TECH BUYER Jan 2020 - IDC Perspective - Doc # US45804019
Stitch Fix, Filters, and Friction: How to Rethink Competitive Advantage in Returns Management and Throughout the Supply Chain
This IDC Perspective addresses the role of friction in building business opportunity; how retailers, such as Stitch Fix and Kohl's, are using friction to their advantage; and how it is important to rethink the role of friction across the supply chain. Thinking about the high value that a returns operation can have for a business is important. When a customer returns an item to a brick-and-mortar store, a completely new opportunity opens up to interact with her. She may choose to look around the store again. She may have a positive interaction with a sales associate, who may show her a product that might replace the product she is returning and may upsell or cross-sell some accessory or additional items. Because of the delight a customer may receive from the way her return is handled and from the new items she walks away with, the customer may become more loyal to the brand. She may talk about the fabulous return experience she had to friends or on social media, turning into an unpaid brand ambassador for the company.
Moving from thinking about the returns process as a time-sucking point of uncomfortable non-value-added interaction to thinking of it as an area ripe for opportunity flips returns on their head. Thinking about friction as an area on which to build, instead of an area to eliminate, is powerful. Both Stitch Fix and Kohl's have turned friction on its head to open up new opportunities to delight the consumer and grow revenue.
"The value of bringing that customer to the store is so high that Kohl's, in July 2019, began a partnership with Amazon to accept and process Amazon returns in its brick-and-mortar stores. Think about that," said Jordan K. Speer, research manager, Global Supply Chain at IDC. "A major retailer is devoting its own resources to processing the returns from another company — a company that is also a competitor. When you regard returns as a competitive differentiator, you have to ask yourself: 'Should we want to reduce returns, and by how much?' At what point does minimizing that operation crossover to causing more harm than good?"