The tide of new technology and trends for online selling continues to get bigger.
While it is obviously favors the industry giants, it's not clear whether small businesses can go on board these new platforms too.
Try before you buy (TBYB) is fast becoming an eCommerce trend that must be considered with caution.
It's a scheme in which online shoppers can order dozens of items to try on, return those that they don't want to keep, and then receive a refund even though the retailer whom they bought from hasn't processed the returns yet.
Though good news for consumers, TBYB poses a serious threat to a seller's profit according to a new study from omnichannel retail management firm Brightpearl.
Their findings, which were obtained from 200 retailers and 4,000 consumers polled in the US and the UK, showed that shoppers would purchase five extra items each month if they were offered the try-before-you-buy option.
However, 87% of them revealed that they would return up to seven purchases. As if this isn't enough to cripple the bottom line of a business, 85% of shoppers surveyed said they expect the retailer they from to provide free returns.
That kind of mindset and expectations are affecting sellers, especially those who have been experiencing a profit squeeze of late, in a really bad way.
40% of businesses have already seen a significant increase in “intentional returns” in the past year as a number of their patrons ordered too many items knowing returning them are either free or cheap.
Are you driving down a one-way street?
It's right to think of your customers' welfare. And though we may have put repeated emphasis on the importance of providing their needs and wants to achieve the success you're gunning for, it does not mean you should put your business on the line.
Receiving a mountain of returned products with open arms and facing the substantial cost on your own is just absurd.
The try-before-you-buy service may be popular among giant online stores who started it, such as Amazon's Prime Wardrobe, Asos, and Topshop among others, but if you're not ready to follow suit it's only going to eat into your profit margin.
It would do you good to weigh the said scheme's pros and cons first. Actually, find out how it can benefit you and your customers to avoid driving down a one-way street.
Although it could potentially increase sales, Derek O'Carroll, CEO at Brightpearl, explained:
“Try before you buy is an interesting model, with obvious benefits to consumers and businesses, but it's something retailers must view with caution. The impact on return rates could cause devastation for online retailers who are already seeing their margins being squeezed considerably.”
Brightpearl's survey further revealed that 17.5% of eCommerce shops have already adopted the TBYB scheme, and more than a quarter of them are expected to offer something similar to their customers by next year.
So, are you all fired up or kinda hesitant about this growing trend?