Soccer team in a huddle

Returns in Omnichannel Retail

March 16, 2017 by Iris Nagel-Martin 0

Retro products are the height of fashion, and omnichannel retailer Manufactum is right on trend. Despite offering a vast range of traditional-style goods, it has a returns rate to die for. And SAP solutions for retail help ensure that the company’s returns process runs efficiently.

In a world where style is often more important than substance, a small retail company based in Germany’s Ruhr region has captured a market niche that makes it the envy of its peers. It sells built-to-last products that have been manufactured with care and thought ‒ and designed to give a lifetime of enjoyment.

While retailer Manufactum has an enviably low returns rate, SAP solutions keep the process efficient

Manufactum GmbH & Co. KG is headquartered in Waltrop, Germany. Founded in 1987, the company is committed to selling products that offer quality and function “by design.” It currently carries a range of 10,000 items from around 1,800 suppliers. The goods are manufactured to a high standard; they’re robust and they do what they’re supposed to. They’re sustainable too, because apart from being made to last, they can actually be repaired if necessary.

Manufactum sells goods that combine practicality with the allure of traditional materials. They appeal to customers on an aesthetic level, as does the company’s catalog, which – although available for browsing online – many customers like to order as a hard copy to place on their coffee table at home.

If you deal in high-quality, well-respected products, you’re likely to have a low returns rate – and Manufactum’s is well under the market average. But the traditional mail-order retailer does need a returns process of course. And there is no escaping the laws of the market here, explains Manufactum’s head of IT, Jens Brockmann: “Being able to return goods is something customers take for granted; for retailers, returns are a serious cost-driver.”

The product category with the highest returns rate (40%) at the company is textiles and fashion; by contrast, only five percent of food purchases are returned.

“When we deal with returns, we focus on two key aspects – why they happened and how we process them. But there are various steps we can take to stop them occurring in the first place,” adds Brockmann. “That includes providing honest product information.”

Brockmann cites the example of a table soccer assembly kit his company sells. This is the kind of product, he says, that is highly subject to wear and tear, even more so if it is heavily used. The product description therefore stipulates how, where, and with what materials the kit was made. It tells potential customers which spare parts are available and how to fit them.

Manufactum provides this same level of transparency for all the products it sells – not just the table soccer kit. A detailed guide to using and caring for each product is provided, and there is a telephone number for customers to call and an email address to contact if they need advice. Each product description includes important reminders and additional information (such as washing instructions) and displays matching products that the customer might also need or be interested in.

All the products on sale – from notebooks fashioned from recycled leather, to hand-painted table lamps, two-ply bathrobes, wrought-iron pans, foldable barrows, and more – are thoughtfully designed and made to last.

Customer Satisfaction End to End

Seen across the entire product spectrum, online buyers return fewer items than customers who purchase by telephone or in-store. The traditional mail-order retailer began setting up an online sales channel in 2000 and is now well on the way to offering an omnichannel experience.

Manufactum uses SAP for Retail to manage its various sales channels

“We have been using SAP for Retail to manage our various sales channels since 2002,” says Manufactum’s head of IT. The system has been continuously enhanced and extended over the years to cope with various changes at the company, such as the introduction of a new POS system and a store redesign program. While there was linear growth in distance selling overall, phone and mail-order purchases decreased and online orders increased.

Internationality as Revenue-Driver

At around the time it opened its online channel, Manufactum also began selling in Switzerland. It has been trading in Austria since 1998, and entered the UK market in 2002. “Whether we were introducing a new ordering system or breaking into international markets, our SAP system was equal to the task every step of the way,” recalls Brockmann.

Manufactum offers today’s customers a “rounded buying process,” says the IT boss. This means that the buying experience has to be seamless across all channels. “No matter whether customers are surfing the Web, shopping in-store, or placing an order on their cell phone, we can increase their loyalty to our brand by having a strong presence on all channels and being able to serve them at any time, whichever channel they choose.”

And interaction between the sales channels is being intensified to ensure that exactly the same services ‒ such as buying and redeeming vouchers and checking product availability ‒ are always offered on all analog and digital touch points. Thus, if a certain product is available, the customer can reserve it online, go and look at it more closely in-store, and – if they decide to buy it – have it delivered to their home free of charge, which all contributes to keeping returns at a low level.

Generous Return Policy for Customer Satisfaction

Manufactum includes a return slip with every product delivery. And it operates an extremely generous return policy. Unwanted goods can be returned through any channel, irrespective of where they were purchased, and customers can choose to receive either a cash refund, a credit note, an exchange, or a voucher for the amount they are owed. Manufactum even takes damaged goods back.

When it registers receipt of a return, the SAP system posts the item concerned to the central warehouse or store inventory straight away so that, provided it is still saleable, the product can be offered for sale again.

On the question of what motivates customer loyalty, Brockmann replies, “This probably sounds old-fashioned but in our book, values like honesty and respect are key.” And because there are clearly plenty of customers who appreciate this attitude, Manufactum is going from strength to strength.

Top image via Manufactum

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