APAC Retailers are Monetising Returns, Here's How

Returns are an inevitable part of the retail industry, especially with the rise of ecommerce but it comes at a cost to the bottom line. SAP FLASH research revealed that 65% of retailers offer the ability to return online orders. How can retailers add value to return goods and services?

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  • The trajectory of the global retail industry has always been inspiring, especially in the Asia-Pacific (APAC) region. It’s an open ground for innovation and digital transformation, clubbed with new modes of interaction at the vanguard of ever-evolving shopping experiences. However, one constant challenge is building engagement and trust, and there isn’t any one-size-fits-all playbook for the region. 

    Utilising industry data and insights alongside its own research and best practices from FLASH, SAP’s latest proprietary enterprise maturity and benchmarking assessment compiled a series of trends that examine the dynamic landscape of the global retail industry. 

    The survey revealed that 70% of advertisers in Southeast Asia and India are seeing an improvement in performance from retail media networks over other channels. Meanwhile, 78% plan on using off-platform programmatic targeting in the future. 

    How are Super Apps Leading the Charge? 

    SAP FLASH data revealed that businesses are making an average of $5.79 for every $1 spent on influencer marketing, an ROI that outstrips many other channels. This has become possible with emerging trends, such as live commerce, where super apps lead the charge. Influencers’ recommendations hold significant sway over purchasing decisions here. 

    For instance, Singapore-based ShopBack has over 35 million users across Southeast Asia, all of whom are incentivised to use its platform and buy bulk with cashback of up to 30%. 

    Whereas, Indonesia-based Tokopedia and Bukalapak, integrates social features with ecommerce, tapping into its tech-savvy population. For instance, in September 2023, Tokopedia integrated the Shop Tokopedia feature in its shopping app, in collaboration with TikTok. 

    Monetising Return of Returns

    Returns are an inevitable part of the retail industry, especially with the rise of ecommerce. Shoppers and retailers in APAC are always curious to try new things, but whether they do it in person or online varies from region to region. According to SAP FLASH research, 65% of retailers offer the ability to return online orders to a store or partner location. Out of these, around 56% of consumers prefer to shop online, while it’s just 29% in Hong Kong. 

    So when the dawn of the age of ROR (return on returns) is upon retailers, what could be done about it? SAP’s FLASH research suggested the following strategies: 

    Being wise to deal with damage

    During the returns process, huge amounts of apparel are rendered unsellable. If it can be repaired, cleaned, or repacked, though, it can be returned to a sellable condition and some of the original value recovered. Businesses may lack the infrastructure to take care of this themselves, but it can be outsourced. 

    For example, (Re)Vive, which has a footprint in India and the US, uses proprietary technology to streamline the conversion of distressed fashion and retail inventory into sellable assets, handling both the data and the physical aspects of damage and repair.  

    Execute VIP and membership-based return programs

    Although it’s an old-is-gold trend, but can always gain impeccable traction. Customers pay a fee for free, unlimited returns. This model generates a steady revenue stream, enhances customer loyalty, and allows high-value customers more opportunities to shop. 

    For instance, Amazon Prime’s return policy provides convenience as a key value proposition, driving membership and repeat purchases.  

    Take In-store return bonuses initiatives

    Encouraging customers to return items in-store can drive additional foot traffic and increase the likelihood of new purchases.

    For instance,  Kohl’s attributes accepting Amazon returns in-store and offering a shopping incentive, attracting over 2 million new customers in a year.  

    Encourage green returns and second chance sales

    It’s a concept in which retailers charge a small fee for carbon-neutral shipping or offer discounts and incentives to environmentally conscious customers. By following this sustainable approach, pre-owned items in good condition get a second life through resale platforms. This not only saves money for value-conscious shoppers but also helps the brand fight counterfeiting by offering legitimate alternatives.

    Giving a gist, Patagonia, an international brand, has thriving platforms dedicated to used and second–hand garments. Whereas, Carousell, a recommerce site in Southeast Asia, facilitates the buying and selling of pre-owned luxury items via REFASH

    Is AI-led return data a goldmine for retailers?  

    AI-led analytics and service, clubbed with seamless omnichannel integration, would all streamline the returns process, reduce costs, and enhance the customer experience. These insights can offer valuable data on customer preferences, product quality, and buying behaviour to improve product offerings, optimise inventory, and personalise marketing efforts. 

    For example, H&M and Zara use AI-backed return data to adjust inventory and design decisions in real-time. This ensures enhanced alignment with customer preferences, reduces future returns and shortens time back to the hanger. 

    Also Read: How Can Scalable Delivery Solutions Increase Ecommerce Sales?

    Will AI completely change retailers’ perception of price elasticity?

    The APAC consumer base is vast but fragmented. AI adds the potential for personalisation and loyalty-building alongside dynamic pricing and precise demand forecasting. It’s an exciting crossover, adding personalisation in the form of pricing, rewards and offers to traditional views of price elasticity and demand.

    On average, businesses that leverage AI in their pricing enjoy an ROI 2.6 times higher than those that rely on traditional methods. For Asia Pacific, with complex borders and regulations, this alone is worth serious attention. 

    AI-powered demand forecasting can significantly enhance inventory management. Retailers can anticipate shifts in consumer demand with more precision, letting them adjust their supply chain operations proactively. Consequently, it will lead to reduced costs, elevated customer satisfaction, and increased sales. 

    GK AIR already offers one such service. Its AI-led solution portfolio adjusts prices to market conditions and offers tailored recommendations and personalisation.   


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