Gearing Up for Peak (Return) Shipping Season

The recent focus of the fulfillment and logistics staff at e-commerce retailers has undoubtedly been on preparing for the coming holiday peak season.  Hiring seasonal labor, providing adequate inventory and confirming carrier capability and developing contingency plans are required to ensure a successful holiday season.  Along with the shipping peaks of November and December comes another peak – Returns. Handling Returns efficiently is not only essential in managing costs but meeting or exceeding customer expectation has a demonstrated positive impact on future sales.

Research has found that 95% of online customers will purchase from an e-commerce retailer again if they have a good return or exchange experience with the company. Conversely, 85% of online shoppers will not do business again with a company whose return process is complicated or inconvenient.

The returns process has many touch points and much has been studied and documented regarding best practices. So it is helpful to look at a checklist of best practices to confirm the return process is set for the peak holiday period.

 

While accommodating the returns process certainly has it benefits, it does come at a cost which is significant. It is important to understand the real cost of managing a customer return, including the cost of the shipping and the labor necessary for processing the return once it arrives back at the seller’s warehouse. If it cost as much or nearly as much to return the item as it would to simply purchase another one wholesale, consider letting the customer just keep it, saving everyone involved time and expense. However, depending on the product, the reason for the return and the condition of the return, the disposition can take a variety of avenues including restocking, refurbishing, liquidation or destruction. The disposition decision is often complex and may be relatively unique to the e-commerce merchant. There are many options for handling returns or “reverse logistics” but one step in the process is the returns process is selecting a transportation carrier that provides an efficient solution.

The major parcel carriers all have return transportation solutions which provide a level of convenience for customers.  Return merchandise services are available from FedEx, UPS, and US Postal Service. In addition, logistics companies such as Newgistics  and Genco offer value added capabilities oftentimes building on transportation services offered by others.

In selecting the appropriate solution, determine how well the provider meets your requirements for customer convenience and operational cost. Customer convenience includes not only the ease of preparing the return shipment but the convenience to tendering the shipment to the carrier. According to the 2016 UPS comScore study, 55% of shoppers sending a return shipment prefer to drop the shipment at the carrier’s location.

In determining operational cost, consider not only the return transportation cost (one you are likely to absorb to offer free return shipping) but the other details that can aid in reducing your handling cost for returns. For example, it is a best practice to include information on the shipping label such as original invoice numbers, quantities, SKUs, etc.  That way, when your company receives the return package, you will know exactly what should be in it.

It is important to monitor your return process on an ongoing basis. Depending on the transportation arrangements you have in place, make sure you are using the most economical service mode and have competitive rate agreement.  Implement return metrics to track the key aspects of the returns. This will provide visibility in areas like reason for the return, disposition, total cost, return percentage, etc. Analyzing the return process in this way will enable you to optimize your return process to provide the convenience to your customers while minimizing financial impact.