A few years back, CNBC referred to product returns as a "ticking time bomb," noting that an average 8% of purchases are returned, with the number spiking to as high as 30% to 40% for online sales. This characterization was validated by a 2019 Appriss Retail analysis, which placed the value of returns at more than $310 billion.
Businesses that sell to other businesses are also affected, with Aberdeen reporting that returns cost the average B2B manufacturer between 9% and 15% of total revenue.
Product returns are big business for U.S. companies, both at the B2B and B2C levels. As Purolator International National Business Development Manager Randy Stomp explains, "Returns have become, quite frankly, too big to ignore." But rather than treat returns as necessary evils, smart retailers are turning them into opportunities. "Both in terms of recapturing value, and using the returns transaction as an opportunity to deliver an optimal customer experience, returns can be quite beneficial if handled properly," Stomp notes.
A detailed logistics strategy is essential to optimal returns efficiency. This is especially true for U.S. businesses that ship to Canada, since the returns process may require a trip back across the border, along with associated customs fees. Following are five key considerations for retailers, both B2B and B2C, looking to take charge of their product returns.
1. Customers care deeply about retailers' returns policies. Surveys consistently affirm the importance that consumers place on retailers' returns policies, with strong expectations for a hassle-free, flexible, and convenient experience. Consumers increasingly review returns policies before making a purchase, and condition repeat business on a favorable returns experience. Current trends include the ability to return an online purchase to a physical store, free returns shipping, full tracking and visibility, rapid resolution, and generous time allowances within which to make a return.
2. Proactive steps must be taken to understand what’s being returned, and why. This allows retailers to determine whether any course corrections can help to prevent future returns. For example, multiple consumers returning a particular toaster, all citing "inability to control temperature" as the reason, should send a flag to the manufacturer that there’s a defect within the product's internal controls. That malfunction could be fixed, thereby avoiding additional returns and potential damage to the brand. In addition, consumers are happy to let a retailer know when online photographs aren't reflective of a product's actual attributes, or if an instruction manual isn't clear. Learn from this critical feedback to make the necessary changes, and potentially reduce the risk of future returns.
3. Not all returns are the same. It’s important to plan for different product scenarios. Production disposition is a critical step in any returns process, and can impact a retailer's ability to regain value from undamaged returns. Through disposition, each return is evaluated and assessed with regard to next steps. Potential actions generally include resale, repair, destruction, or donation. A retailer will need to evaluate each product, and determine a proper course of action. Because not all returns are the same, a retailer's reverse-logistics strategy will need to accommodate each potential course of action.
4. Logistics strategies must be customized to fit the retailer’s needs, as well as customer expectations. A retailer's reverse logistics process should be as seamless and integrated as its outbound strategy. Work with your logistics provider to develop a technology-based returns process that addresses your business's unique needs. Returns should be picked up on an established schedule, and processed at a designated returns facility. Once a disposition decision is made, the product should be quickly routed for the appropriate course, whether that’s delivery to a retail outlet, repair facility or distribution center. And it’s critically important that products are scanned at every step, to allow for full visibility.
5. Canadian returns pose extra challenges. U.S. businesses that ship to Canada must plan for comparable rates of returns. But processing those returns gets trickier when the product has to clear an international border and satisfy multiple customs mandates. The wisest course is to work with an experienced cross-border logistics provider to build an appropriate solution. In many instances, empty trucks heading back to the U.S. can be enlisted at a reduced rate, or returns can be processed in a Canadian facility.
As the above list makes clear, help has clearly arrived with regard to returns management. Retailers now have options, and are no longer forced to view returns as an inevitable drag on their bottom lines.
"Although we'll never reach the day when retailers are happy about product returns, we are at the point where the concept is no longer dreaded," Stomp notes. "With an experienced logistics partner on its team, a business can be assured of returns-management efficiency that meets its needs, and exceeds customer expectations."
About Purolator International
Purolator International is a leading provider of logistics services for shipments traveling between the United States and Canada. As the U.S. subsidiary of Canada's Purolator Inc., an expert in integrated freight and parcel-shipment services, Purolator International offers comprehensive cross-border solutions, with greater capabilities in Canada than any other U.S.-based logistics provider.
U.S. businesses rely on Purolator International for fast, consistent service to the Canadian market. Purolator shipments generally arrive days faster than via service offered by most competitors. This is due to Purolator's three core advantages:
Purolator International is a trusted partner for U.S. businesses that ship to the Canadian market. No two Purolator solutions are ever the same, but all solutions offer guaranteed, on-time deliveries with the highest levels of customer service.
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