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Monday, 27 September 1999

www. R. eTURNS .com

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Originally published in Twice Magazine


The WEB, the information super highway, the Internet! It’s like a portal to the universe has suddenly opened up and everyone can’t wait to go through it! In a way it reminds me of the famous Twilight Zone episode, you know, the one where the giant bald headed aliens come to earth in friendship offering gifts. They present to the government and the people of earth, a book written in their language "To Serve Man". Well everybody saw how friendly they were and accepted their invitation to visit their planet. Hordes of people lined up to go visit their planet. In the closing minutes, as one of the main characters was about to enter the ship his colleague, drove up shouting, " Don’t get on…. "To Serve Man"…. It’s a COOK BOOK! Well he couldn’t get off and yes was later dinner for some alien family.

The WEB seems, to most, to be a very friendly and useful place to visit and an exciting place to set up a limitless, revenue producing business. In today’s retail environment it is mandatory to have a presence in cyberspace or risk getting zapped by the competition. With the potential business that the Internet brings it is important to understand the dramatic increase in return rate you are about to encounter. Unless your return policy is so restrictive that it alienates potential customers, my advice to you is: Buckle your seat belt Buck Rodgers and get ready for the RETURNS meteorite shower. To better understand what I am talking about look at your latest STORE P&L and do the following math:

Step 1. Write down your dollar and percent return figures for last month and for Year to Date. (if you don’t know your returns figure the problem is much worse than you realize).

Step 2. Now put the monthly return percent in your calculator and multiply it by 2.

Step 3. Multiply this percent by an average months Internet sales.

Step 4. Subtract the incremental return dollars at cost and the estimated cost to process these returns from your bottom line. This is what you can realistically expect from on line shoppers.

CRAZY you say? Is it? Think about your current rate of returns. Your current rate reflects some or all of the following:

The list above represents a few of the many reasons you will see your return rates double on Internet sales unless you are AWARE and PREPARED to reduce them. What is missing on an Internet sale are the key factors above and many other functions that separate filling an order from making and keeping a sale. Most returns are a result of customers buying what they WANT rather than what they NEED. Your goal should not be just to have a WEB site, but instead to have an interactive store on the net that effectively defines and satisfies the customers NEEDS. Go to your company’s web site and review the key factors above. How well does your web site score at Interactivity, Finding the right product and Actively suggesting accessories as opposed to having just a site with merchandise to sell. The effort to develop and support an effective, customer satisfying web site can be more complex than opening a brick and mortar store. Think of the effort to open a physical store: select location, merchandise mix and layout, security, adjacencies etc.... Now ask yourself if you put that same thought into your web site. How did you differentiate your web store from the competition? Or did you just do what everyone else did, you opened a web site. Returns on the "sales" made over theInternet will escalate dramatically unless you are prepared. There are countless tools that can be used to insure that your site is an interactive, NEED satisfying, sale producing "location" in cyberspace that minimizes returns. You can start by reviewing the key factors above when looking at your web site.

Don’t get caught like our friend the scientist on the Twilight Zone, with returns eating you up. Take the time to decipher the book and don’t get cooked! Find ways to: "To Serve Customers Better".


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Bill Stuart

Bill Stuart is CEO of Stuart & Associates, a retail consulting firm specializing in Sales and Margin Growth Programs and Returns Reduction Programs.

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