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Cut avoidable returns

28 October 2020

Analytics can help managing the rise and cost of online returns, says Ken Fleming.

The pandemic has meant more people than ever are now shopping online, triggering unprecedented volumes of product returns. Many retailers are extending returns periods and offering free returns, where previously they may have charged. At the same time, they are aggressively working to reduce the cost and volume of returns and manage reverse logistics more efficiently.

One of two main ways to cut the cost of returns is to use analytics and business intelligence to reduce avoidable returns by identifying weak links in fulfilment. It might be possible to trace a high number of incorrect product shipments to certain distribution centres or individual pickers or warehouse staff, for example. Or to highlight procedural problems so staff can correct inventory and warehouse management processes to resolve the issues driving more returns.

It’s also important to track frequently returned products in order to investigate why they are sent back and what can be done. Can they be packaged in a different way to avoid damage in transit, for example? Or should product lines that are more susceptible to damage in transit be removed from online inventory altogether and only sold in stores?

The second approach to bringing down the cost of returns – where returns are unavoidable – is to find more efficient ways to reduce the cost of collecting and processing the returned products. For example, perishable products will need to be collected immediately. Other products can wait a little longer and may not require an expensive, fast turnaround. It’s important to choose the correct collection method and speed in order to control costs.

"With an accurate picture of expected returns volume and delivery date and time, companies can assign the appropriate level of workers and resources."

Of course, different carriers have different charging policies and apply different rates based on parcel size and volume, speed of turnaround and customer pickup location. As a result, some companies have implemented a reverse logistics strategy that uses a pool of different carriers, rather than one. This allows them to optimise the cost of returns by selecting the most cost-effective carrier partner for each returned product and pickup location.

In the same way that it’s essential to track parcels out for delivery to customers, it’s equally important to have visibility of shipments on the way back, in order to make processing returns more efficient. 

Tracking returns is key for managing goods inwards in the warehouse, for example. With an accurate picture of expected returns volume and delivery date and time, companies can assign the appropriate level of workers and resources to check returned goods and ensure they can be swiftly put back in stores or warehouses for resale. Doing this quickly and cost effectively is vital: any products that are in the hands of the consumer and pending return, or in the process of being returned, is inventory that is unavailable to resell.

The other side of a good returns’ strategy is making the experience as easy as possible for customers. A hassle-free returns process helps build customer loyalty and drives repeat purchases. 

A variety of creative methods can be implemented, including using dual-use labels that serve the purpose of both the outbound shipment and return; or peel-off labels where the customer can easily peel off the outbound label to expose a return label. 

Some retailers are now offering a refund as soon as the carrier first scans the returned parcel on the customer’s doorstep. While there is a level of risk with this approach because the product might not be in a condition to put back into stock, retailers know customers are more likely to be loyal if they are refunded quickly. 

With eComm on the increase, retailers are going to have to put a spotlight on their reverse logistics strategy. Not only do they need to find a way to manage returns costs, but they also need to make returns quick, easy and hassle-free to drive customer loyalty and repeat purchases. 

Ken Fleming, president of Logistyx Technologies

For more information, visit www.logistyx.com