A sale is a sale … except when an online sale results in an in-store return. The retailer might break even, but its website division receives the credit for a sale, while the physical location’s total sales are dinged by a return. This tension between brick-and-mortar locations and the brand’s online presence ultimately can disrupt and hinder the omnichannel consumer experience.
For example, employees of the physical location may not be incentivized to direct customers to the website, for fear of having to accept a return later. The negative sale numbers associated with too many returns can lower the physical location’s sales numbers, which might threaten to reduce employee bonuses or awards that are based on sales figures, or else lead to stagnant compensation rates.
To reduce this tension, Rainbow Shops is taking a new approach. In an effort to create a more cooperative relationship between its physical store locations and its online presence, the retailer has modified the bonus structure tied to in-store sales. In the event a customer’s shipping ZIP code is within a 10-mile radius of a physical store location, the sale is applied to the store’s bonus. If a customer’s shipping ZIP code is outside of this radius, the sale is associated with the retailer’s website division only.
Rainbow Shops asserts that this new location-based bonus structure has helped establish greater cohesion between its brick-and-mortar presence and its e-commerce platform. Retail store employees are now more likely to encourage customers to shop on the website for out-of-stock items and to encourage other brand purchases. In-store returns no longer are perceived as threats to the location’s bottom line. As an added bonus, customers who visit the store to return some merchandise make additional in-store purchases approximately 60 percent of the time. Thus, a team approach has replaced the previous, tension-filled, competitive setting, and ultimately, the brand, its employees, and its customers all seem to benefit as a result.
Discussion Questions:
- Why were online sales sometimes unfairly representing the performance of Rainbow Shops?
- What did the retailer do about it?
- How would you handle the inequity involved when online sales negatively impact store sales?
Source: Matthew Stern, Retail Wire, June 13, 20