Inventory Management is the Bridge

It’s surprising to some that the physical retail space is a key component of online shopping. While consumers often start their shopping journey online, many still visit brick-and-mortar stores to see and try products in person before buying. And increasingly, consumers buy online and pick up in-store (BOPIS) or buy online and make returns in-store (BORIS).

Increasingly brands and retailers are rethinking inventory management as a result—specifically how they manage returns and in-store pickup. An effective inventory management system will help reduce some of the $260 billion in losses annually due to inefficient management of returns, many of which come from online purchases. These present an opportunity for brands and retailers: 46% of consumers report that they prefer returning online purchases to stores—70% of whom, according to a UPS report, will make an additional purchase. Meanwhile, an effective buy-online, pickup in-store system leads to additional in-store purchases by consumers on top of what they’re visiting stores to pick up. And both drive sales by contributing to a more seamless consumer experience overall.

Better Prepare Stores for Returns

Every time a customer returns merchandise in good condition, the item needs to be returned to the shelf or the manufacturer as quickly as possible to be resold. Rob Oglesby, Senior Director for retail consulting firm The Parker Avery Group, says retailers should train associates to abide by a 24-hour sorting rule: Put products back on the sales floor, or ship them back to the manufacturer (if defective, typically) or the distribution center (if the store doesn’t carry similar products) within one day. Oglesby adds that extra training may be needed to help staff determine if a returned product can be resold and placed back into inventory. Brands selling in third-party retailers can assist by sending representatives to stores to educate associates about the brand’s specific inventory and how to manage it.

“Retailers need to keep up on [returns] now because what’s returned today in the store could be sold tonight online,” says retail consultant Mark Smith of San Francisco.

Training associates can also help avoid mishandling of “orphan” products, too. These are sold online only, but the return policy allows consumers to bring the products to the store. Without a plan in place to send back to the manufacturer or work into the store’s inventory, many of these types of returns are pushed into boxes in the store’s back room where they’re kept until they’re thrown out. Even simply equipping store personnel with stock locator scanners can greatly assist in inventory accuracy and correctly report inventory availability online and in-store.