The hustle and bustle of the holiday season often excludes planning for the inevitability that some of what goes out must come back.
The facts are mounting. Holiday shoppers buy nearly half of their gifts online. Depending on category, 10 to 30 percent of those purchases are returned. Buy online, pick-up in store, free shipping and free returns are prevalent Omni-channel features that drive online sales even higher. E-commerce continues to grow as retailers cater to consumers’ desire to have a better selection, better deals and the convenience of shopping anywhere at any time.
Top reasons for returns are real or perceived damage, unmet expectations, or did not fit (person or place). Trending in the current market is in-home showrooming.
A consumer takes advantage of the low or no cost of buying and returning online to try out a new product or try on a trendy dress, and unabashedly returns the merchandise to the vendor.
None of us can afford to get caught without a plan.
How to balance customer delight with the avalanche of unexpected returns?
1. After the holidays is the rush of returns. Are you prepared? The first step in your reverse logistics strategy should be data, lots of data. If you know the details of what, why and where of the returns, you can use this knowledge to improve merchandise mix, vendor selection, and business strategies.
2. Review your returns policy. Leniency will garner higher sales, but at what cost? Understand your gains and your losses when your sales go through the distribution process twice.
3. Develop a disposition strategy. Identify parameters for when the returned item should be re-packaged and re-stocked; refurbished or repaired; liquidated to the secondary market; donated or recycled. The further out on the disposition continuum, the lower your ability to recoup the product’s original value.
4. CLEAR and EASY returns. A pre-printed carrier label, with simple instructions, rewards you with an efficient, fool-proof process to get the package into your preferred reverse logistics network. The goods will be back in your hands quickly; sustain minimal handling and damage; and retain maximum value for re-stocking or liquidation.
5. Pick-up or Drop-off. Consider the options – should you have your logistics partner pick up at the consumer’s home or have the consumer drop the returned merchandise at a store, a post office, or other centralized point. Your ability to control the speed and method of inducting the product into the reverse logistics stream will be important. Quicker to process. Wiser to pre-sort into consolidated reverse lanes. Sweeter the returns in lower line-haul costs, less handling, less damage and faster dispositioning for value recovery.
If logistics is not your core competency, seek the expert advice of a logistics professional. Leverage their experience in network studies, parcel analysis, and carrier negotiations. Incorporate your returns data to identify which carriers and services are best for your business characteristics. Third-party logistics firms will provide un-biased options for carriers who offer structured returns services. They can also assist you in negotiating carrier contracts to accommodate your reverse logistics strategy.
Identify the right partners. Do they have the ability to engineer a reverse logistics process that includes volume consolidation, pick-up and final mile delivery, data collection, visibility and reporting? Do your partners offer inspection, refurbishment, liquidation, and recycling services? Are they innovators in the reverse logistics process for on-going process improvements?
Above all, be ready for the boomerang. For many of us, peak season begins after the holidays.
Tom Nightingale is the president of Transportation Logistics at GENCO. He can be reached at tom.nightingale@genco.com
The facts are mounting. Holiday shoppers buy nearly half of their gifts online. Depending on category, 10 to 30 percent of those purchases are returned. Buy online, pick-up in store, free shipping and free returns are prevalent Omni-channel features that drive online sales even higher. E-commerce continues to grow as retailers cater to consumers’ desire to have a better selection, better deals and the convenience of shopping anywhere at any time.
Top reasons for returns are real or perceived damage, unmet expectations, or did not fit (person or place). Trending in the current market is in-home showrooming.
A consumer takes advantage of the low or no cost of buying and returning online to try out a new product or try on a trendy dress, and unabashedly returns the merchandise to the vendor.
None of us can afford to get caught without a plan.
How to balance customer delight with the avalanche of unexpected returns?
1. After the holidays is the rush of returns. Are you prepared? The first step in your reverse logistics strategy should be data, lots of data. If you know the details of what, why and where of the returns, you can use this knowledge to improve merchandise mix, vendor selection, and business strategies.
2. Review your returns policy. Leniency will garner higher sales, but at what cost? Understand your gains and your losses when your sales go through the distribution process twice.
3. Develop a disposition strategy. Identify parameters for when the returned item should be re-packaged and re-stocked; refurbished or repaired; liquidated to the secondary market; donated or recycled. The further out on the disposition continuum, the lower your ability to recoup the product’s original value.
4. CLEAR and EASY returns. A pre-printed carrier label, with simple instructions, rewards you with an efficient, fool-proof process to get the package into your preferred reverse logistics network. The goods will be back in your hands quickly; sustain minimal handling and damage; and retain maximum value for re-stocking or liquidation.
5. Pick-up or Drop-off. Consider the options – should you have your logistics partner pick up at the consumer’s home or have the consumer drop the returned merchandise at a store, a post office, or other centralized point. Your ability to control the speed and method of inducting the product into the reverse logistics stream will be important. Quicker to process. Wiser to pre-sort into consolidated reverse lanes. Sweeter the returns in lower line-haul costs, less handling, less damage and faster dispositioning for value recovery.
If logistics is not your core competency, seek the expert advice of a logistics professional. Leverage their experience in network studies, parcel analysis, and carrier negotiations. Incorporate your returns data to identify which carriers and services are best for your business characteristics. Third-party logistics firms will provide un-biased options for carriers who offer structured returns services. They can also assist you in negotiating carrier contracts to accommodate your reverse logistics strategy.
Identify the right partners. Do they have the ability to engineer a reverse logistics process that includes volume consolidation, pick-up and final mile delivery, data collection, visibility and reporting? Do your partners offer inspection, refurbishment, liquidation, and recycling services? Are they innovators in the reverse logistics process for on-going process improvements?
Above all, be ready for the boomerang. For many of us, peak season begins after the holidays.
Tom Nightingale is the president of Transportation Logistics at GENCO. He can be reached at tom.nightingale@genco.com
