Holiday returns are inevitable. In this QAD Precision Report we
look at six strategies retailers can use to make holiday returns
easy for customers while controlling the costs of reverse logistics.
Holiday shopping and peak shipping season is almost over. But as we
move towards the end of December, returns begin to flood in. UPS
forecasts that holiday returns will reach a high of 1.9
million packages on 2 January 2020. If so, that would represent a 26
percent increase from last year’s “peak returns day.”
Unfortunately for retailers, holiday returns are as predictable as
the peak season rush. But predictability does not mean unchallenging.
Furthermore, many retailers are loathe to invest in returns. Outbound
shipping is a direct contributor to the bottom line, but returns are
often seen as nothing more than a drain on profitability.
When you sell online, returns are simply a fact of life. Online
shoppers send back around 30 percent of their purchases. This number
rises to 38 percent for holiday gifts and 40 percent for clothing. For
comparison, only 10 percent of in-store purchases come back. Because
of this, shoppers look for retailers that make returning unwanted
goods easy. Nearly 80 percent of consumers want free return shipping,
and two-thirds check the returns policy before ordering.
If returns are important to your customers, they should be important
to you. An easy, and generous returns policy is a differentiator for retailers.
Free and easy returns for the customer is certainly not free nor easy
for retailers. Reverse logistics also require different processes,
technologies and expertise. However, retailers benefit if they manage
and control their reverse logistics spending.
Retailers need to plan for holiday season returns, just as they need
to plan for peak season shipping. Here are six strategies that
simplify returns and help control costs.
Consumers want options when it comes to initiating and completing
returns. With multi carrier shipping software retailers can provide
the flexibility customers want. Your multi carrier solution should
support a wide variety of return strategies. This includes dropping
packages off at a shipping kiosk or carrier drop-off station,
arranging for pickup at the customer’s home or office, and including
Multi carrier shipping software also supports a Buy Online, Return In
Store (BORIS) option. This is convenient for the customer and reduces
the cost of facilitating returns. Retailers may also recover some of
the losses associated with returns. Once in-store, a customer may make
an additional purchase or decides to swap the original product.
If you are an omnichannel retailer, you can encourage shoppers to
drop returns back to your store. By using existing infrastructure as
fulfillment and returns centers for online consumers, retailers can
reduce shipping costs and increase customer footfall. After all, many
of these customers are ready and eager to buy. BORIS — Buy Online
Return In Store — not only costs less for retailers, many customers
prefer it. A 2018
UPS study found that 58 percent of shoppers in the US
prefer returning an item to a store. The same is true for 45 percent
of Europeans, 64 percent of Canadians, and 58 percent of shoppers in Mexico.
Retailers could also incentivize customers to use store pick-ups.
This gives customers the chance to decide if they will keep an item
before taking it home.
Online retailers with bricks-and-mortar stores could consider
encouraging customers to return items using pick-up/drop-off (PUDO)
facilities. Moreover, this allows you to aggregate returns, thus
lowering shipping costs.
Customers may want multiple return options, but retailers should
discourage the use of higher cost services. Ideally, retailers should
nudge customers to select the returns option that makes the most
financial sense for them.
One way to do this is to place a returns label in the box prior to
shipping. Should the customer decide to return, the included label
encourages the use of your preferred return service.
Pre-printing labels also minimizes the chance of returns being
shipped to the wrong warehouse. Furthermore, if you sell high-value
goods, such as electronics, you want to get them back to inventory
before they become obsolete.
Unfortunately for retailers, 38 percent of seasonal and holiday
purchases are returned. One issue impacting this is late delivery. If
holiday items are delivered late, many customers will look for an
alternative in a store. After all, nobody needs Christmas presents in
January. The holiday period is peak season for parcel deliveries.
Therefore, a multi
carrier shipping strategy helps ensure that you get your
goods to your customers on time, even at times when high volumes of
parcels squeezes a carrier's capacity.
Cross-border retail is growing. E-commerce platform Shopify
found that 57 percent of shoppers worldwide make
international purchases. Global trade drives revenue, but complicates
returns. Furthermore, some carrier networks handle returns better than
others. As a result, returns options are not uniform in all regions of
To appeal to international customers, it is important to work out a
returns process that works as well for them as it does for domestic
ones. Again, multi carrier shipping software can help. Retailers that
use a single carrier for outbound shipments may need to consider
alternate carrier networks for returns. With multi carrier shipping
software, you can review the return delivery options of hundreds of
carriers around the globe and select the services that will satisfy
customers at the lowest cost to your organization.
Most retailers want to return goods to inventory when they come back
in perfect condition. If not, it may be possible to repurpose some
returns or recycle them. However, that is not always feasible.
Consequently, around 30 percent of returns end up in landfill. This is
sometimes due to the lack of clear procedures for managing returned
goods. Shopify found that more
than half of distribution managers do not have the
resources to determine if they should add a returned item to
inventory, returned it to the vendor or scrap it. Scrapping goods that
could go back to inventory or sold on to a secondary market both
damages profits and has a massive environmental cost.
QAD Precision (Precision Software), a division of QAD Inc., provides
industry-leading global trade management, transportation execution and
multi carrier shipping software solutions from a single, integrated
platform. Preeminent industry leaders in every region of the world
rely on QAD Precision’s global support centers to leverage thousands
of carriers and manage millions of shipping transactions every day.
Our open architecture easily integrates with Enterprise Resource
Planning, Warehouse Management Systems and legacy solutions. An
ISO-certified company, QAD Precision assists companies to minimize
shipping costs, optimize first mile and last mile deliveries, automate
free trade agreement compliance, avoid customs delays and mitigate the
risks associated with dynamic trading environments to maximize their
competitive advantage. QAD Precision’s customers span multiple
industries including banking and finance, life sciences, high
technology, retail, industrial, automotive, higher education and
public sector as well as logistics providers. For more information
about QAD Precision, visit www.precisionsoftware.com.
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