[Podcast]: 60% Consumers Take Advantage of Retailers

"Building brand loyalty is about putting the customer first, in every aspect. Tuned into this idea of proactive communication, Amit Sharma founded Narvar, a pioneering platform that helps brands engage with consumers beyond their purchase. In this episode of Retail Refined, host Melissa Gonzalez spoke with CEO and Founder Amit Sharma about engaging customers on Narvar’s platform to build brand loyalty."

[You can watch the full interview here—transcript below.]‍

[The transcript below has been edited for clarity.]

‍Melissa Gonzalez (00:09):

Hello everyone and welcome to another episode of Retail Refined, a Market Scale podcast with your host me, Melissa Gonzalez. Today I'm excited to introduce you to Amit Sharma. He is the founder and CEO of Narvar, which is pioneering how brands engage with consumers beyond the buy button, where really the relationship is just getting started.

Today Narvar's comprehensive post-purchase platform empowers 1200 plus of the world's most admired brands. Before founding Narvar, he spent decades shaping real estate operations as an executive at companies like Apple and Walmart. So we're really lucky to be able to kind of pick his brain today. But before we do that, I want to introduce Amit, so say hello. And then secondly, can you tell the audience a little bit more about Narvar?

Amit Sharma (00:59):

First of all, Melissa, I'm so excited to be here. Thanks for having me on your show. As you mentioned, Narvar is a personalized post-purchase platform so that businesses can really engage with their consumers throughout the customer journey beyond the purchase. Because this is so much more that happens, 'Where is my order?' 'When can I get it?'. And then delivery and beyond, which is returns, exchanges. So, we help businesses to enable all those capabilities through our technology.

Melissa Gonzalez (01:35):

Great. Well we're going to have a lot to dive into, not only because you're doing some exciting work, but you also have exciting insights that we can dive into and kind of talk through, help demystify for our audience a little bit, the possibilities here.

Firstly, you guys recently have done your own retail survey on returns, and it showed a number of data points such as "60% of consumers are taking advantage of loopholes in the return system." So that's a whole conversation itself. But also the opportunities of this to really enhance the consumer experience.

So, can you tell our audience a couple of those, maybe your top three consumer trends on what you're seeing for needs, wants, and expectations?

Amit Sharma (02:15):

Yeah, happy to share some of the insights.

As you mentioned, we have over 1,200 global brands and we track billions of orders and packages on an annualized basis. And two or three trends are still relevant for this year as well. What we saw the last couple of years is that there are still constrains in supply chain and labor market beyond the COVID backup.

What that means is orders are getting delayed in terms of fulfillment and in terms of deliveries. So, as consumers continue to shop online, two things are important:

• Setting that right expectation in that shopping journey
• Showing the estimated delivery date on product pages and the checkout page

Doing those two things is critical to earning the confidence and trust of the customer.

Whether companies are shipping from warehouses or from their stores, fulfillment delays are running rampant—roughly 15% to 20% of all online orders are delayed.

Because of labor market crunch, it's important to send updates or notifications to customers whether orders are shipping on time or there are delays.

Proactive customer notifications will not only maintain customer trust by removing uncertainty or anxiety, but they'll reduce the amount of inbound "Where is my order?" calls to your customer service team.  

The same principles apply to the returns process as well. If customers want to return a purchase, they need to be able to do so in a convenient fashion. Moreover, they need to receive their refund (or their exchange or their store credit) in an expedient, seamless fashion.

So, for retailers, the big question to ask is, how can you help your customers by making the returns process as effortless as possible?

Melissa Gonzalez (04:14):

It's funny that we have these conversations because, inherently, you should think this is leading into convenience—yet there still seems to be a gap in how do brands bring it full circle.

I see this as an opportunity when we think of fulfillment, it could be a transactional moment, but it also has the opportunity be a brand moment, and a moment that's in service of its consumer.

Amit Sharma (04:37):

Oh, absolutely.

At every step of the customer journey, on every touch point, the brand or retailer must think about lowering the funnel, as you mentioned—how do we address value for the consumer in the transaction?

And higher up in the funnel, you have to build experiences that enhance the brand and drive loyalty which naturally leads to repeat purchases—how can you be more proactive in terms of notifying consumers via email, SMS, or other channels? By proactively keeping the customer up to date, you're providing a brand enhancing moment and generating loyalty.

Melissa Gonzalez (05:29):

I think what's also interesting is the adoption of SMS when it comes to consumers. I think that's a big opportunity. What kind of trends are you seeing there?—Because years ago would be faux pas for a brand to connect with a consumer that way, but this is the way we're living now.

Amit Sharma (05:46):

I think there are two pieces:

1. If you look at transaction email open rate, we see over 80 to 85% of emails are being opened on mobile. So, SMS isn't necessarily the best or only way to reach shoppers on mobile. People aren't afraid to engage with long-form content on the smartphones anymore.
2. All consumers want the option of being messaged via SMS, it just depends on what the message is about. Is it an 'order confirmation' message or is it a 'delay' notification? We see SMS adoption or opt-in fluctuates between 10% and 40% depending on what the context of the message is.

You have to engage consumers how and when they want to be engaged, with the right content and using the right channel.

Melissa Gonzalez (07:24):

OK, transitioning topics, please tell us what separates Narvar from other post-purchase platforms?

Amit Sharma (07:38):

At Narvar, we're extremely focused on enabling an end-to-end post-purchase experience for consumers—helping brands set the right expectation, provide proactive communication after purchase, and then delivering the right call-to-actions. It's that last bit that's our secret sauce is, giving brands the power to offer personalized calls-to-action during the order, the delivery, and post-delivery (especially returns and exchanges).

Having those 'end-to-end' and 'personalized' pieces really enhance our platform capabilities. For example, if you're waiting for a delivery, you can leave real-time delivery instructions for the carrier through our partnership with UPS and FedEx.

Imagine if you're a shopper living in an apartment building and you buy a big, 40-pound bag of dog food from Petco. For one reason or another, you can't physically carry that bag of food up the two flights of stairs to your unit. You can leave instructions for the carrier to bring that bag all the way to your unit door. We're seeing anywhere from 15% to 18% of consumers leaving these kinds of delivery instructions.

We've also seen that sending fulfillment delay notifications reduces total shopper calls to customer service by about 5%. These are the 'Hey, has my order shipped yet?' calls. Consumer experiences and customer satisfaction (as measured by NPS) are key focus areas for brands and retailers in this economic climate, and these notifications not only improve the consumer experience, but they drive operational efficiency which is really important. Why?—Because operational efficiencies and cost reduction deliver real ROI and value for retailers.

Melissa Gonzalez (10:24):

And it's a challenge because you want to drive value but there's a cost to fulfillment, right?

Amit Sharma (10:32):

It is. Brands want to drive a really good experience, they want to offer convenience, they want to fuel top-line revenue but they can't afford to ignore costs—this is actually a good topic to discuss as it relates to returns.

When we started working on returns five to seven years ago, the general sentiment in the industry was that:

1. Returns are bad for business.
2. It's okay to have returns friction because we don't want the product back.

That was the general sentiment back then, but today it's dramatically different.

Today, if you provide a returns experience that's easy to understand and easy to follow, your sales go up—especially if you're an omnichannel brand. That's because most customers shopping online will actually find and look at your returns policy before they make a purchase. They want to be sure, before they spend $100 on an item, that they can easily bring it back if something goes wrong.

When return policies aren't clear or aren't accommodating, those shoppers will take their business elsewhere and the sale will go to one of your competitors.

Melissa Gonzalez (11:54):

Right. What about return cost?

Amit Sharma (11:54):

What we've seen is that if you give shoppers choice and convenience in the return experience, retailers can recover goods 25% faster, which makes it easier to bring that inventory back in stock and sell in season for full price, versus taking a significant markdown to sell.

For example, every day a piece of to-be-returned apparel sits in the customer's closet versus your warehouse or store, its losing $.75 to a $1.00 of its resale value—especially when you're dealing with finite seasons. The longer the shopper takes to send that item back, the longer it takes you to get it back in stock for resale, which means you're taking a greater markdown.

Melissa Gonzalez (13:34):

Absolutely, and I think that's an important consideration. Do you work with your clients to help them understand that? Because I think people see the cost, but maybe not the breakdown that you just mentioned.

Amit Sharma (13:50):

This is where the education and awareness is really important, and why we talk about SKU profitability. If an item is sold at full price, how can we bring it back in the most cost effective way possible and get it back in stock to sell again at that full price.

And, if we can't find a cost effective way to get that item back and in-stock do you really want to bring it back? Or would you rather let the customer keep the item? That way you're not paying $2 or $3 on reverse fulfillment and another $6 on reverse shipping.

Thinking about all this from a P&L perspective is huge if you want to build a pragmatic and personalized customer journey, whether it's on the delivery side or the reverse logistics side.

Melissa Gonzalez (14:59):

Who of your clients, who do you think is kind of best in class? Who's doing it well right now?

Amit Sharma (15:05):

Wow, that's always a tough question because we work with so many brands that are doing amazing work.

At a global level, On Running comes to mind—they're doing a really good job both in Europe and North America.

Melissa Gonzalez (15:29):

I mean, you can't walk around Manhattan and not see them on somebody's feet, right?

Amit Sharma (15:33):

Yeah.

We're so grateful that we've been able to work with them for the past five plus years on a global scale.

Neiman Marcus also comes to mind on the luxury side of the post-purchase experience—how do you provide that real, white-glove kind of experience? How do you emulate that experience online? They have done a really great job in terms of their communication, their returns, logistics, and expectation setting.

And then you have the other favorites, such as Glossier and Yeti. I call them out because they have such strong product lines and so much focus—they bring all that passion to their consumer experience from end-to-end. It's something we've seen both brands do a really good job of, you know, enabling that personalized, end-to-end consumer experience.

Melissa Gonzalez (16:44):

So, one of the things we haven't talked about specifically is your optimization of routing and your support of brands that want to lean into sustainability—can you talk about that?

Amit Sharma (17:02):

Consumer sentiment end-to-end is more about how can brands be more mindful in terms of their impact on the environment, and in the ecommerce industry, there's a lot to be done there.

At Narvar, returns is where we're focusing in terms of helping the environment—how can we help brands reduce their environmental impact with a more efficient returns process?

In terms of routing, there are three things we offer:

1. If you have a store network, or multiple distribution centers, instead of having one designated place to ship or receive all your returns, we can optimize that network. We can actually route a given package to a nearby warehouse or store, that way you reduce the carbon footprint and lower costs at the same time.
2. Our routing abilities mean you can process your returns faster, which reduces the likelihood of a returned product ending up in the landfill because it's easier for you to restock and resell in-season.
3. The final piece I'll call out is that consumers are not the most efficient when it comes to packing an ecommerce return, so we've entered into a partnership with third-party vendors across North America and Europe to allow customers to submit returns in a boxless, labelless fashion using a QR code on their smartphone. That way you're not putting the burden of packing on the consumer, you're making it easier for the consumer to submit the return in less time, and you can be sure the return will be packed and consolidated in the most efficient manner possible.

Melissa Gonzalez (20:03):

It's a lot of little steps that add up to big impact, which is important.

Amit Sharma (20:08):

It is. And what we see is that consumer adoption of our QR code drop-off offering is anywhere between 25% to 40%.

What's also interesting is that anywhere from 10% to 15% of consumers are willing to pay for packaging services and other conveniences, which is a big reason we  launched our home pickup service last year...we have a network of couriers that we dispatch to consumers homes to pick up their returns. We see consumers willing to pay as much as $7 per return for that convenience.

So, this all about bringing convenience, choice, and personalization to the returns experience.

Melissa Gonzalez (21:41):

Back to the point, this can be transactional or it could be a brand moment, but that point of purchase is critical because you want to surprise and delight the shopper. When they purchase something, you don't want their excitement to fall off or fall flat because the experience after they click "buy" isn't a positive one.

Amit Sharma (22:05):

You bring up a great point, which is why we place so much emphasis on being a platform that allows brands to improve the customer journey through personalized, loyalty-enhancing moments.

For example, Melissa, if you are a VIP customer for Gucci and you really love and enjoy their products, at the time of return, Gucci can decide in real-time to give you an instant refund the moment you submit your return because you're an exceptional customer. They might even dispatch a courier to your home to pickup your return free of charge.

Being able to capitalize on these post-purchase moments is worth it because we know if we give you the VIP treatment, you'll continue to be a VIP customer who will come back and spend a lot more our brand down the road.

Melissa Gonzalez (23:01):

For sure, and there's some cost of acquisition there, but it's also unlocking that loyalty and that fandom, and that's where you drive lifetime value.

So, we've covered a lot of ground, and I think you're already very progressive in your thought process. But what do we have to look forward to the next five years? Where is personalization going? Where is the industry going in terms of fulfillment and returns?

Amit Sharma (23:26):

Yeah, I think personalization is key there—what is good for the P&L but also good for the consumer experience? There's still a lot of work to be done, and if you step back and look at the last 10 years, there hasn't been a lot of overlap between marketing and supply chain, or marketing and fulfillment...So my boring answer is the future will be focused on the use of customer data to personalize each shopper's journey. Brands are beyond rich in customer data, they just need to get more effective at activating that data from pre-purchase through post-purchase.

Melissa Gonzalez (24:37):

Yeah, I think you bring up a great point. It's really about breaking down silos so this can be as successful an experience as possible.

So, partnering merchandising, fulfillment, and marketing—they all sit in different areas of data collection and they should be sharing that data with each other.

And I think the marketing team, in particular, is at the front line in terms of understanding what consumers are seeing and saying...so it does seem like there's a lot of possibility here.

Amit Sharma (25:15):

If I may, I think I'll share one more point here—if you look back 10 years ago at how retailers thought about buying online, they really viewed it as a completely separate business to brick-and-mortar. The incentives weren't aligned. Store sales were store sales. Online sales were online sales. Store inventory was store inventory. Online inventory was online inventory. Everything was kept separate, they weren't allowed to mix and mingle even though it was all one retailers. But a lot of progress has been made in the last decade, and with the growing importance of buy online, pickup in-store, those walls are coming down.

Melissa Gonzalez (25:36):

Absolutely, yeah.

Amit Sharma (25:37):

We're seeing the same thing happen in the way of customer marketing and customer acquisition. Traditionally, retailers only think about first-time customer acquisition, but that's changing. Now there's huge emphasis on repeat customers. You can now run campaigns that encourage first-time shoppers to become repeat buyers by way of exclusive offers delivered in the post-purchase experience. So, we're seeing this trend where retailers are moving beyond acquisition and tapping into post-purchase engagement to drive loyalty and that next sale.

Melissa Gonzalez (26:09):

Well, I think the more that you're learning through data—and the more you're enhancing the Narvar platform with that data—the more effective you'll be at opening up opportunities and being a partner to the brands and retailers that you service.

Anyway, the time always goes by so quickly—do you want to leave the audience with any kind of last thoughts? If you're not investing in post-purchase, how do you get started?

Amit Sharma (26:52):

Sure. I'll leave the audience with this.

Having end-to-end customer journey mapping is critical if you want to succeed with post-purchase. Your map can't start with discovery and stop at the point of purchase. Your map needs to include delivery and repurchase as well. So, that's the place to start if you're thinking about your post-purchase experience—look at your journey map.

Also, spend time with your call centers and customer service reps—in doing so, you'll identify opportunities that you can activate to build a thougthful, efficient post-purchase experience.

Melissa Gonzalez (27:30):

Great. Well, thank you again for helping us break down post-purchase today. Everybody again, this was Amit Sharma, he is the CEO and Founder of Narvar—Amit, we loved hearing your insights.

Amit Sharma (27:47):

Thank you so much for having me.

‍