Return Logistics Shouldn’t Be an Afterthought for Online Retailers

13 January 2021

As E-commerce continues to surge, so does online returns. Now the return process is so important many online customers consider an eRetailer’s return policy before placing an order. Return logistics can longer be an afterthought for retailers who want to stay competitive. 

According to UPS, US National Returns Day on 2 Jan. has been extended into National Returns Week. UPS expects 1.75 million received packages every day, totalling 8.75 million – a 23% increase compared to last year’s Christmas season.

The True Impact of Returns

Many shoppers believe that returned items simply travel back to retailers the same way they came, but that’s not always true. The real world of reverse logistics is complicated and can have negative ramifications for retailers and customers alike. 

Warehouse Logistics. While front-end strategies focus on delighting customers, back-end reverse logistics focuses on increasing efficiency, cutting costs and optimising the value of the returned product. 

Reverse logistics is more expensive than forward logistics, primarily because of labour and shipping costs. Return packages must be collected, shipped to a returns centre, opened by hand, inspected, classified, repaired if necessary, repackaged, distributed to the next sales venue, and restocked. Businesses are adding workers, increasing warehouse space, and establishing separate departments just to handle E-commerce returns. 

It will take nearly 28% of businesses approximately two weeks to add a returned item back into inventory, according to research by Shopify. And the longer a product takes to be resold, the greater the chance that it goes out of date or depreciates so much that it is no longer profitable to sell, making it more likely to end up in the rubbish. 

Sustainability. Twenty percent of E-commerce returns occur because of damaged products. When the damaged item is returned to the fulfilment facility, it will be set aside until someone can decide if it's going back for repair and refurbishment, or if it's being junked for parts or being junked altogether. About five billion pounds of returned items, not to mention the waste from packaging materials, end up in the rubbish; making returns a major component of landfills. 

There’s an environmental cost from damaged and returned goods that adds up fast when goods must make multiple journeys, and it takes multiple manufacturing cycles to fulfil the same order. 

Assuming a company’s average damage rate is just one percent (considered admirable by most standards), 48%, which is almost half of the total environmental cost of shipping, comes from damage. In total, the item must be made, packed, shipped, return shipped, made again, packed again and shipped again. This repeated process also doubles the packaging materials and manufacturing consumption needed to remake the product. 

Customer loyalty. Some returns are unavoidable: Customers change their mind and sometimes are not satisfied with their purchase. Today, shoppers are more dependent on easy returns than ever before, buying multiple items online with the intent to return some of them. How easy or how hard retailers make those returns can make or break fragile online relationships. 

Fifty-eight percent of shoppers are increasingly not satisfied with the ease of making returns. But for companies that get it right and make the process simpler, 72% of shoppers are willing to spend more and buy more frequently. 

But how can you make the returns process simpler for online shoppers and fulfilment centres? An easy return process starts with correct packaging and can help earn and retain customers. 

Returns Made Easier With Proper Packaging 

Returns are the new normal and central to the customer experience, but many retailers haven’t figured it out yet. The time is now to start thinking about packaging’s role in optimising the returns process. Packaging that has return logistics built in to minimise shipping costs and complexity will help to retain customers and make life easier on the fulfilment side. 

One of the best ways to ensure customers have as much confidence in a company when it comes to returns as it does with deliveries is the ease in which the delivery receptacle can become the return receptacle. Most online shoppers seek reusable packaging that can be resealed easily. When it comes to secondary packaging, special boxes with retention and suspension capabilities can be used for returns. Tear strips, which aid in the return process, can be incorporated into mailers and polybags. 

During the fulfilment process, companies can include a prepaid return label inside the shipping vessel along with a diagram on how to prepare the package for the return and an insert card printed with the company’s return policy. 

Companies that make the return process an integral part of the customer experience will attract more shoppers. These days, online consumers seek full retail services, not just delivery services.