Multi-channel retailers (ones with physical stores) are trying to get a leg up on pure web retailers by offering "(web)site to store" options and / or convenient returns at the store for their customers. What are the best practices to deal with products that are returned to the store but are not in the assortment for that store?
More and more retailers with physical stores are allowing customers to buy on their website and pick up the product at the store, at no extra cost. This is a great strategy both from the retailer and consumer perspective. From the retailer perspective, they can have a sensible, small assortment at the store and let the rarely sold items to be purchased by the consumer using the "(web)site to store" option. The consumer gets access to a bigger assortment at no extra cost. This could be rarely bought sizes, colors, flavors but also could be rarely bought items like high end running shoe. In addition the consumer gets to return the product in the store if it is not what the expected. Here is a good article on this.
This looks like a great win-win for the retailer and the consumer. One of the rubs in this whole thing is returns. Since the purchases on the web are usually for items that are not in the store, what happens to returns? The retailer can put these returns in a special area in the store and try to sell them. Most probably these products are going to in the store for a long time given that the consumer is not coming into the store looking for the product. So it is pretty unattractive for the retailer to dedicate valuable shelf space for these returns. The retailer can ship it back to the distribution center and then try to pool it there and ship it to other customers who buy the same item from the web. That is an added expense for the retailer eating into profitability. The third option is to setup a way to ship the returns directly from the store when a retailer orders it. But this leads to a significant inventory management issue (a central system needs to keep track of what inventory is in which store and these systems are usually very error prone), and an order allocation issue.
What are the best practices that have evolved in this area? I will edit this in the future to incorporate the feedback I get.