Ways to Reduce Returns' Costs, Increase Productivity, and Maintain Superior Customer Service
As we conclude the back-to-school shopping season and prepare for the upcoming holiday shopping season, e-commerce sales continue to show tremendous secular growth. The search for online solutions has only intensified with the closing of brick-and-mortar locations across the globe. This flurry of unprecedented shifts carries both risks and opportunities for retailers as they grapple with fulfilling consumer demand that’s increasingly reliant on e-commerce activities.
The proliferation of online consumerism shows little signs of slowing down and has resulted in a much greater number of product returns. According to a global returns survey we commissioned, we found that 36 percent of global retailers have seen an increase in online returns in the past 12 months, and retailers are scrambling to figure out how to manage the logistics and operational challenges accompanying that shift.
Retailers know that customer experience is paramount — and this is particularly important during a return process. However, with customers experiencing long wait times, onerous return processes, and sometimes a confusing experience overall, retailers are quickly changing their return policies. Our survey reveals that approximately a third of retailers have extended return windows, offered full refunds, and are offering free shipping and returns, all to maintain a high standard of customer service throughout the purchasing and return cycle. Additionally, in handling this unprecedented volume of returns, logistical challenges which have major costs and operational complications abound. Consequently, retailers reported that their greatest need is to partner with experts in returns to help undertake the process.
To help retailers manage this influx of returns, outlined below are tips for increasing productivity, cutting costs and modernizing operations.
Use technology to forecast demand and drive fulfillment.
From what we’ve seen, deploying advanced technology can help mitigate the impacts of rising orders of goods. Specifically, automation and predictive analytics can be used to forecast the future rate of returns and fine-tune processes for seasonality, providing timely and accurate stock level management. Additionally, the use of cobots — robots which collaborate alongside humans to accelerate the fulfillment process — has revolutionized the logistics industry, doubling productivity rates and increasing accuracy levels by as much as 40 percent.
In one of our recent projects for a large e-commerce customer based in Europe, we used robots and cobots to manage high-volume reverse logistics, integrating automated sorting lines, touchless scanner technologies, and a mechanized sortation system to handle throughput of 12 million returned products per year. This technology demonstrates the tremendous impact of using predictive analytics and its potential to better manage returns.
Identify strategic partners to manage outsourced logistics.
Retailers know that a seamless return process engenders customer loyalty. Partnering with third-party logistics (3PLs) providers, a critical logistical component for many retailers, can help ensure a more integrated approach. With increased access to technology, 3PLs understand how to process returns efficiently by merging their technological tools with the systems and processes of retailers. This partnership yields reductions in costs and allows retailers to focus on their main concern: customer needs.
The recent heavy shift toward e-commerce highlights the significant logistics challenges global returns present to retailers. To meet this challenge, we’ve witnessed the successes of those retailers that focus on adapting to changing customer priorities by partnering with 3PLs to manage returns and leveraging data and technology to drive accuracy, efficiency and overall productivity.
Mark Manduca is the chief investment officer of GXO, the world’s largest pure-play contract logistics provider.
Related story: Winning the Return Customer