Commentary

New Retail Dynamic Creates Post-Purchase 'I'll Keep It' Phase

by Kathy Kline , Op-Ed Contributor, January 15, 2015

A new consumer dynamic is emerging in retail: Purchase risk is receding across categories, and it’s creating a new step in the path to purchase that is shifting when the consumer decision journey ends.

In an effort to be accommodating, retailers have created a new dynamic — especially with Millennials. Nordstrom, Zappos, Target and Costco are among the many that have made returning merchandise incredibly easy and generally free, prompting a relatively new and widespread sentiment among customers that virtually anything is returnable.

Thanks to these new return policies and “risk free” customer mindset, the National Retail Federation estimates merchandise returns cost retailers $270 billion annually. An NRF report (2013) says that if merchandise returns were a company, it would rank No. 3 on the Fortune 500.

So how do easy returns affect the purchase journey? In a recent study we conducted of four retail categories (grocery, technology, fashion and home décor) we saw a new step emerge: The post-purchase “I’ll keep it” phase. This is the moment when customers decide to snip off the tags and own the merchandise. Only then, even though they have already purchased your product, do they leave the “consideration” phase where they continue to look for additional options and make their final decision.

So should retailers go back to limiting returns and making it more difficult? Of course not: A recent Washington and Lee study found that online retailers who offer free return shipping see up to a 350% lift in sales while those who don’t watch YOY sales decline 74% to 100%. Returns are here to stay, and risk has most likely permanently receded.

In the midst of all of this, there is a huge opportunity for retailers and marketers. Recognize and benefit from the new “I’ll keep it” phase of the customer journey, understanding it’s an additional opportunity to succeed with them. Ask yourself, what can we be doing post-purchase to engage customers and increase the likelihood that they will “keep it” or buy from you again? Think about how your marketing should shift now that “buying it” isn’t the end goal, and “keeping it” becomes the ultimate outcome.

gen y, retail

2 comments about "New Retail Dynamic Creates Post-Purchase 'I'll Keep It' Phase".

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Mike Lauber from Tusco Display, January 15, 2015 at 10:47 a.m.
Returns have been a competitive weapon for some retailers for years. For instance, LL Bean has used it as a cudgel against other catalogs for decades. Kathy makes a useful point nonetheless that the "I'll Keep It" is the true Second Moment of Truth for the consumer, trailing the shopper's First Moment of Truth to buy it.
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Howard Zoss from Zig Marketing, January 15, 2015 at 11:06 a.m.

Post purchase dissonance has actually been around for a long time ... but certainly is taking on greater importance in the era of the easy return. The goal of constant connection, at any stage in the purchase cycle, is an objective of Social Media and CRM. The ability to continue developing the relationship has and remains a fundamental process for many brands today. Digital connection makes that easier through personalization derived from CRM data. To your point, probably requires greater emphasis than some brands put to it just by equating CRM = email.