In some years, end customers return 10-30% of all products they purchase. In 2021, it’s inching closer to 40%.
E-commerce’s rise has only amplified this upward trend, driving an additional 33% increase in returns.
We get it, consumers love the choice and convenience of shipping back merchandise they no longer want or need. But, retailers simply aren’t yet optimized to fully handle this reverse supply chain.
Before COVID-19 hit, just 40% of retailers had optimized their returns processes.
So what exactly is missing from the returns management process?
Where are shippers and carriers identifying weaknesses?
Returns management, defined
Returns management is the process by which a company accepts returned orders from customers. Retailers and e-commerce sellers must configure an entire ecosystem of tools, policies and efficiencies to manage the acceptance, refunding or rebating, delivery and resupplying of merchandise. This cycle of collecting, organizing and shipping is known as the returns management process.
Returns management is a defined component of the larger reverse logistics market. While returns management refers to just that — the management of returned goods — reverse logistics more broadly applies to any business operation post-sale that aims to recoup surplus value or reuse existing materials.
As you can imagine, creating a regional or global supply chain is already a massive undertaking. But making that same supply chain work in reverse is still an emerging process that few companies perform well.
So, there’s a lot of money to be made — and lost — within the returns management space. That’s why your organization should inspect the following critical aspects of your returns management strategy.
1. Transparent, documented policies
It might seem obvious, but it can’t go unstated given the circumstances retailers face: Merely codifying a returns management process is a far cry better than omitting one. By this, we mean, a transparent, documented policy in the eyes of internal stakeholders, business partners and customers.
Returns management programs should be clearly visible and easily navigable at all the points at which other parties interact with your brand. For instance, customers should be able to quickly find and understand your returns policy from your website or e-commerce platforms (or at least from their email receipt). Similarly, carriers should have all key information they need to both deliver goods and receive returns — potentially all in the same trip.
- Gatekeeping policies: To efficiently standardize the quality and exceptions for returns. This entails making sure there is personnel (or software) that weeds out unjustified returns claims. Additionally, you can avoid gatekeeping phases of the supply chain by improving original manufacturing quality and initial customer service, which might reduce the number of returns.
- Returns merchant authorization (RMA): RMAs ensure due diligence to better qualify returns, so that returns aren’t approved for products outside of company policy.
2. Optimize route planning
If merchants aren’t equipped to handle all delivery and returns internally, relying on outsourced carriers can prove difficult to manage. Working with a third-party logistics provider can help facilitate optimized route planning, so that carriers don’t sit idle with empty trucks on their return routes. With strategic support, each route is optimized for deliveries on the way in, and returns on the way out, in a single trip.
Not only does this process create material benefits for carriers in the form of streamlined labor and fuel costs, but it also allows retailers to more predictably interface with customers and plan for upticks in returns.
As carriers budget for the time and capacity required to fulfill return orders, traditional delivery routes can be converted into stronger ROI engines with every trip.
Top brands are already working to revamp their returns management process via smarter routes, which you can see in recent partnerships between FedEx and Happy Returns as well as Amazon and Kohl’s. These partnerships are establishing new standards and expectations for retailers and carriers alike.
3. Diversified carrier networks
As the COVID-19 pandemic so clearly illustrated, relying on single carriers creates burdensome bottlenecks and weak bargaining positions when negotiating carrier contracts in a pinch.
That’s why the use of alternate carriers — particularly in moments of peak demand, carrier congestion or weather events — can promote greater uptime and flexibility for shippers. This process works well for returns too.
Take the holiday season of 2020, for instance. More than 63% of U.S. consumers who bought gifts over the holiday had already returned them by early January 2021 (or planned to).
Unexpected returns can be contracted to the carriers best fit for the job — in that very moment. This ability to handle the current and future demands of returns is a key component of our full-scale Parcel Network Optimization strategy.
4. ‘Down-to-the-penny’ network modeling
So how do you truly generate as much efficiency as possible in your returns management process?
We use our down-to-the-penny network modeling that uncovers all avenues for savings in carrier contracts — today and tomorrow.
While a lot of shippers or spend management providers might address surface-level contract inefficiencies, they don’t consolidate all of your parcel data for a 360-degree audit. Using process automation tools to generate powerful business intelligence reports, you can accurately forecast spend trends and needs.
Contact Green Mountain Technology today to leverage the full strength of your data and optimize your returns management process.
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