Department store chain Wehkamp is driving for profit. One of the measures it is taking to that end is abolishing the free return service. Customers now pay 2.95 euros if they want their returns collected.
Wehkamp is having a tough time. The company posted a loss of 27 million euros last year. Sales fell 10 per cent, while average e-commerce sales rose 14 per cent. British CEO Graham Harris has been appointed to make Wehkamp a healthy company again. Top executive Piet Coelewij waved goodbye as chief executive in April this year.
Profit more important than growth
In an interview with the Financieel Dagblad, Harris argues that profit will henceforth take precedence over growth. In doing so, he breaks with the trend started by competitors such as Amazon, bol.com and Zalando. The department store chain, which has annual sales of EUR 0.6 billion, no longer needs to be among those 'big boys'. "Those spots are taken," Harris said. Wehkamp is moving away from the platform model and wants to evolve into an online department store, where customers get an "inspiring shopping experience rather than a killie search experience".
Return policy on the rocks
To improve margins, Wehkamp is also tackling the returns process. Indeed, this is one of the reasons why the company is in dire straits, with 42 per cent of goods returned last year. This year, that percentage is even higher, with the CEO calling it a step too far in the current market to charge money for returns. However, the online department store did recently start charging money for collecting returns at consumers' homes, something that is still free at Zalando. In addition, serial returners, consumers who return more than 80 per cent of their orders, are no longer allowed to pay afterwards at Wehkamp. "The current returns model is economically unsustainable, so the market has to move. Someone had to take the first step, and that takes courage. I wonder who will follow our example," the UK CEO let slip.
'Of course we will be sold someday'
On the company's future, Harris says: "There is room for us as a powerful local department store. Of course one day we will be sold, that's part of private equity. But to have more options, this has to first become the most successful company it can be."
