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Reverse Logistics in eCommerce
It’s no secret that a positive experience delivered to a customer determines whether that customer will come back. Retailers must enhance the user experience prior to pressing the “buy” button but also focus on the post-purchase site experience to keep customer retention metrics at satisfactory levels.
This is where many online retailers drop the ball; specifically with the processing and communication management of consumer returns. By incorporating new strategies to optimize this process, retailers can increase customer retention and add new revenue streams to the direct business.
Here are some key metrics to support the return optimization business case:
• 85% of customers say they will stop buying from a retailer if the returns process is a hassle (Harris Interactive)
• 95% of customers say that they will likely shop with a catalog or internet retailer again if the returns process is convenient (Harris Interactive)
• 40% of shoppers don’t buy online due to returns difficulty (Jupiter Research)
• Customers who have their complaint resolved quickly have a re-purchase intention rate of 82% (McKinsey)
The increased importance of online returns
Returns are an inevitable fact of online retail. As the depth of online product categories became apparent in the last three years, the importance of online return policies became painfully obvious. Provide a bad returns experience and you undoubtedly reduce the chance of a customer coming back for a repeat purchase.
For example, sectors such as high-end apparel, consumer returns reach levels as high as 20% and an efficient returns process is critical to overall success. Quicker inventory cycles and fluctuating retail prices make it important to not only process the return effectively for the consumer, but also get it in the warehouse quickly for re-sale.
Reverse Logistics solve fundamental business problems
Retailers are now being proactive and turning these operational challenges into competitive advantages and incremental revenue streams. By investing in solutions that integrate key platform components and data, online retailers are able to offer self-service return capabilities to consumers.
A typical reverse logistics solution allows the consumer to more easily initiate the return by incorporating a pre-paid postage label within the box. This label can be integrated within the packing slip or it can be a separate stand-alone piece. Because the label generation is initiated by the warehouse management system, the label is able to capture key customer information for tracking purposes, both for CSR’s and the end consumer.
The label provides one primary source of value to the customer - convenience. No post office trip is needed and retailers improve overall customer satisfaction while facilitating the product return to the distribution center.
When consumers initiate returns through this process, retailers typically charge them a “handling fee”. This fee is typically 20% higher than the postage charge that was provided by the reverse logistics service provider. This dollar spread, between what is charged to the customer and what has been billed to the retailer for postage, generates direct and measurable profits for retailers.
Improving communication with online consumers
A reverse logistics solution can drastically improve customer communication during the return process. Newgistics is a great example of a reverse logistics provider that has customer-centric communication processes embedded in their overall solution.
After a return package is picked up from a consumer location, it is sent to a Newgistics hub for sorting and re-locating. During this process, there are strategic scanning mechanisms used to facilitate triggered and branded communication emails.
A consumer receives “retailer branded” email notifications when certain milestones are achieved in the return process, such as:
• Return receipt o (Ex. We have received your return and you should get a credit in the following days).
• Return Completion o (Ex. Your return has been processed)
Quick receipt of these emails enhances the confidence level of customers, reduces inbound customer service calls, and provides another value-added feature to boost the eCommerce relationship.
Your company is taking a great risk if it does not provide a great post-purchase site experience. Feel free to contact Trinity to learn more about this type of initiative and how we can help in discovery, scope, and implementation efforts.
Craig Smith
Trinity Insight LLC
About The Author Craig Smith
Trinity Insight is a leading consultancy for the online retail sector.
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