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Reverse Logistics –a winning strategy for customer loyalty

Reverse Logistics –a winning strategy for customer loyalty

by Dr. Sunnanda Panda, Founder and CEO, RevLog Resources, India

Reverse Logistics Magazine, Edition 97

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A business organization exists to provide products and/or services that customer’s need/ want. In other words, if the customer does not need these products and services the organizations would not exist. So a blindly obvious statement is – no customer = no company!

Companies or organizations who have worked around their customer’s -needs, wants, preference, taste, service, experience –are the ones who are successful, while others don’t thrive for long unless it is a monopolist market which globally we have moved away from long back. Customers in turn prefer companies that provide
• Value for money
• Delivering acceptable customer service
• Keep promises
• Quality as stated
• Easy to do business – forward and reverse
All the above, make customers loyal to organizations and their products.

Reverse Logistics is an evolving strategy to strengthen the company’s customer base and build customer loyalty. Returns are very much part of the sales process. Therefore how a company uses reverse logistics directly impact customer loyalty. It starts when a customer calls a customer service representative and how they walk the customer through their returns process, forms the first impression and clearly conveys the company’s attitude towards returns. Of course this has to backed by a strong return policy that balances the interest of the company and customers. For example, a 30-day return with receipt is a balanced compromise. This return policy must be clearly and transparently available to the customer before they place an order. Any surprises or unexpected cost on returns, inculcate doubts about the organization in the customer’s mind.

Returns management and policy is vital especially in online sales. Since customers don’t have the touch and feel experience, they are comforted by the fact they can return products with easy and this infact encourages them to indulge in an online sale.

Here is an interesting case study of how an organization encouraged sales on a product - not preferred to purchase online, and the solution provided to satisfy customers who need to touch and feel the product, thus increasing customer experience and possibly negating returns. Caratlane is one of India’s largest online jewellery retailers of diamonds and gemstone jewellery, solitaires and gold coins. Deep-rooted beliefs are tough to crack …. One such belief in India is that you cannot buy jewellery until you touch and feel it before committing to a sale. To address these concerns, Caratlane created an app for customers with the ability to try and buy jewellery designs ‘virtually’, aided with an innovative 3D mirror ...... Mirror Mirror, on the wall, an interactive experience for all! This app uses face recognition and 3D imaging technologies to provide a life-like immersive try-on experience for customers to discover a range of jewellery designs. So if a customer wants to see how an earring looks on one’s ear lobes, the app would superimpose the earring on mirror image of the customer and they can have a 180-degree view of themselves. This app and customer experience has increased the earring business by almost 20 percent, but Caratlane is not limiting oneselve to a certain kind of jewellery. Mithun Sacheti, Co-founder and CEO of Caratlane says “No matter how big a jewellery store is, there is only one door to enter, but the online platforms offers multiple doors”… thus they pioneered the virtual jewellery try-on feature and broke the restrains on the online jewellery market. Another recent service offered by Caratlane, is free trial of jewellery in the comfort of one’s home at no charge to customer.

Reverse logistics in E-commerce is a necessary part of the transaction to maintain customer satisfaction and directly impact customer loyalty. Companies must ensure the click-buy-receive service to mirror the click-return-refund capability; this is crucial to maintain customer satisfaction, loyalty and confidence in ordering again. While e-Commerce dominates the market, reverse logistics require as much concentration as the original sale. To shift from managing rapid orders to rapid returns, there must be innovation, adaptation and evolution in the supply chain.

Even if a customer has had an excellent experience with a retailer through the buying and delivery process, returns is one area where things may go wrong. Making the returns process easy and free for customers is one way to ensure they retain a positive impression of the retailer, even if the product isn’t suitable for them. This ensures that they will return and make purchases in future. Charging for returns is one sure-fire way to annoy customers and deter them from future purchase.

Retailers should do everything they can to minimise returns rates, by providing detailed product information, images, and product videos (the instructional product vidoes have done wonders for its returns rates), but a proportion of customers would still want to return items. This may be because clothes don’t fit as well as they thought when they try them on, something just doesn’t look right when they see it at home, etc. While returns is a cost to the retailers, they may have to loom in an average return rate and factor it into the cost of the item and its initial delivery charges rather than penalise customer for returning items. Here are how some online retailers handle this issue of returns…

Argos is a multichannel retailer who offers customers the option to return at store, like most multichannel retailers do. For other customers, they simply need to call up within 30 days for a free collection.

Returns, refunds & exchanges
Christmas gift returns

We’ve extended our returns window over Christmas. Items purchased from 11 October 2018 can be returned up until 25 January 2019.

Can I return it if there’s nothing wrong with it?

Absolutely! We offer a 30 day returns guarantee on most items. (We’re nice like that.) So if you need to bring it back, just bring it back to any Argos store. Or if you got it delivered, we can collect it for free and refund your original delivery charge. If it is a small item you can also return it to a store at a convenient time for you and we can refund you immediately. However it may take 5 – 7 days for your bank to process the money.

We’ll either refund the cash onto the original payment method or offer you an exchange. Easy.
You just need these 3 things:
• Your proof of purchase
• The item should be unused, in its original packaging and in a re-sellable condition
• Any free items that came with your product unused and in a re-sellable condition

How do I return Tu clothing?
For Tu clothing items bought on it’s a little bit different... here’s some specific information on returning Tu items.

What about returns that were paid for partially/fully with Nectar points?
Return your item to a staffed till in any Argos store and we’ll refund the Nectar portion of your payment as an Argos Gift Card (as we’re not able to refund your Nectar points). The remainder, where applicable, will be refunded via the original payment method, such as cash or payment card.

If you don’t collect a Click & Collect item (that was paid for using Nectar points) within 7 days, your order will be cancelled, and you’ll be refunded via your original payment method(s).

And a few more things to note… There are some things we can’t do returns for, such as food and some jewellery (see FAQ below) unless of course they’re faulty. Our website and catalogue clearly show which items are excluded

If the item or the packaging has been handled excessively to assess the goods (ie. more than you would if you were buying it in a shop) we reserve the right to reduce the amount of refund to you

During the returns process, we might ask for the product serial number or similar, to check the item was actually supplied by us.

Naturally, none of this affects your consumer rights.

Glasses Direct
Glasses Direct offers free home trials and free returns, prominently mentioned on their website and thus have gained an excellent reputation among customers.

With Next you can return products by post, charges to be borne by the customer or by Smart label where they deduct $7 from the refund amount.

Marks & Spencer has always had a no-hassle returns policy in its stores, and the online version is also simple enough with a 35 working day refund window.

Sports Direct
Sports Direct’s returns policy could deter customers from a purchase as their tone seems pretty harsh and customers are charged for returns and since the amount is not clearly stated it’s a further deterrent.

We would recommend that you return your items via registered post. Please clearly state on the invoice the reason for return and whether you require a refund or exchange, We are only able to exchange items for the same product.

Personalised Items are non-returnable. Some goods are non-returnable for hygiene reasons. Please note that this does not affect your statutory rights.

If a full refund including the original delivery costs is required, we need to be informed fourteen (14) days after the receipt of the order. The order must be then returned to us within fourteen (14) days after we have been informed of the cancellation, however you will be responsible for the cost of returns the goods to us. If a return is payable to you we will process the refund as soon as possible and, in any case within fourteen (14) days of receipt of the original order back to us.

The returned goods do not need to be in their original packaging however they need to be in a sellable condition. Return postage is at your own cost and risk.

You have a legal obligation to take reasonable care of the goods while they are in your possession. If you fail to comply with this obligation, we may have a right of action against you for compensation. This applies to all goods that are returned.

Our returns policy does not affect your statutory rights.

If you return goods claiming they are defective, we will examine the returned goods and will notify you of your refund via e-mail within a reasonable period of time. We will process the refund due to you as soon as possible and, in any case within thirty (30) days of the day we confirm via e-mail that you are entitled to a refund for defective goods.

If a refund or reimbursement is payable to you, we will transfer the money using the same method originally used by you to pay for your purchase. If we cannot refund via the original payment then a cheque will be raised to the address on the order (except in the case of a full or part purchase of goods using a Gift Card, as detailed below).

If any product purchased with a Gift Card is subsequently exchanged for a product of a lower price, any money owing will only be issued as a Gift Card. If your purchase was partially paid for on Gift Card and a refund is payable to you, your Gift Card will be refunded up to the card’s original value, any outstanding balance owed after this will be refunded via the other payment method originally used for your purchase. If you no longer have the Gift Card used to purchase the returned good(s), we will issue you with a new Gift Card to the value payable to you up to the amount of the card’s original value.

Zappos is an online shoe retailer under Amazon. They offer a ultra-generous 365-day, free two-way shipping and return that invites customers to orders shoes, try them on at home and send them back if they don’t want to buy them.

Zappos believe that customer service is their new marketing strategy. Their well managed and operated, return policy actually drives growth. Infact their top customers who purchase the company’s most expensive footware actually return 50% of everything they buy. The margins made on these expensive footware offset the added shipping costs and returns. Thus their best customers who have the highest return rate were the ones who spend the most money and therefore are their downright most profitable customers.

Therefore in conclusion, retailers need to work hard to retain customers, and a free returns policy is one way to achieve this. One greatest motivator for online purchase is if the customer knows that they can return them if they don’t like the product. If the return charges are steep or unexpected, or they have to inconvenient themselves to return the item, then this negative experience is held against the retailer and their products, online and offline. Retailers can charge shipping cost for cheaper items to deter customers from returning them but on the expensive ones it should be factored in. Hence, Retailers need to tradeoff the cost of covering returns charges against the risk of losing customers.
Dr. Sunnanda Panda, logistics professional with a PhD in reverse Logistics. Founder and CEO of RevLog Resources, India
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