Why Retailers Need To Rethink Their Reverse Logistics Strategy | Comment

The pandemic has demonstrated that a better omnichannel shopping experience and improved fulfillment processes are needed for many retailers.

Image provided by iStock.

When the pandemic-related closures shut down retail stores, it impacted both in-store purchases and in-store returns. Items pre-purchased by consumers could no longer be returned to the store. This consequence created pent-up demand and frustrated customers.

In this new reality, many retailers have decided to lengthen return times to “entice” buyers and make up for lost sales. Unfortunately, the extended return times have made more items eligible for return and are now causing a huge delay in shipping and processing returns.

A good example of retailers trying to woo their shoppers is Walmart’s recent announcement of a partnership with FedEx to pick up free door-to-door packages, a service called “Carrier Pickup by FedEx.” After fully refunding the item to the buyer, Walmart should absorb the cost of free shipping and free return, as well as other operational costs such as processing the return by quality control and transaction fees. reimbursement.

Given this process, it’s hard to see how this can be a good strategy for Walmart. What is needed is a better omnichannel customer experience and efficient fulfillment processes.

While a behemoth like Walmart may offer free return to shoppers, not all retailers have the financial means to offer the same service. If they did, it would go directly to eliminating their profit margins from other successful sales. The good news is that there are better options for customer feedback. Let’s look at some of them.

Refund without return / exchange without return

The reverse logistics of picking up the product from the buyer comes with huge costs. There is also a lack of resources and knowledge on what to do or how to handle items when they come back. Therefore, Amazon has launched its “no return refund” service that sellers opt for.

Many sellers prefer their buyers to keep, give or throw away the item. The buyer receives a full refund and now does whatever they want with the item. Some retailers go even further and even ship a new item to the customer for free, in exchange, usually a different color or size, etc.

It is important that retailers maintain the quality image of their brands and are prepared to take a hit on the profits as long as the buyers come back. With this type of strategy, retailers can reduce their margins, but they will retain customers, increase customer lifetime value, and increase customer retention rate.

Refund Now, Return Later – Redeem Now, Return Later

Anyone who has run a business understands the difficulties of accounts receivable. Funds are always needed immediately for operating expenses. Buyers who return an item feel the same way while they wait for the refund to arrive in their bank account. They shouldn’t be punished like that for making returns, otherwise they might never come back. That’s why Returnly helps retailers accept customer dissatisfaction with an item with open arms, by acting as a go-between. This helps buyers avoid the dreaded waiting period between when an item is returned and when a refund is received. Returnly fronts shoppers get their money back so that it can be used to purchase other items.

Once the retailer receives the original item, they will refund the money to Returnly rather than the buyer. Returnly has also developed a similar solution for exchanging an item that allows a buyer to get the correct item before returning the wrong one without risk to the retailer.

Consolidate return shipments

As e-commerce has grown over the years, returns have also increased, and they are expected to continue to grow. Retailers who want to reduce return shipping costs opt for in-person returns. In-person returns work in favor of retailers who have a large physical presence where shoppers can easily drop off unwanted items.

But how can this model work for online retailers who have little or no physical presence? E-merchants can outsource the management of their returns to companies such as Happy Returns and Optoro. Both of these solutions aim to reduce shipping costs for retailers by consolidating returns into one shipment.

In anticipation of a record-breaking holiday returns season, FedEx and Happy Returns have announced a partnership ahead of peak season to allow shoppers to drop off unpacked items at one of FedEx Office’s physical locations. Happy Returns receives the items from FedEx, sorts them and returns them to each brand’s distribution centers, using its reverse logistics system.

Products are shipped in reusable bins, resulting in reduced cardboard waste and carbon, promoting sustainability and closed-loop goals when items return to retailers. Optoro has formed a similar partnership with Staples allowing shoppers to drop off items from any participating online retailer at a Staples store to avoid the “artistic” hassle of packaging and shipping a return.

Optoro differentiates its returns solution from Happy Returns by including tools to assist with the resale of returned items. Other big retailers like American Eagle Outfitters, Under Armor, Best Buy, Target and Bed, Bath & Beyond are expected to join the Optoro returns ecosystem in 2021.

Your home, your dressing room

Online shopping is not perfect. We can’t always say what is or isn’t a good fit, a good match, etc. For example, on small mobile screens, buyers cannot easily tell the difference between a gray and charcoal colored garment. Therefore, if we take a close look at the buying behavior of consumers, we will learn that buyers generally end up buying both to make a final decision. That’s why Amazon is on a mission to develop a new delivery robot that will wait while shoppers try on clothes, giving them more time to decide, before returning unwanted items. This concept had previously originated in the luxury retail industry. Due to the high profit margin of these products, luxury retailers could afford to hire or outsource white glove delivery drivers who would bring various designs and colors of a similar wardrobe for the customer to try. and return whatever it doesn’t want. It was also an opportunity to sell products.

This concept can work for small non-luxury retailers as well, and in some ways it’s already happening today. What do you think happens to all undeliverable packages? Packages end up returning to the seller, putting the round-trip burden of cost on them. Retailers need to work with delivery companies to tackle this problem and make it a competitive advantage.

If delivery companies use the same infrastructure and implement a waiting period as part of the delivery execution, they can make this process work for their customers and become the ideal delivery partner. . A delivery driver collects the items from the local retail store, delivers them to the customer, waits for the customer to try to test the items, and returns the unwanted items to the driver for drop-off at the store.

COVID restrictions have forced retailers to close fitting rooms, so they need to be more innovative. Consumers don’t go to stores, they shop digitally in their pajamas, but it’s an opportunity for the digital world to meet the physical world by turning buyers’ homes into changing rooms.

Self-service and contactless returns

As the COVID pandemic has shown us, the future is self-service and contactless. Buyers want to do it all on their own, and technology gives them the tools to achieve the best results. Whatever business model a retailer may use to process returns, there must be a platform where physical goods can be held securely that supports the chain of custody.

The platform allows buyers to contactless retrieve BOPIS items by scanning a QR code without having to interact with anyone. This is a smart self-service shelf that notifies shoppers when their order has been prepared and ready to be picked up. It provides the physical platform that supports the different variations of the above mentioned return solutions all in one solution.

This platform allows quick and easy online shopping, return to store (BORIS) for buyers without ever having to queue. It can also allow buyers to buy online, to trade in store (BOXIS) by ensuring that an item to be exchanged is prepared and ready to be picked up when a buyer comes to drop off the original item not. desired, all within 15 seconds.

In an effort to bypass closed changing rooms, future versions could allow buyers to determine what they want to keep. The platform could also receive feedback from any participating retailer at its collection points. This helps online retailers establish a physical presence to help lower their shipping and return costs. This platform is truly an in-store staging and fulfillment hub that helps retailers design and deliver a fully integrated omnichannel fulfillment experience for shoppers.

With an average return rate for online purchases of around 30%, according to the National Retail Federation, retailers need to seriously reconsider their reverse logistics strategy.

To get started, they need to critically analyze the impact of returns on their profit margins and predict how much they could save by implementing some of the solutions outlined above. Next, a top-down commitment to reducing the costs of returns must be implemented. Not all solutions will be right for a particular retailer. They must test various alternative solutions and gather feedback from field associates, customers and measure KPIs to determine the best strategy for their brand.

Photo courtesy of Position Imaging.