Getting Retailers To The Point Of No Returns

What’s the worst part of the holidays? It could be a draw between Aunt Martha’s fruitcake that nobody really wants, Uncle Eddie’s drunken political rants and Dominic the Christmas Donkey. But, if you ask a retailer, you’ll probably get the same answer no matter which one you ask: holiday returns.

Annually, merchandise returns cost retailers in the U.S. hundreds of billions of dollars, and a fair chunk of that is concentrated around the holiday season. Like Aunt Martha with her fruitcake, it seems many people are not very good at giving gifts that recipients actually want.

It’s not always their fault. They may have put in a good effort or spent good money on something they believed would be appreciated, and maybe they got close. Maybe the blouse is the right style but the wrong color or size. Maybe the throw pillow is pretty but doesn’t match the drapes. Maybe the wallet is too small or the shoes are too big.

Target has joined the ranks of retailers trying to combat the post-holiday returns wave (and unwanted gift returns in general) by adopting GiftNow, a digital gifting service by Loop Commerce that allows gifters to virtually choose, pay for and send a personalized gift. Recipients can then accept the gift as given or trade it in digitally before any goods are shipped.

Happier Holidays

In a recent interview with Karen Webster, Loop Commerce CEO and co-founder Roy Erez said GiftNow could make the holidays easier all-around. Fewer returns doesn’t just mean happier retailers — it means happier gift recipients and less stress for shoppers, too.

For the gifter, the service makes it possible to give a personalized, hand-selected present without the insecurity of wondering whether the recipient even wants it, thus taking just a little bit of stress out of the busiest time of year.

GiftNow simplifies shopping for fussy loved ones by ensuring they get a gift they really want. If they don’t like the one the giver picked, if it doesn’t fit or if they’d simply prefer a different color, exchanging can be done virtually before the merchant and gifter waste time and money shipping the wrong or unwanted item.

And, because delivery is instant, shoppers can skip the last-minute panic if they forget to buy a gift for a certain friend or family member. According to Erez, no matter how good a merchant’s products may be, how strong its branding game and how deep its discounts, it can’t sell after the holiday shipping cutoff.

There are, of course, no holiday shipping cutoffs for emails, giving any retailer offering GiftNow a certain advantage, at least among procrastinators.

The Payoff

As commerce in general and holiday shopping, in particular, migrate online, brick-and-mortar stores must give consumers a reason to shop with them instead of just turning to Amazon to fill their stockings, Erez said. He thinks GiftNow could be that reason. The service could help retailers like Target avoid the 1.3 percent decline in comparable sales of the 2016 holiday season by differentiating them from stores that do not have a robust digital or omnichannel strategy.

“Loop GiftNow adds another layer of experience — stores don’t have that,” Erez said. “They’re transactional; we’re social. Retailers have known for a while that they can’t compete purely on price and merchandise anymore. GiftNow adds a layer of experience to attract the audience and convert them.”

By way of example, Amazon plans to add a line of intimate apparel, he explained. With low prices and, of course, fast delivery (free for Prime members), the line likely won’t make Amazon much money, but it will attract millennial shoppers — or at least, Erez believes that is the eCommerce giant’s hope.

Because Amazon is so large, it can afford to take that hit in one department because it will inevitably make it up in another, he explained. Other retailers don’t have that luxury. They must get creative to attract and convert millennials and other customers who may otherwise turn to online shops simply because of their convenience.

A service like GiftNow is one way to do that, and the holidays are a great time to try it, Webster chimed in, because people like to browse at that time of year. Browsing is festive, after all. The frustration comes from finding the perfect gift in the wrong size, or not knowing what size to buy.

“Shoes are a great gift, but they’re not traditionally giftable,” Erez agreed. “We’re enabling retailers to expand their catalog to categories that were not traditionally giftable.”

Webster noted GiftNow seems like a good way to invest in an omni experience while eliminating those traditional frictions that all parties — shoppers, retailers and gift recipients alike — experience during the holidays, especially if physical retailers incorporate signage letting holiday shoppers know there are more sizes and colors available for instant gifting online. Erez said some stores are trying this.

In addition to Target, Macy’s, Coach, Saks Fifth Avenue and Neiman Marcus also use the GiftNow service.