Rave reviews are coming in on the recent sold out “Return to the Future” one-day event held on Sept., 20, 2018, and presented by PostalVision 2020 and the Reverse Logistics Association (RLA). The event was held at the Schar School of Policy and Government at George Mason University and focused on consumer returns and the reverse logistics supply chain.
The initial feedback on the event has included great reviews from attendees — “The content was up to date, extremely relevant and every session was interesting. I’d recommend this event to any logistics and supply chain professionals or retailers.” “Great event — really energizing and worthwhile!” “Really insightful event!”
All of the survey respondents so far have said they would like to attend another one-day excursion event with over 90% indicating their interest in another event focused on returns/reverse logistics.
Scoping the Returns Landscape
The event kicked off with welcome and remarks from PostalVision 2020 founder John Callan, RLA executive director Tony Sciarrotta, and the Hon. David Williams, newly appointed Governor, U.S. Postal Service and distinguished professor at the Schar School of Policy and Government at George Mason University. The agenda then focused on presentations by Dr. Ian Stanford, USPS Office of the Inspector General, and Brody Buhler, Accenture, who helped attendees understand the scope, relevance, and continuing growth of the returns landscape.
Dr. Ian Stanford,
Public Policy Analyst, USPS Office of the Inspector General, re-capped the OIG’s recent research, “Riding the Returns Wave,” which looked at the returns process and reverse logistics supply chain, as well as the size and growth of returns and included 35 in-depth interviews with companies across the supply chain. The returns process can be complex, he said, and a challenge for retailers, customers and supply chain providers. He emphasized that the reverse logistics process is not just a flip of the forward logistics processes because the reverse has many different stages, elements, and supply chain entities.
As ecommerce continues to grow, retailers are seeing more returns and costs are also rising, Stanford noted, reporting about $5 trillion in retail sales in 2017 with about $476 billion in returns — $113 billion from ecommerce returns. With customers expecting free returns but retailers footing the shipping and return costs, the latter are exploring new solutions and innovations. And delivery companies have an important role in the returns market because they mediate the relationship between the retailer and customer, so they are also working on improving the customer returns experience and lowering the costs for retailers. The USPS has some critical advantages for returns and the OIG identified specific innovations that stakeholders said they wished the USPS would explore.
Sharing research on “Returns:The Value Conundrum,” Brody Buhler,
Global Managing Director, Post and Parcel industry, Accenture, talked about how consumer expectations continue to evolve and shared a video re-cap from hundreds of interviews with customers taking a “selfie” video describing what they want from their returns experience. The bottom line is that customers want free returns, they want them to be easy and as self-service as possible, and they want their money back faster. Buhler said research shows that consumers are three times more likely to return an item bought online than an item bought in a physical store. And the consumer’s returns experience can have a significant impact on their future purchase decisions.
Buhler said the average days to process a return from the date the package is placed in the mail until the credit is processed is 11.4 days, which is unacceptable to most consumers and to most retailers. But returns models are changing with new models emerging based on consumer patterns such as the rental market, try on at home programs, and shop at home with curated boxes and subscription models. The power of effectively managing returns equates to increases in profits of 22-46% for retailers, Buhler reported, with 12-25% profit increase from additional purchases, 26-50% reduction in lost profit from returned items, and 18-39% decrease in marketing costs. To win with returns, retailers need solutions that dynamically manage the consumer experience and solutions that dynamically manage returns operations and associated costs.
Academic Research Returns Interesting Takeaways
Delivering the morning keynote presentation at the event, “The Impact of Emerging Technologies on Consumer Returns,” Dr. Michael Galbreth,
Head of the Dept. of Business Analytics and Statistics at the University of Tennessee’s Haslam College of Business, shared research that he and others have done around returns.He presented research results and data on returns forecasting, drivers of returns, the returns experience, and the impact of retail innovations.
Returns forecasting presents challenges for all in the reverse logistics supply chain since when returns are coming and their condition is not known in advance Galbreth said that predicting the rate of future returns is a challenge that retailers are trying master using transaction and sales data. He shared a forecasting model that has produced much more accurate results in predicting returns.In terms of the characteristics of products that drive returns, product maturity and variety are key drivers of returns, he reported, and “bracketing” is an emerging issue for some categories.Positive user reviews can decrease returns, but there can be artificially inflated reviews, and a wide variety of reviews can reduce returns if the users find the reviews helpful.
Looking at whether the returns experience can impact purchase patterns after the return and, if so, how, Galbreth said research shows the faster the customer receives their refund, the better customer they will be in the future in all measured metrics. Having a good recovery process when a return experience is not going well is also important to driving future purchases by the customer, and investments in highly competent returns staff may be justified. Retail innovations such as improved online visual tools, virtual fitting rooms and technology, can reduce returns as well as having other benefits. The “cost center mentality” around returns is being debunked by research on how returns can impact future sales and purchase value.
Building Next Generation Returns Solutions
Acting Senior Vice President of Sales & Customer Relations, U.S. Postal Service, in his luncheon keynote presentation at the event, talked about the “next generation of consumer returns,” noting that returns are a necessity as ecommerce continues to grow and $1 billion+ sales days become the new normal.
Nicoski noted that 48% of retailers ship 21-100 online deliveries per week and 4% ship 10,000+ deliveries per week. Returns are becoming the new normal, with Americans returning $100 billion in ecommerce purchases in 2017, returning online apparel purchases 8 times more often than in-store purchases. Cross-border ecommerce demand also is growing and with it the challenge of cross-border returns. Returns touch many different industries and processes, he noted, from try-on-at-home models, to recall of defective products, to end of product life, to rent and return, to diagnostic testing, to recycling and trade in. Businesses want to meet the needs of their customers but also need affordable, flexible options.
New solutions and innovations are being seen around returns, with some business models built on causing returns (e.g., consumer receives multiple items, picks what they want, returns the rest), or providing faster fulfillment of exchanges, offering customers omnichannel returns solutions (buy in store return in store, buy online return in store, etc.), technology to improve purchase choices (clothing sizing/color technology, etc.), issuing credit prior to return receipt by retailer, and more. The costs associated with returns can be significantly higher than shipping the original product, so merchants are getting more creative on giving customers incentive to keep the product to avoid the returns cost. Using data on returns can also reduce costs by limiting the supply chain components needed to handle the return or keeping inventory at local stores or warehouses. Labels for returns are another area where innovation is being seen – could merchants dynamically create a label to direct the return most efficiently to its destination? Everyone realizes the benefits, Nicoski said, but there are not many widely accepted solutions yet.
More to Come!
Stay tuned for more highlights from the event, coming soon!
Save the Date
Save the Date
PostalVision 2020 announced at the returns event the dates for their 2019 annual event, PostalVision 2020 / 9.0, which will be held June 5-7, 2019 (evening reception kick-off on June 5th!) at The Ritz Carlton Pentagon City. More information will be published on the PostalVision web site as it becomes available.
Save the Date!
For more on returns and reverse logistics, The Reverse Logistics Association (RLA) will be holding its annual event on February 5-7, 2019 in Las Vegas, NV. More information can be found on RLA’s web site.