True profitability

– the Easycom definition

Easycom’s true profitability approach is about understanding and then managing the financial consequences from all contributing costs relating to sales, delivery and returns. Our view considers all contributions, no matter how small they may be.

Understanding the impact of returns on profit margins is not new. The negative effects on profits from returns are often reported in an aggregated report generated by systems disconnected from the eCommerce channels. Very few retailers today are able to act in real time on the trends underpinning return reason. Too often retailers only see trends appear too late to make a difference and typically the underlying data explaining the trend is difficult to get hold of.

Purchases and return behaviors can mean that many ‘good’ customers are profitable as we expect, while other, frequent shoppers drive a constant negative profitability. Our analysis also reveals the shocking truth that some key products retailers rely on are often unprofitable due to the combination of:

• Return share
• Operational and logistic cost
• The return policy of the market

True profitability is an accepted technique in management consulting often used in industrial production accounting where all costs are captured for even the smallest product or service. These contributing costs are all considered when taking decisions about manufacturing at scale and the impact small changes can have on top line figures.

Easycom takes this concept to eCommerce, and automates the analysis through digitization of returns and connecting the data to sales, eCommerce, ERP and CRM systems. To talk about return rates at an aggregated level is too simplistic, control and strategy at that level produces undesirable consequences.

Returns are good and bad, customers and products are unprofitable and profitable. Every customer and product should be treated differently for maximized profitability, customer experience and minimized environmental impact. 

Constant automated insight at the lowest granular level enables a profit-driven tactical and operational management that has not been possible before.