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How Outsourcing Logistics Can Help Ecommerce Merchants Manage Returns This Holiday Season

How Outsourcing Logistics Can Help Ecommerce Merchants Manage Returns This Holiday Season

by Dhruv Saxena, CEO, ShipBob

Reverse Logistics Magazine, Edition 97

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For ecommerce sellers, the returns process can make or break the customer experience. There are several aspects of the returns process that affect customer perception of a brand or online store. In this article, we will discuss the ways in which returns affect the customer experience, particularly during the holiday shopping season. We will also discuss how outsourcing logistics can improve the customer experience during the busiest ecommerce season of the year.

48 percent of shoppers’ report having returned an online purchase in the last year, with apparel being the most commonly returned product category[1]. With so many shoppers returning online purchases manually, offering a good customer experience throughout the returns process is vital for online sellers: 95 percent of shoppers who are happy with the returns process said they intend to purchase with the same retailer again[1].

On the other hand, shoppers who are unhappy with the returns process are three times more likely to never purchase from that retailer again [1].

Meeting Customer Expectations
The returns experience begins before a shopper completes a purchase from an ecommerce website or marketplace: 49 percent of shoppers actively check an ecommerce retailer’s return policy before buying[1], and 18 percent of shoppers will abandon their items at checkout because the return policy is unsatisfactory[2].

To that end, the first step to create an excellent returns experience for a customer is to create a return policy that meets expectations. The top two consumer concerns about the process? Restocking fees and return shipping fees — avoiding these fees can encourage more shoppers to purchase with the knowledge they will have access to free returns[1].

Once you have the returned product in-hand, make sure your process includes quickly refunding or crediting the customer. 72 percent of online customers expect a refund credit within just five days of returning merchandise; 88 percent of customers would limit or stop shopping with a merchant that took too long to credit the refund[3].

Handling Holiday Returns
Creating a best-in-class returns experience for your customers becomes especially important during and immediately following the busy holiday shopping season. Holiday return rates are two percent higher than the rest of the year, with one out of every three gift recipients returning at least one item during the holiday season[4].
Return volumes peak the first week of January, with an estimated 1.4 million packages returned on January 3, and a total of five million packages returned to retailers throughout the week[5]. With such a pronounced increase in return volume, it is imperative that ecommerce businesses manage returns strategically. Those who typically manage returns in-house may find themselves unable to keep up with the influx in return shipments that follow the holiday rush.

Outsourcing Logistics
Many ecommerce businesses outsource their logistics — including inventory management, order fulfillment, and returns — to third-party logistics providers, or 3PLs. While order and return volume may be manageable in-house for the rest of the year, the benefits during the ecommerce busy season can make developing a year-round partnership with a 3PL worthwhile.

An unprecedented return volume over the holidays and at the start of the new year can cause ecommerce businesses to fall behind and find themselves beginning the new year by playing catch up. Growing ecommerce companies may reach a point at which they cannot handle both processing returns and fulfilling new orders in-house.

Outsourcing logistics to a 3PL can help merchants streamline the returns process by offering a designated staff to receive, assess, and process each item that is returned to the provider’s warehouse. The scale at which 3PLs operate on a daily basis allows them to leverage experience and industry best practices, making them best prepared to handle peak ecommerce season, manage returns, and much more.

During and after peak season, 3PL companies can help ecommerce companies scale at a rate they may not have been able to on their own by automating nearly the entire logistics process. This includes providing the transparency and integrations mentioned above — features that are essential, especially during the returns process, to creating a customer experience that encourages brand loyalty and repeat shoppers.

3PLs can provide the end customer with tracking information for their return shipments. Some providers may also feature integrations that allow them to send automatic text alerts to customers once their return has been received and refunded.

Partnering with a third party to manage logistics for the holidays and weeks following may be an expense ecommerce merchants are unprepared to take on; however, some retailers may find that the benefits are worth the cost, especially when the opportunity cost of spending time processing hundreds of returns in-house is taken into account.

Whether a merchant chooses to outsource logistics or keep operations in-house, the data shared above proves that a strong returns policy and process can have a significant positive impact on the customer experience — especially during and immediately following the holidays.

[1] Making Returns a Competitive Advantage, Narvar, June 2017
[2] 11 of the Best Ecommerce Stats from 2018 (So Far), Salecycle, July 2018
[3] Slow returns processing will keep customers away, Internet Retailer, October 2016
[4] 2015 Consumer Returns in the Retail Industry, National Retail Federation, December 2015
[5] Return to Santa: Consumers are sending more than a million packages a day back to retailers, says UPS, CNBC, December 2017
Dhruv Saxena is the CEO of ShipBob, a technology company that streamlines shipping and fulfillment for ecommerce businesses. Saxena co-founded ShipBob in May 2014 with Divey Gulati, out of Y Combinator. Prior to ShipBoB, he spent five years as a software developer at InContext Solutions and was also an engineer at Lincoln Electronic. Saxena holds both an MS and BS in Electrical Engineering from Purdue University.
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