Tuesday, December 25, 2012

Tis the Season for Returns

Now that the pre- Christmas spending frenzy is over, retailers are now bracing for the deluge of returns. Although the overall total number of returns is not known, for the 2011 holiday season, UPS stated it expected to handle over 550,000 returns the day after Christmas alone with another half a million during the first week of 2012 – a plus for the likes of UPS, FedEx and the Postal Service – but for those that handle this process, whether by an outsourced service or by the retailer itself, it can get tricky.

Handling of returns is not only a part of a successful customer experience strategy but it is a logistics challenge that many retailers struggle with. In fact, according to Intermec’s recent survey, about 44% of distribution center managers admit that managing returned goods is a pain point within the business. To solve this pain point, 60% of distribution center managers are turning to ‘reverse logistics—the reverse management of stock to get items back into the supply chain as soon as possible.

As more retailers move into multi-channels, the management of reverse logistics can not only be difficult but costly if not done correctly. Next to free shipping, an easy and free returns process is important to maintain a strong customer experience, particularly for online purchases.

Specialized companies such as Newgistics offer solutions for retailers that chose to outsource this service. Based on a Newgistics’whitepaper, more than half of consumers surveyed said they had returned merchandise to an e-tailer at some point. Among these shoppers, the top expectation for returns was a prepaid, preaddressed shipping label. This feature makes the return process easier for consumers. After prepaid, preaddressed shipping labels, the second most common consideration that consumers cited regarding returns was how quickly their accounts are credited. Next came the desire for e-tailers to clearly communicate their return policies prior to purchase. An unfriendly or unknown return policy is one of the top reasons customers abandon online shopping carts.

Reverse logistics could possibly be a competitive advantage for brick and mortar retailers over e-retailers. By capitalizing on its multi-channels such as the physical store, online presence, mobile and tablet websites and its distribution centers, returns can be made either in-store or by mail regardless what channel the merchandise was originally purchased in. The merchandise can then enter the reverse logistics process and if determined saleable can be sent to any store as part of standard inventory replenishment or be sold online. To do this properly, retailers will need to connect their online websites (mobile and standard) with its physical store and to its distribution centers for complete visibility in inventory, transportation and order management/fulfillment – These systems will need to be able to communicate with one another in order to balance this process successfully. Probably a more difficult and definitely more complicated process to set up than from that of an e-retailer but the potential could be great. Partnering with the likes of Newgistics or even traditional logistics providers that offer a reverse logistics solutions such as Kuehne+ Nagel, DHL, CEVA or UPS may be beneficial as well.

UPDATE: A bit remissed here and my apologies but not only would companies benefit from traditional logistics providers but also from fulfillment/efulfillment companies such as Kenco, Innotrac, Webgistics, DMI and Shipwire.