How Smart Retailers Are Tackling The $1 Trillion Returns Problem | Ask An Expert
Returns are no longer just a cost center - they're a $1 trillion opportunity waiting to be unlocked. In this episode of Omni Talk's Ask An Expert series, hosts Chris Walton and Anne Mezzenga sit down with David Morin, VP of Customer Strategy at Narvar, to reveal how leading retailers are transforming their returns operations from a liability into a competitive advantage.
David shares exclusive data showing over 55% of retailers now charge for returns "at some point in time" - but it's not what you think. Learn how brands are using personalized return policies, leveraging customer data for fraud detection, and creating frictionless experiences that actually increase customer loyalty.
Key topics covered:
- Why charging for returns doesn't hurt conversion (when done right)
- How retailers save 50%+ on shipping costs through smart consolidation
- The shocking reality of returns fraud (52% of consumers admit to it)
- Real-world examples from Urban Outfitters, Sephora, and other major brands
- AI-powered tools that identify high-risk vs. high-value customers
- The chandelier story that perfectly explains returns psychology
Whether you're an e-commerce leader, operations manager, or retail executive, this conversation provides actionable strategies to reduce costs while improving customer experience.
Music by hooksounds.com
#RetailReturns #ecommerce #RetailOperations #CustomerExperience #RetailTech
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Transcript
Foreign.
Speaker B:Hello, welcome to another exciting and elucidating episode of the Omnitalk Ask an Expert series.
Speaker B:I'm one of your hosts and mazinga.
Speaker C:And I'm Chris Walton and we are.
Speaker B:The founders of Omnitalk, the fast growing retail media outlet that is all about the companies, the people and the technologies that are coming together to to shape the future of retail.
Speaker B:Amitak fans, we have heard you returns are a major issue facing all of you retailers and brands out there right now.
Speaker B:In fact, it is a $1 trillion problem.
Speaker B:Chris, I had to look up for this just to confirm the correct.
Speaker C:How many zeros?
Speaker B:Right?
Speaker B:One trillion?
Speaker B:Yes.
Speaker C:Because a lot of zeros.
Speaker B:Yes.
Speaker B:You don't come across this every day, but it is a $1 trillion problem for retailers.
Speaker B:So, Chris, we had to bring in the very best person that we know on the show today to share some data and most importantly, some solutions that can help you get a handle on your reverse logistics.
Speaker B:So it is with great pleasure that we introduce Narvar's VP of customer strategy, David Marin.
Speaker B:David, welcome.
Speaker A:Thanks, Anna, Chris, for having me.
Speaker A:Super excited to be here.
Speaker A:I was, you know, thinking about today and I really wanted to say longtime listener, first time caller, but then I remember that I actually chatted before course.
Speaker A:So, yes, I think the last time I was a little less adept at all things Omnitalk.
Speaker A:Since then, I am regular listener to all your content and it is very humbling and exciting to be here.
Speaker C:Yeah, that's right.
Speaker C:We had, we, we had you at shop Talk fall.
Speaker C:Right.
Speaker C:We did a live interview with you right from the terrace overlooking the whole expo hall.
Speaker C:It was great.
Speaker C:It was fun.
Speaker A:And since then, fast five is my bible.
Speaker C:Yes, nice.
Speaker C:Love to hear it.
Speaker C:Love to hear it.
Speaker C:And flattery will get you everywhere, my friend.
Speaker C:All right, well, just a quick reminder before we get started here with David and for those watching live with us on LinkedIn right now, feel free to ask your questions at any time via the chat session window on LinkedIn on the right hand side of your screen if you're on your desktop.
Speaker C:All right, David, well, let's start.
Speaker C:Let's start with the basics like we always do.
Speaker C:Tell the audience a little bit about yourself and also about Narvar in case they aren't as familiar with our coverage as, say, someone like yourself might be.
Speaker A:Sure.
Speaker A:Well, let's start with Narvar.
Speaker A:For those of the people that are listening and watching, an unfamiliar Narvar is a customer experience post purchase platform.
Speaker A: We work with over: Speaker A:In the space that we call post purchase, many of you maybe might not know Narvar by name, but you've likely interacted with Narvar in some form over the last 10 to 15 years.
Speaker A:A fun game I like to play with people when we talk about Narvar is if you go into your personal inbox and type in Naravar, you will likely see a number of emails that we have sent you on behalf of our great brands from some of the most notable names in retail and beyond.
Speaker A:I think what's really exciting about Narva right now is continuing to think about what the future of post purchase and post delivery is.
Speaker A:Today we're really focused not only on customer experience, but I like to say we're also focused now on retailer experience as well.
Speaker A:So not only how do we accelerate the consumer experience and all things post purchase, but how do we also give retailers tools and visibility to accelerate their own internal operational management?
Speaker A:In my role, I've been at Narva for seven and a half years, which is a lifetime in all things SaaS and startup.
Speaker A:I've done a lot of different things, but always with the customer front and center.
Speaker A:So I've been lucky enough to work alongside some of the world's largest brands and retailers, strategizing and optimizing all things post purchase.
Speaker A:Today.
Speaker A:I like to think of myself as a Narvar consultant that works with Narvar.
Speaker A:Really thinking about how do we bring together the voice of our retailers, the voice of the industry and the voice of Narvar and really think through how do we all partner together to really elevate consumer experience and retail experience.
Speaker C:So, David, I want to go a little bit deeper on that too, to start out here, more so than we normally do as well.
Speaker C:But you know, for those, we've got a lot of executives, a lot of executives from big enterprise retailers listening.
Speaker C:Some of them may or may not be as familiar with E commerce.
Speaker C:So what is like, what does a typical Narvar relationship look like?
Speaker C:What are you typically doing for those retailers, aside from the example you gave of, you know, being the ones responsible for the emails in everyone's inbox?
Speaker A:Sure, yeah, I think.
Speaker A:Great question.
Speaker A:And it's something I'm so passionate about because it's been a core part of my experience in Narvar.
Speaker A:Obviously, first and foremost, what we're working on is building out that customer experience for the retailers and brands.
Speaker A:So after A customer buys with you what is the actual digital experience they go through.
Speaker A:In most cases at default, Narvar is providing that and hosting that experience, whether it's a branded tracking page or the emails I talked about or the platform to actually facilitate returns.
Speaker A:But something that I've always felt is Naravar's competitive difference in the market and it's something really unique is really again thinking about those things.
Speaker A:1500 retailers and brands we work with, there is no one else in the world that has the same level of both quantitative data, but also qualitative experience in post purchase.
Speaker A:So a real core part about how Narvar works with our brands is not only providing that digital experience for consumers, but providing consultative guidance to our partners on how to continue to optimize those experiences to drive revenue or to save costs.
Speaker A:Share best practices that happened at Sephora and sharing it with Everlane and kind of everything in between.
Speaker A:So really, you know, I think you and you both know as retailers, retailers love to know what other retailers are doing.
Speaker A:Yeah, both their competitors, but also the stall horse of the industry and the fast moving startups.
Speaker A:And I think Narvar has a really unique position to share that again from a data perspective, but also from like a best practices and examples perspective of how are other retailers improving their experience.
Speaker C:Yeah, the thing I would add there too, David though, is a lot of times, and this is I think what you're getting at too, the retailers also think that their own processes set them apart when in reality they're probably just doing it the same way everybody else is.
Speaker C:And you guys bring that data to the table ahead of time because you're seeing everything across the industry that could potentially make them faster as well to, to improve the experience for their customers day in and day out.
Speaker A:The number one thing I hear all the time is, well, our brand is special.
Speaker A:What I like to say is your brand is special.
Speaker A:But consumers are going to consum and consumers generally consume in the same way.
Speaker A:So there's a lot of shared learnings we can take that are unique to your business, but also really acknowledge the trends and behavior that we see that kind of are very similar across categories and across different price points.
Speaker B:Well, David, let's start to dive into the topic at hand here.
Speaker B:We had your colleague Katherine Doumet on the show a little while back and she was talking to us about one way that brands can start thinking about how to capture back some of that revenue that they're losing from returns.
Speaker B:The $1 trillion that we talked about by starting to charge Customers for returns.
Speaker B:We've seen this from H and M, from Zara and others.
Speaker B:However, I think this, there's this perception out there that customers won't shop you or hesitant to shop some of those retailers when they start charging for those returns.
Speaker B:Can you, like, make some.
Speaker B:Some clarity here for us or, like, help us understand, like, what's really happening here and what the right move is for retailers?
Speaker A:Sure.
Speaker A:This is probably one of the most frequent conversations I've been having in the last two years for this exact reason, which is, you know, costs are skyrocketing.
Speaker A:People are looking at different levers.
Speaker A:We, you know, are probably exiting, I would say, an era of free returns for everyone.
Speaker A:I think, you know, if we look at the vast last five to seven years, that's kind of been the dominant.
Speaker A:And we know consumers like it.
Speaker A:Right.
Speaker A:Narva does a lot of our own consumer studies.
Speaker A:We hear the same thing again and again.
Speaker A: In: Speaker A:That same Survey said that 36% of consumers consider it a headache to have to pay some sort of restocking fee or shipping fee.
Speaker A:And broadly, if you ask consumers, of course, they say they like free shipping.
Speaker A:If you ask me, I would also say I like.
Speaker B:It's a nice thing.
Speaker B:Yeah, it's a nice thing.
Speaker A:I agree.
Speaker A:But does that actually determine true behavior?
Speaker A:And I think what's interesting is we're finding that and this is not just in return shipping, but consumers say one thing, but the way they behave is often not exactly what they say.
Speaker B:Yeah.
Speaker A:So I think we've seen a lot of changes here.
Speaker A:First, we've absolutely seen many, many more retailers start charging for return shipping at some point in time.
Speaker B:Okay.
Speaker A: lysis on our platform in June: Speaker A:We found that over 55% of the retailers on our platform are charging for return shipping at some point in time.
Speaker A: % in: Speaker A:So huge, huge step change in that.
Speaker A:But I really.
Speaker B:David, real quick, what do you mean by some point in time?
Speaker A:Like, that is exactly where I was going and.
Speaker B:Okay, sorry.
Speaker B:Sorry.
Speaker B:Thank you.
Speaker B:Thank you.
Speaker A:And I think that's the, that's the, I think that's the interesting piece is that we're really starting to see free shipping potentially being used as a lever of personalization.
Speaker A:You know, it could mean that loyalty members get free shipping, but non Loyalty members don't.
Speaker A:We've seen some real retailers experiment with time based policies.
Speaker A:So if you return in the first 10 days it's free, but if you wait more than 10 days, it's $10.
Speaker A:Those retailers are trying to incentivize getting inventory back faster.
Speaker A:We've seen some retailers say if you're going to do an exchange with us, of course we'll process it for free.
Speaker A:But if it's a return, you might have a small fee, maybe you take a store credit.
Speaker A:So we're really seeing knowing that consumers like that return.
Speaker A:Free return shipping experience.
Speaker A:Are there ways in which you can drive consumers to experiences that also benefit the retailer in exchange for that free shipping lever?
Speaker A:And I think that's one of the ones that's probably the biggest trend.
Speaker A:As a sub note of that, and I think we're all aware, I've heard you guys talk about it to some degree over the last year on your podcast as well, is that the cost of first party data is really increasing.
Speaker A:And so that ability to offer free shipping, if you're a known customer, if you're a logged in customer, actually can pay dividends for the retailer over time to reduce their cost of acquisition.
Speaker A:So I would say of all the examples that I shared, that's probably the one that's the most common, at least in the last 12 months.
Speaker B:I love that example, David.
Speaker B:I think it's important to call out there like it's, you have to be, well one, your teams have to be very closely aligned within the retail organization so that you, you can understand the value there, that maybe you're reducing your customer acquisition costs a little bit.
Speaker B:So the marketing team is saving some money.
Speaker B:Yes, you have to ship back the product, but I think that's a really.
Speaker B:I had not thought about that as, as a way to kind of make up some ground for some of these returns.
Speaker B:So that's a fascinating thing.
Speaker B:I just want to make sure that the audience is listening to and paying attention to and thinking about within their organizations.
Speaker B:Can you do that?
Speaker A:The question is always like, does this change behavior?
Speaker A:Totally.
Speaker A:I've had a lot of conversations with senior E Comm leaders who have implemented some form of shipping fees.
Speaker A:And anecdotally what we've resoundedly heard is that as long as the value exchange is there, adding in nominal return shipping fees has not really had a material impact on conversion either.
Speaker A:And I think that's also why we're continuing to see that growth of people shipping because people are starting to see that as long as you're providing a good experience to consumers that the merchandising is good, the quality is good, there's a unique value offering.
Speaker A:It isn't a bit as big of a purchase to suede or as some people are scared about.
Speaker A:Yeah.
Speaker C:And it's probably because of the data.
Speaker C:Which leads me to the question I want to ask you.
Speaker C:I comment on that question I want to ask you.
Speaker C:One is like, I had no idea that retailers were getting that scientific in terms of delineating between a known shopper versus an unknown shopper in terms of what their return policies are.
Speaker C:So that that's kind of a big aha for, for Ann and I right out of the get go of this podcast and I hope for other retailers listening too, to be like, there are ways to think about this that you may or may not be thinking in your organizations.
Speaker C:But the second part goes back to what you said.
Speaker C:My question now goes back to what you said at the top or at the top of this last question in response to Ann, which is, you know, customers only tell you what you know.
Speaker C:They tell you some strange things sometimes.
Speaker C:And my, my favorite, my, one of the things that pisses me off on LinkedIn more than anything, David, is when somebody will put a pithy comment on something and then I post and be like, why don't you just ask the customer?
Speaker C:So how do you, how do you reckon?
Speaker C:And we get that all the time, don't we?
Speaker C:And so like, yeah, how do you reconcile that belief that's out there with trying to figure this out?
Speaker C:Because if you ask the customer, do you want to be charged for shipping for this, you know, dynamic or this instance, they're always going to say no.
Speaker C:But you're saying that that's actually not the case potentially, if you think about it a different way.
Speaker C:So how do you actually unravel that with the retailers you work with?
Speaker A:Yeah, I think one, I think that's the challenge is, you know, consumers are very sensitive people and sometimes they think they mean and sometimes they don't.
Speaker A:And so it's hard to really distill, you know, which are the ones that mean the most.
Speaker A:I think specific to this conversation and our work and my work, I think we are lucky that we've gone through this process with so many retailers.
Speaker A:So where we are as a company now is that we have a lot of experience and data of actually working with retailers through this change management process, through the step change process.
Speaker A:And helping retailers with change management across all E commerce and post purchases is not new to Us, and especially not in returns.
Speaker A:Five, six, seven years ago, you know, we became really adept at helping retailers take the label out of the box.
Speaker A:And seven years ago, if you would have asked how, how do consumers want to return?
Speaker A:Every consumer would say, I love a label in the box.
Speaker A:Sure.
Speaker A:You know, and so we, we're really adept and we've become really adept at helping retailers through that kind of consultative guidance that I shared at the top that I'm really proud of, of, you know, making them feel like it's okay, that consumers are, you know, both fickle but resilient and that as long as you're providing the right level of help and information and guidance, they're going to adapt to things, you know, that, that are reasonable.
Speaker A:I think for those retailers who are maybe thinking about charging and aren't yet, I think the good news is over half of our retailers are already doing it.
Speaker A:And the chances are that one of your consumers shops with one of our other half of the consumers doing it.
Speaker A:It's pretty likely.
Speaker A:And so I think a lot of people who might be seen now as like kind of late decision makers are going to have the benefit of a lot of the early movers because consumers now are becoming more adapted and socialized to some of the changes and return policies and returns practices that have been happening over the last two to five years.
Speaker B:Yeah, David, I checked my Gmail while you said that and I'm not even going to tell you how many Narvar emails I have in there.
Speaker B:And that's just from like the last six months.
Speaker B:So I can attest you are.
Speaker B:What you are talking about is true.
Speaker B:I.
Speaker B:You're definitely interacting, your customers are definitely interacting with more than just you and experiencing this, this type of thing across the board.
Speaker B:Because you guys have 90% of like 90% of the, the country is interacting with Narvar at some point in time.
Speaker B:I remember Catherine, maybe at the end.
Speaker C:Of this webinar we'll take a bet.
Speaker C:We'll take guesses between David and I and how many, how many there are actually in your inbox ad.
Speaker A:But David, that means the first question to ask is, do you delete your emails?
Speaker A:Because I don't delete my emails.
Speaker A:So it's a crazy number.
Speaker B:No, just archive, just archive it now.
Speaker B:I'm Michigan.
Speaker B:I deleted them.
Speaker B:Yeah, right, right.
Speaker C:The other point too that I want to call out to what you said, David, is like sometimes you just got to try stuff, you know, and that's right.
Speaker C:I mean that's the other thing.
Speaker C:Like you've just got to try some things.
Speaker C:And the digital space particularly enables you to do that.
Speaker C:And retail does too, which is actually why I personally got into retail back in the late 90s, because that's the thing that attracted me to it, is you can just try new things very easily.
Speaker C:So.
Speaker C:All right, well, what else seems to be top of mind?
Speaker C:We talked a lot about potentially charging for returns and it sounds like there's some momentum heading in that direction.
Speaker C:What, what, what else is top of mind for retailers in terms of trying to stop this $1 trillion bleed, so to speak?
Speaker A:Yeah, I think the, I think that piece alone is the top of my number.
Speaker A:Right.
Speaker A:Is that $1 trillion?
Speaker A:I don't know how many zeros that is.
Speaker A:We just write a T. It is so big, you know, and I think what a lot of maybe people who aren't as embedded in the business as we are don't really understand how costly returns really are.
Speaker A:And what is accounting for that trillion dollar problem?
Speaker A:You know, we like to estimate that any time a consumer makes return, it costs $30 on average.
Speaker A:But I've been doing a lot of speaking or discussing with a lot of our customers and some of our customers have told us that they actually estimate that to be closer to $75 to $100.
Speaker B:Oh my gosh.
Speaker A:About the all in process, right?
Speaker A:Shipping plus labor at the DC plus potential like loss of dollars because the turnaround or they can't resell it, the accounting for the shrinkage, the repackaging, like if you really think about all of the steps that it would take to actually get back a return, get it into either a sellable form or a liquidatable form, like how much is that, you guys?
Speaker A:I think both have a merchant background, so I don't have to tell you this, but the margins that most retailers are working with are pretty, pretty thin.
Speaker A:And if you really think about like a $75 cost for an item, like it's really easy that a single return for an item turns into a loss pretty quickly on the balance sheet.
Speaker A:So on that end, I think retailers are really being forced to take this like laser focused approach to all steps of the return process and really think through where might they be able to find savings, you know, and I think that's especially relevant when we estimate that 57% of returns stem from operational issues and not true consumer intent.
Speaker A:Maybe damage or late or bad descriptions on a website.
Speaker A:Are there actually avoidable things that could have helped, not helped avoid the return for happening in the first place?
Speaker A:But then I Think what's the trade off there?
Speaker A:And that's kind of where we've been is at the same time, we also know that retailers need to balance consumer experience.
Speaker A:So it's not as easy as just adding a cost for everyone or being really stringent and just cutting returns out of the, out of the.
Speaker A:Like not allowing returns at all or forcing people to go to your one store in an inconvenient area if they want to make a return.
Speaker A:In the same consumer surveys that I referenced before, I think the stat that really I like to lean on because it really speaks to the importance of using returns as a loyalty and acquisition moment, is that 84% of consumers say that a poor returns experience will make them walk away from that brand and.
Speaker B:Never shop with them again ever again.
Speaker A:Ever.
Speaker A:Well, unless the next new item comes.
Speaker A:Right.
Speaker A:But I think it's criteria.
Speaker C:Well, no, but I mean, you gotta rehook them, though.
Speaker C:You gotta acquire.
Speaker B:Right.
Speaker B:Right.
Speaker A:Wow.
Speaker A:One of the stories I share a lot and I've been using this story a lot.
Speaker A:So for your listeners who might have heard it again, I apologize.
Speaker A:But I love it because I promise you this is a true, true story.
Speaker A:I was at ETEL this year in Palm Springs where I saw you in, and I was at one of the opening cocktail parties and we were chatting with this woman and she was like, oh, what's Darbar explained it to her and she started to think and she was like, returns.
Speaker A:And she's like, you know what?
Speaker A:I recently bought a chandelier.
Speaker A:And I got it.
Speaker A:I was super excited.
Speaker A:I opened it up and I hated it.
Speaker A:And she said the first thing that went through my body was dreadful.
Speaker A:How am I possibly going to return this giant chandelier?
Speaker A:So she, you know, told this whole story and you could see that she was getting emotional in her face.
Speaker A:And she's like.
Speaker A:So I like, went online and I was just thinking, like, I'm going to have to like, drive to some warehouse and like, pay all this money and who knows?
Speaker A:And she said to her surprise and delight, this particular retailer had a great returns program.
Speaker A:They offered a free home pickup to come the next day to pick up and box up the chandelier and take it away.
Speaker A:So she did all that.
Speaker A:And then she realized, she said, and you know what?
Speaker A:The next thing I did was I sat on my couch and said, you know what?
Speaker A:I still need a chandelier.
Speaker A:And she immediately went back to that retailer site because of how great of an experience they gave her and started shopping for a new chandelier again.
Speaker A:And I think that story, I think really encapsulates why it's really important for retailers to look at the entire returns experience holistically.
Speaker A:Yes, we absolutely agree.
Speaker A:There is things happening within a retailer's return network that really could be better optimized to help them save costs, potentially reduce return rates.
Speaker A:But introducing too much friction into the returns process for consumers can actually have a really negative impact.
Speaker A:And especially if you believe like I do, and I think you both do, that most consumers are well intended and really do want not to have to return.
Speaker A:Like how do you really make sure that you're using your returns as a loyalty driving moment?
Speaker B:That makes a lot of sense and I, I love that story.
Speaker B:I think that's so true.
Speaker B:I mean, I feel that way about Walmart now that they come and pick up the returns for my house.
Speaker B:Like that that alone was enough to, to get me, you know, on the right track to be like, okay, well if I don't like this, I can just have, you know, somebody will come to my house and pick it up.
Speaker B:Like that does make a big difference.
Speaker B:And I hadn't thought about it until that chandelier story.
Speaker B:So I'm glad that you told it.
Speaker B:David.
Speaker B:I, I want to move in though to something that you were just talking about on the operations side.
Speaker B:You know, we talked about, you know, it, the cost of an item being returned is in the high $70 range now because of things like the number of hands that have to touch it to process it to get it back in the rotation.
Speaker B:What have you seen with your visibility to all these retailers?
Speaker B:What have you seen retailers do that helps them manage operations more efficiently and successfully and then kind of try to drive down that cost of returns without this, this alienation of customers or creating a ban or something like that?
Speaker A:Yeah.
Speaker A:First, you are the nation's greatest micro influencer of Walmart Plus.
Speaker A:I am not a subscriber, but I might be after, after your latest pitch.
Speaker B:Oh my God.
Speaker B:I got accused of that over the holiday weekend a couple of weeks ago.
Speaker B:My, my brother was like, why don't you just go work for Walmart Plus?
Speaker B:And I was like, well, you never know.
Speaker A:Yeah.
Speaker A:But yes, continue, I might be sold.
Speaker A:Finally.
Speaker A:I'm a creature of habit though, so I got to make that my habit.
Speaker A:I think.
Speaker A:Is this right?
Speaker A:Yeah.
Speaker A:I think when we think about managing costs, what I say a lot is not all returns are created equal and not all consumers have equal long term value to a retailer's top line growth.
Speaker A:The other thing that we Say a lot is having a one size fits all return policy is likely not sustainable.
Speaker A:I used to say outside of Amazon, but if you actually look at what Amazon is very publicly saying they do, it is also not having a one size fits all returns program anymore.
Speaker A:And they as well are looking at how do they use their own data and assets, digital assets, but also physical assets in terms of store footprints and logistics networks to actually personalize the experiences their consumers have at returns as well.
Speaker A:And so I think that is gone.
Speaker A:And I think the answer just is not all the days of a one size fits all return policy just really aren't sustainable almost for anyone.
Speaker A:So like I said, we look at both sides of the equation.
Speaker A:It's how do you use that returns as a loyalty lever, but then also how do you better manage your returns operationally?
Speaker A:And we can see, we see that being done today in a number of different ways.
Speaker A:A couple of examples, you can really use returns networks to better balance costs.
Speaker A:Narva has a program that we call Narvar Concierge, which is our reverse logistics consolidation network that can really help retailers save over 50% and per label savings costs, per label shipping costs.
Speaker A:Sorry.
Speaker A:I think the world of consolidation isn't really new, but what we've seen in the last, at least in our business, is a lot of our enterprise retailer partners haven't really engaged fully in consolidation.
Speaker A:That works because there's a trade off of experience and time.
Speaker A:Like the way that you can get savings and transportation is by slowing down.
Speaker A:For some retailers that might work, but you know, there's some challenges.
Speaker A:You might run into longer transit time, might be longer refunding time.
Speaker A:For some of our retailers who have limited inventory, getting inventory back faster is actually a premium to get it back into a resellable form.
Speaker A:But the operational savings is really, really there.
Speaker A:Where I think, you know, some of this beauty is, is that Narva can really start to lean in with a lot of our offerings to allow retailers to build out personalized or dynamic return programs that suit their customer and suit the business.
Speaker A:So we think about consolidation.
Speaker A:Right.
Speaker A:One of the things I said is longer transit times, you know, maybe refunding.
Speaker A:What Narva can do is a couple of things there.
Speaker A:With our intelligent returns dispositioning, we can help retailers only allow certain goods to go back to the consolidation network.
Speaker A:So if we're working with a brand, sure, this season's items, which you only have 10 of each size in, maybe we never show you a drop off network that takes a lot of time.
Speaker A:But your flagship Evergreen T Shirt or leggings all day long, you don't need those back quickly.
Speaker A:And then what we can also do through Narvar Iris, which is our intelligent retail insight service, is really started to harness the power of data to provide retailers safe signals on who might be a good trusted customer.
Speaker A:That could be low risk if they were refunded immediately at the drop off.
Speaker A:So then you're getting the trade off of customer experience, refunding your customer immediately so that there's no impact, slowing down transit so that you can get the savings, especially for goods that you might not need back quickly.
Speaker A:Similarly, but then maybe from a different side of the coin, we could also use the same intelligence to force a customer to go to a drop off network.
Speaker A:What we know today is that consumers are significantly less likely to intentionally try to defraud you or abuse you through boxless networks.
Speaker A:So Narva Concierge is a 100% label.
Speaker A:Free box, free drop off.
Speaker A:And I think it's, you know, I'd say it's really hard to take a handful of air to like a Kohl's location and be like take my return or a handful of rock like this is my T shirt.
Speaker A:And so Narva's intelligence might determine someone to be a risk of fraud.
Speaker A:Potentially pushing them to a store or pushing them to a drop off location can actually start to dissuade some of that behavior as well.
Speaker B:That's so cool.
Speaker C:Yeah, so, so, so there you're talking about abuse, right?
Speaker C:Like that, I mean that's, that's what you're trying to protect from.
Speaker C:So, so I mean that's kind of a new part of this conversation, a new wrinkle.
Speaker C:So, so how do you, how, how should the retailers watching be and listening be thinking about abuse and trying to maintain the trust with their customers when that type of thing is happening?
Speaker A:Yeah, it is actually scary how much is happening.
Speaker A:And I feel like every day in the last year that I, that I talk to retailers at work here a new scary story happens about how a small but mighty set of consumers are actually abusing policies.
Speaker A: ow, we, NRF estimates that in: Speaker A:And we see it happening across all retailers and all categories.
Speaker A:I think the first thing maybe to kind of just level set is we see lots of different forms of abuse.
Speaker A:Some of that might be what we more refer to internally as friendly frauds.
Speaker A:That would be things like, you know, a consumer intentionally buying a dress, keeping the tag on that they were planning to wear once for that event.
Speaker A:And return could be something like, you know, making up a little white lie because you missed the return window.
Speaker A:And that when you call the call center, you, you know, feigned a family emergency, which is why you couldn't return it on day 30 and you're calling on day 35.
Speaker A:Two things that happen with maybe a little bit more fraudulent intent.
Speaker A:You know, one of the trends we saw coming out of COVID is a lot of retailers advance refunding kind of blanket wide.
Speaker A:And some consumers got savvy to it.
Speaker A:They'd start to ship back boxes that had their keys and their cell phone in it and be like, oops, that wasn't my sorry.
Speaker A:And then we actually are seeing.
Speaker A:Which is maybe the more scary part is true criminal intent.
Speaker A:So people tampering with labels, reselling fraud services on the dark web, you know, really, really criminal intent people.
Speaker A:I think the other thing that I think is interesting and scary at the same time is how normalized this is becoming.
Speaker A:I think most people who are listening and watching have probably seen some version of a TikTok video or an Instagram reel or a Reddit thread that's like, do you want a free lipstick?
Speaker A:Here's what you do.
Speaker A:Call up and say that you didn't get an item.
Speaker A:Repeat these things like you'll get a free thing.
Speaker A:How did you know that?
Speaker A:Watch my channel.
Speaker A:So these.
Speaker B:So not surprised.
Speaker B:But yeah, that's crazy.
Speaker A:Consumers who would like never otherwise walk into your store and take things off of the shelf and leave shoplifting are starting to become more socially normalized that that type of behavior on digital is actually acceptable.
Speaker A:And so retailers are really like facing the challenge.
Speaker A:And we see it in consumers responses as well.
Speaker A:I think.
Speaker A:I know I've referenced it a lot, but it's such a really powerful piece of thought leadership content we put out last year in that same survey.
Speaker A:Survey, which is the first time we've seen such a high data here, is that 52% of consumers admitted to committing a version of return fraud at least once.
Speaker A:So not only is it happening, but when they're surveyed, they are admitting that it's happening.
Speaker A:And again, I'm not saying that those consumers are saying that they're like tampering with labels and reselling things, but they are saying I might have worn in return something and said I didn't or made up a story to get an exception on a refund or something of that nature.
Speaker B:That's wild.
Speaker B:I'm still baffled by the, the Process of how you, I mean, I think this has been so interesting, but the process of how you can single out each individual item and be able to, you know, do a returns processing plan that's different for each thing in your, in your, your SKU set.
Speaker B:David I'd love to close out there.
Speaker B:Like how, how should the retailers and brands listening, how should they think about approaching this work?
Speaker B:Whether they are interested in working with Narvar and doing something as specific as, you know, that that individual skew return policy handling fraud like you just talked about in your, you know, true crime Narvar edition.
Speaker B:What advice would you leave these retailers and brands with here?
Speaker A:Sure, I'm working it backwards one time because I always forget that there's something I like to, I like, I like to share another example of David, True crime.
Speaker A:One of our retailers told me two years ago again in Covid, they started refunding everyone immediately when it got into the carrier network and consumers became savvy.
Speaker A:So they started to see at their distribution center a high influx of three empty CD cases.
Speaker A:And it's because someone figured out that the weight of their core item, which was like a legging of sorts, weighed the same as three empty CD cases.
Speaker A:And so they, the hypothesis of consumers was that they're going to compare the weight of a package before they refund.
Speaker A:If they can just mimic the weight, they'll get a refund.
Speaker A:And so this person who I was talking to, who which was the head of distribution center logistics was like, then all of a sudden we just ended up with a bunch of empty CD cases, which I think is both scary and a fun story.
Speaker B:That's where my Alanis Morissette CD went, right?
Speaker A:Free pants, no more jagged little pill.
Speaker A:So, yeah.
Speaker A:So what can I leave you with?
Speaker A:I think first I like to reiterate, I really do believe, and we believe in the power of the consumer.
Speaker A:Most consumers have good intent.
Speaker A:And in fact, I actually believe that most consumers are not trying to make a return.
Speaker A:Most people, I think doing a return is not the best experience.
Speaker A:But returns are about peace of mind.
Speaker A:You know, the living room really is the new fitting room.
Speaker A:And most consumers are not trying to abuse policy, but they also need to have the ability to try, especially if we're talking about apparel that has sizing and footwear and things.
Speaker A:We also know that only, you know, 80% of all returns fraud is from less than 5% of consumers and probably closer to less than 2% of consumers.
Speaker A:And so this is not about setting out with fear because I think at the top line, people really are trusting and good customers.
Speaker A:But we also recognize that small amount of consumers are having an outweigh size of impact and those are the really important things to try to cut out.
Speaker A:I think the good news is that we as an industry really have so many more tools available to us than ever before.
Speaker A:The acceleration of AI and large language learning models over the past two years has really led to everyone having the ability to analyze data a lot more quickly and having more data inputs to be able to synthesize and start to use.
Speaker A:And as you referenced earlier, Narva has a bunch of data from the interactions that we have viewed over the last 10 years of our business.
Speaker A:We sit with on over 42 billion annual touch points of data, which is order data, shipment data, carrier data, logistics data, grading information, warehouse data.
Speaker A:Now through the acceleration of AI tools, we've been able to really launch our tool set, which is iris, as I mentioned before, where we can really start to look at aggregated behavior and intent and intent signals and use that data back with our retail partners to build better experiences.
Speaker A:Yes, of course, the first thing that we talk about today is how do you help use that data to cut out crime?
Speaker A:Generally what we see, like I said, is a large amount of crime is a lot small people.
Speaker A:So the behavior is there and the signals are there and they look the same.
Speaker A:And can we really ISO that out?
Speaker A:And then the power of that is once you ice out the bad criminals, you can start to use data for a really good purpose.
Speaker A:So how do you reward your best customers?
Speaker A:How do you reward customers that you don't know are going to be your best customer?
Speaker A:But we might because of their behavior across the industry.
Speaker A:You know, we're in the area of hyper era of hyper personalization.
Speaker A:And IRIS is going to become a really powerful tool for the industry and for our retailers, not only in post purchase, but in pre purchase as well to use the data and signals to really accelerate revenue growth, revenue retention, and then of course the revenue protection I mentioned as well.
Speaker C:Yeah, David, I love this.
Speaker C:Thank you for, thank you for joining us.
Speaker C:I mean that last point too, pre purchase and post purchases, that that's kind of my.
Speaker C:I've got a number of takeaways from this, but that was kind of my big takeaway too.
Speaker C:Especially when we started off about, you know, there are retailers are starting to charge for returns because that's more of a pre purchase decision.
Speaker C:And then the other thing I took away from you was like, yes, you can do that, but you have to also Start thinking about how do you make the most frictionless post purchase, you know, experience available to your customer as well.
Speaker C:And in addition to that, you can, you know, you can segment things by the item type.
Speaker C:You can say segment things down to the customer level too.
Speaker C:There's lots of different ways to slice and dice this to.
Speaker C:To try to find ways to combat this quote unquote, $1 trillion problem.
Speaker C:And it all starts with having the courage to test and try new things like we talked about as well.
Speaker C:So again, thank you so much.
Speaker C:If people want to pick your brain, get in touch with you, get in touch with Narvar.
Speaker C:What's the best way for them to do that?
Speaker A:Sure.
Speaker A:Since we're on LinkedIn today, you're free.
Speaker A:Feel free to LinkedIn me.
Speaker A:I'm gonna like, say like click here.
Speaker A:Is it above us.
Speaker C:Where that is?
Speaker C:Yeah.
Speaker C:Right.
Speaker A:Have you seen that video of Usher from COVID where there was like a bunch of like, like they were in like the family, the Hollywood Squares view.
Speaker A:And he thinks he's in the middle, so he's like making all these actions, but he's really in the corner.
Speaker A:So that's great.
Speaker A:Click here to.
Speaker A:To contact me.
Speaker C:Right, right, right.
Speaker C:That's great.
Speaker C:All right, well, that wraps us up.
Speaker C:But before we let you go, David, and how many.
Speaker C:How many Narvar related messages do you have in your inbox?
Speaker C:I'm gonna guess over 500.
Speaker C:David, do you want to venture a guess?
Speaker A:Okay, six.
Speaker A:Are we gonna say six months?
Speaker B:Yes, six months.
Speaker A:Okay, well, as we were prepping, we were talking about how much shopping Anne and I do.
Speaker A:So I'm gonna go 787.
Speaker B:Wow, that's a lot, you guys.
Speaker B:I'm not quite that bad.
Speaker B:492 was the.
Speaker C:Wow.
Speaker B:So that's a lot of emails, though.
Speaker B:I mean, and yes, yes, that is.
Speaker B:I.
Speaker C:90% of those are from Walmart Plus.
Speaker C:But anyway.
Speaker C:All right.
Speaker C:No, I have no idea, really on that side.
Speaker C:I'm just joking you.
Speaker C:But anyway, thanks to.
Speaker C:Thanks to David for sitting down with us.
Speaker C:And as always, on behalf of all of us, Omni Talk, whether you're watching live or listening in later, be careful out there.
