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Six Strategies to Simplify Holiday Returns

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.

Returns Matter to Customers

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.

USE THE RIGHT TOOLS

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 returns labels.

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.

ENCOURAGE IN-STORE RETURNS AND DROP-OFFS

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. 

PLAN AHEAD WITH RETURNS LABELS

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.

AIM FOR ON-TIMELY DELIVERY

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.

THINK LOCALLY AND GLOBALLY  

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 the world.

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.

CONSIDER THE ECOLOGICAL IMPACT 

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. 

About QAD Precision – Trusted Global Trade and Transportation Execution

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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