should modern retailers approach this? As always, the answer lies in the data.

For years, the most successful retail websites have been personalising the customer experience based on previous purchases. Data is used to identify the pain points in a customer journey and remove them. User journeys are recorded, analysed, interrogated and changed based on the findings. All of this is done to make it easier for the customer to buy their goods, time and time again.

However, physical stores need to adopt the same mantra.

As an extreme example, Amazon makes over 140,000 updates every day to refine its customer experience. While this level of change is obviously not achievable in store, the technology now exists to collect the data needed to gather the insights that can shape the in-store experience customers have. The store should be treated as a living website, which you can monitor in real time.

Looking to the future

As we’ve seen over the last few years, especially with the capitulation of former high-street staples, there are countless factors that affect physical store performance that are simply out of retailers’ control; competitor activity and economic conditions are less predictable than ever.

Efforts should be focused on the areas they can influence, with insights only they have. Using the wealth of knowledge and data already gathered from their own store networks, they should combine these with a focus on tuning their physical locations with data-led technology investments. These should not only improve the customer experience, but provide incredible insights into modern browsing and purchasing habits.

If you’re looking into options for collecting and acting upon data to optimise your performance, no list should go without these three concepts being discussed.

In-store product tracking

Technology can be cleverly used to gain insight into when products that are being viewed, picked up and put back. If rails were adapted with RFID or sensor-based technology, using tech similar to Amazon Go, crucial data could be gathered to see which products are hitting the mark with consumers. Stores should see this data in the same way that ecommerce teams respond to product page bounce rates and checkout abandonment.

sm0033-in-store-tech-store-media-2

From here, it’s all about understanding why these issues exist: is it pricing, packaging, or even the call to action? By collating and analysing this information and testing strategies based on it, bricks-and-mortar retailers can dramatically improve product performance.

This goes hand-in-hand with the use of existing technology at checkouts, which can easily and quickly gather data on a daily basis regarding sales volumes and peak shopping times. This can potentially be used to dictate which product stands go where on a given day, or in response to conditions of the day, such as weather.

Responsive fitting room technologies

Think of the fitting room as the basket page on a website – a consumer has picked the products they’re interested in, and close enough to buying them. As they enter the fitting room, RFID can identify the products, brands, styles and sizes being taken into the space.

This data could be used to make recommendations on in-booth displays to suggest products that could go well with them: a shirt to match those jeans, or a belt to match those shoes. These can be used as an upsell opportunity to a customer at the point of purchase.

sm0033-in-store-fitting-room-tech-1

For increased customer ease, products could even be added to the customer’s basket on screen and delivered to their door – or even just to the counter – removing any potential logistical barriers such as buying too much to carry, or simply making the process as hassle-free as possible. Equally, if the upsell product isn’t in stock in that store, that shouldn’t ever be an issue; it can be selected in the fitting room, added to an order and get it sent directly to the customer.

Video analytics

Ecommerce teams have used video analytics to document user journeys for years. In stores, these can be used to truly understand customer navigation paths and patterns. Video can even be used to review the performance of sales assistants, to statistically understand the right and wrong times for them to speak with customers.

This information can be logged to inform future merchandising decisions, to capitalise on what customers truly want. On top of this, it could identify aisles, shelves and tills that perform better and worse than others. There’s a huge opportunity to interrogate customer behaviour in-store, learn from it and optimise shop designs to improve both customer experience and, ultimately, sales.

sm0033-in-store-tech-video-4

Listening to customers in a new way

Customers are telling retailers so much. Every time they interact with a brand in-store, they’re giving them a piece of crucial data which, if collected, can be used to improve their experience. The technology exists to do this, and digital teams have made this discipline of data collection, analysis, testing and optimisation the foundations of their success.

This mindset needs to be rolled out to improve store performance. As ever, the answer lies in the data: use it to identify the problem, propose a test to remedy the problem, analyse the findings, then repeat, repeat, repeat.

Retailers will always face challenges; new competitors will enter the market, customer behaviour will change, the economy will fluctuate. But one thing won’t change: every time your customers interact with a business, they are telling it what they want. Now it’s time to really listen to them, then act upon it.