Keeping in theme with the rest of the year, the 2020 holiday shopping season was… well, like nothing the retail world has ever seen before. Instead of waiting in line for 5 a.m. doorbusters, consumers opted to do most of their shopping from their couches — rapidly expediting a trend that’s been building steam for several years.
eCommerce purchases increased by 32% from November through December 2020, amounting to about $188 billion in sales, according to research data from Adobe Analytics. Overall holiday sales during the same period were projected by the National Retail Federation to increase between 4.6-5.2% over 2019.Online and other non-store sales increased between 20-30%.
What does that mean for the costly and ever-challenging logistics of product returns? A record high surge and “the mother of all return seasons,” according to one last-mile trucking executive.
Well, Santa hasn’t been known to double back and pick up the gifts he didn’t quite get right. So what does that increase in online shopping mean for the expensive headache we’ve all come to know as product returns? According to one last-mile trucking executive: it means that January 2021 became “the mother of all return seasons.”
In some cases, major retailers like Amazon and Walmart are telling consumers to just keep the items; don’t send your unwanted goods back, keep them and we’ll refund the purchase anyway. Retailers are using artificial intelligence tools to determine the economic “tipping point” where return shipping fees and other restocking costs make it cost-prohibitive to take the item back. Basically: If it’s smarter (and cheaper) for the customer to keep the goods, the seller will simply let them.
Whether bought in-store or through an online eCommerce platform, returns have always been an expensive wrench in the already complex logistics operations of sellers, eating into bottom-line profits. One industry estimate pegged the cost of completing a return at more than 50% of the original product cost.
It’s an unavoidable cost of doing business, but one that retailers and their delivery service providers are working overtime to develop and deploy innovative solutions to solve.
Solving tough delivery problems
Even before the pandemic, returns were a costly problem. In 2019, merchandise returns cost U.S. retailers a staggering $351 billion in lost sales. With e-commerce return rates as high as 30%, simple and direct return policies are a critically important part of a retailer’s strategy.
Your returns process could be what closes your next sale. One study by warehouse software provider Ware2Go found that 61% of consumers cited easy return policies as “very important” to a purchase decision, while another 34% pegged them as “somewhat important.” For a retailer, restrictive return policies can not only hurt consumer goodwill, but can depress revenue and curtail repeat business.
That’s why many retailers are finding new alternatives to speed up resales, create more convenient returns experiences, and use flexible policies as a customer selling point.
Crowdsourcing delivery for faster, 1:1 customer returns
The explosive growth of online retail in 2020 has only reinforced consumers’ demands for getting everything faster and freer; and along with it, it reinforced customer expectations for quick, flexible delivery and return services that cater to their needs. While many retailers are ramping up same-day delivery, that same level of attention hasn’t been given to returns processes.
But some retailers have started to think outside the box. Kohl’s has started facilitating returns of Amazon-purchased goods; Staples is now a return site for companies such as Best Buy, Target and Under Armour. Retailers such as Dollar General, Walgreens and Michaels are alternative pickup and drop-off sites for FedEx and UPS shipments.
While all this innovation is well and good, none of it addresses the most convenient solution of all: picking up returned items straight from the customer’s home. And that’s where a crowdsourced, on-demand delivery network comes into play — customers leave items outside their doors, and someone picks it up that very same day.
But there are clear benefits for retailers, too — namely, getting stock back to the store or warehouse quickly. Crowdsourcing platforms like Roadie enable faster — even same-day, restock and resell — especially when processing centers or storefronts are local. Considering that less than half of returned items are resold at full price, margin-conscience merchants are under enormous pressure to turnaround product while it can still be sold at a full ticket value.
Taking advantage of your physical footprint
From Walmart and Macy’s to The Home Depot, meeting the expectations like same-day delivery is vital. Therefore, the emergence of omnichannel e-commerce has paved the way for major U.S. retailers to use brick-and-mortar stores for speedier delivery, including same-day. Now, top retailers are leveraging physical store footprint, supported by same-day delivery resources, to quickly process returns, speed restocks and maximize revenue from resales.
Smart retailers are harnessing the untapped potential of a more streamlined and convenient returns process. Rather than letting distressed inventory end up as waste, retailers stand to gain something out of their billion-dollar returns reality, reselling items at profit. Some are even starting to embrace returns as a way to truly differentiate their brand — leveraging the process to not only reduce costs, but build customer loyalty and create additional revenue streams.