Managing reverse logistics for retail returns is always a challenge, but at no time of year is it more pressing than during holiday returns season. It’s a problem that’s only getting bigger with each passing year: In 2016, UPS estimated that more than 5 million packages were shipped back to retailers during the first week of January. A recent study by the National Retail Federation found that holiday returns made up 10% of holiday sales—two percent higher than the average return rate at other times of the year.
All told, holiday returns account for more than $63 billion dollars—or 25% of the total returns in any given year. The sheer volume of holiday returns generates a major cost center for retailers; while some retailers have mastered the art and science of outbound shipments, many have still not mastered the reverse shipment processes associated with returns.
Is your organization prepared to manage the reverse flow of holiday returns? Here are three ways PRECISION Multi Carrier Shipping solution can help.
1. PRECISION Makes Return Shipping Easy
As the retail industry continues to move toward e-commerce and mobile retail, the likelihood that any given purchase will be returned increases dramatically. Online shoppers return about 30% of the items they buy; for apparel, the return rate can exceed 40%. Return rates are even higher for gifts: according to the NRF study, 38% of gift recipients say that they returned at least one holiday item.
Why so many returns? Sometimes products are damaged or don’t work, other times they may not fit or just aren’t quite right for other reasons. Whatever the reason, holiday returns cost retailers billions every year.
Returns have actually become an important differentiator in the retail business. According to UPS, between 58% and 66% of online shoppers say a generous and free online return policy is an important part of their purchase decision. Comscore found that 88% of shoppers review return policies before purchasing, indicating that a retail organization’s ability to streamline and execute its holiday returns process can either deliver strategic advantage, or undermine customer satisfaction and negatively impact sales.
PRECISION Multi Carrier Shipping software delivers strategic advantage by enabling retailers to meet customer expectations for a fast, easy and flexible returns process. With PRECISION, it’s easy to implement a Buy Online, Return In Store (BORIS) return policy, or process returns online or through a customer service representative. Regardless of how the return is processed, the return label can be generated right from the application, eliminating the need to use a separate third-party application to manage reverse logistics. And unlike a carrier shipping interface, with PRECISION you get the benefit of choosing from multiple return strategies that best suit your operations and can easily compare the cost of returns across multiple carriers to reduce the cost of each return.
2. PRECISION Enables Shippers to Reduce Cost of Holiday Returns
One of the challenges with holiday returns is executing them at the lowest possible cost, since the best case is that returned products are headed for the clearance bin, even if they are shipped back in marketable condition. More frequently, returns will not be returned to store or warehouse shelves at all. Those that are damaged may be refurbished, parted out or scrapped. Items still in marketable condition are destined for holiday liquidators, where they will be sold for a fraction of the original retail price.
These returns liquidation practices mean that retailers lose billions on returned items, so it’s critical to reduce the shipping cost for every return. PRECISION Multi Carrier Shipping helps retailers save money by selecting the service level that’s most cost-effective, since speed isn’t an issue with returns. While the majority of outbound parcels might be shipped with premium service, returns should be sent to the consolidation center at the lowest rate possible.
And with PRECISION Multi Carrier Shipping, you’re not stuck with the lowest rates of a single preferred carrier. You can shop rates across multiple carriers—including 3PL providers that specialize in reverse logistics—and select the best rates. Retailers can even consolidate returns coming from a single location, such as a retail store, to bring costs down even further.
3. PRECISION Provides Visibility Into Holiday Returns Spending
In the past, retailers tended to neglect their returns processes. They didn’t seek to learn more about their returns, since spending money to study them was often seen as “throwing good money after bad.” Today, with online returns driving not just higher sales but also higher returns, retail organizations that want to drive higher margins from their online sales need to understand more about what’s driving returns and the true cost of managing their reverse logistics spending.
With PRECISION Multi Carrier Shipping, retail shipping managers can gain better insight into their shipping spend with reporting and analytics that allows them to understand where and how their reverse logistics dollars are being spent. Are items shipping parcel that could have been shipped freight or via a 3PL reverse logistics specialist carrier for a lower cost? What is the ratio between spending on reverse logistics and overall shipping spend? With PRECISION, retailers can answer these questions and gain visibility into their outbound and reverse logistics processes, so they can drive excess cost out of their shipping functions.
Higher holiday return volumes are likely to remain a long-term challenge for the retail industry. By streamlining holiday returns execution, retailers can be more competitive, drive higher customer satisfaction and repeat sales, and be more profitable. With PRECISION, retailers can create and execute an easy, flexible holiday returns process that reduces cost and delivers critical insight into where and how to streamline and reduce costs of holiday returns shipping.