In the United States, customers returned an estimated $428 billion in products in 2020, according to the National Retail Federation (NRF). Of that, the lion’s share of customer returns were e-commerce purchases, with a whopping 30% return rate compared to only 8.9% for purchases made at brick-and-mortar retail stores.

When it comes to shoes and apparel, the return rate is even higher. It’s as if e-commerce “shopping” has transformed into “discovery options” whereby consumers haphazardly fill their online shopping carts knowing full-well they’ll return a significant quantity. As Kate Reidel, Parcel Pending’s SVP of Business Development, explains: “Pandemic consumers who went online to shop for clothes often resorted to bracketing, buying multiple sizes, since they didn’t know exactly what they’d need. That exacerbated the expense of managing returns.”

Managing shipping costs and customer expectations for returns

One of the reasons a retailer who is looking to improve customer experience might be reluctant to make changes to their return policy is because of customer expectations. Invesp reports that most consumers expect a liberal return policy, and 79% of them want free return shipping. On the flip side of the coin, 86% of retailers agree that a lenient returns policy is critical to increasing revenue and share of wallet, according to a new McKinsey & Company report. In short, all returns initiatives must boost the retailers’ bottom line, but in a consumer-friendly way.

Managing the logistics of package return initiatives

One of the reasons reverse logistics are so expensive is that there is typically not one dedicated department to returns management. Retailers even admit that a lack of accountability exacerbates the problem. Of course, the obvious implication is to create a Chief Returns Officer or a returns management department.

Another initiative to decrease the amount of bracketing in e-commerce shopping carts is to employ pop-up messages alerting consumers that they have the same product in multiple sizes.

Returns processing: Streamlining with emerging technologies

Retailers have also seen lower e-commerce returns by employing technology. The NRF reports that “spending on global reverse logistics technologies will spike in 2021 — forecast last year to hit $604 billion by 2025 — as retailers seek to alleviate a major pain point in the shopping journey and minimize the costs of a returned product”. Investing in technology may create costs for a retailer now but realize substantial savings later.

One of the killer technology battlegrounds in returns management is the virtual fitting room. For instance, Walmart announced that it is acquiring Zeekit, a startup that allows shoppers to upload a picture of themselves to see how the product will look like on them. In China, Nike launched foot-scanning technology to recommend the best shoe and size. And Sephora has been investing in its Virtual Artist, a tool that allows consumers to try on make-up virtually and other products. Showing models with different skin tones and body shapes also helps consumers make smarter buying decisions when it comes to their shopping experience. The relationship between technology and returns is clear: Offering virtual ways for consumers to interact with the items they’re interested in means more items bought to keep.

Fixing the problem at its source

Understanding the reason for customer returns is critical. Retailers must utilize dynamic strategies to lower returned goods. Stitch Fix is one of the few retailers that takes a deeper dive into the “why” of a return request.

There’s also a new twist in e-commerce with “clienteling.” Whereas sales associates used to closely guard their “black book” of repeat customers, today “clienteling” takes the form of a software suite whereby customers’ past purchases are coupled with artificial intelligence to provide a 360-degree view of the customer. The system then offers product recommendations utilizing cross-selling and up-selling with the goal of reducing the e-commerce return rate.

Smart lockers: Improve customer experience while lowering costs

It’s estimated that the labor cost for a traditional in-person return costs the retailer between $1.00-$1.40 per transaction. Add in an estimated wait time for the customer of approximately three to five minutes for in-store returns, and you have a potential recipe for disaster.

On the other hand, installing smart lockers that work as both a product delivery and product return vehicle is a true win-win. Labor costs for a return via a smart locker are almost nonexistent. Further, a typical return via Buy Online, Pick-up in Locker (BOPIL®) takes the customer less than 30 seconds, and 92% of consumers will make future purchases from your brand if the returns process is easy!

The entire returns process with lockers is fast and efficient. Customers can initiate the return via mobile app or online, return the product by selecting “drop off” at the lockers, scan or enter their return barcode, and place it in a locker. Customers also automatically receive an email confirming that their returned product was received. Most importantly, lockers can be configured so that only certain doors can be used for returns, allowing stores to balance capacity between order pick-ups and returns.

Quadient and you

Retailer costs for returns may vary, but in-store returns are typically the most efficient and cost-effective. Installing smart lockers and recommending them as the “preferred channel” for returns offer direct to the bottom-line savings.

Contact us today to learn how Parcel Pending by Quadient can help improve your customer experience while lowering costs.

Alexandrea Purvis

Alexandrea Purvis

Content Marketing Specialist- Parcel Locker Solutions

Alexandrea Purvis is the Content Marketing Specialist for Parcel Locker Solutions at Quadient, responsible for the development and execution of Quadient's global content strategy for Parcel Locker Solutions. Alexandrea has more than 5 years of experience in the technology industry and has created and implemented key marketing strategies that are engaging and increase brand awareness around parcel lockers. Alexandrea holds a B.A. from the University of Central Florida and an M.A. from Lille 1 University of Science and Technology. 

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