As was the case in 2017, returns continue to be a significant issue for retailers, especially after the holidays. The NRF expects 13% of holiday purchases to be returned, slightly higher the 11% expected for the entire year, so the sheer volume alone makes it a real issue. But with the generous and transparent return policies companies like Amazon are embracing, consumer expectations are higher than ever. So, retailers are looking for ways to better manage their returns processes and make them as seamless as possible to their customers. If they don’t, they risk losing them -- 64 percent of consumers, according to a survey conducted by the National Retail Federation (NRF), said they would be hesitant to shop at a retailer again if they experienced friction in the return process.
So, how can e-tailers, omnichannel retailers and manufacturers afford to offer such customer-centric return policies? Chances are, they’ve partnered with a third-party provider to help them streamline and centralize their process. Not only will this allow them to handle all types of returned merchandise, in any volume, from anywhere, and in any condition, but it will also free up time so they can focus on their core business. As companies consider how to improve their returns management program, they should keep three key things in mind:
1. A centralized process will increase revenue opportunities.
Many retailers and manufacturers have localized returns management programs, either in-house or with third-party service providers. While this may seem like the best approach, it limits revenue opportunities and carries hidden costs such as unnecessary transportation costs, lack of transparency in sales channels, and brand protection challenges. The best strategy is to centralize the process, perhaps with a third-party strategic partner. Look for one that has warehouses nationwide and can handle all types of merchandise, in any condition and in any volume. Review their operations. Make sure they offer services like de-labeling, refurbishment, electronics data-wiping and repackaging. These value-added services mitigate risk, increase the quantity of items available for recovery, enhance value and protect the brand. Also, make sure they offer multiple disposition channels including return-to-vendor (RTV), return-to-stock, re-commerce, charity donation and recycling options. Retailers and manufacturers should also verify the vendor’s ability to remove protected consumer data from electronics in compliance with local, state and federal regulations. Failure to do so could result in civil and criminal penalties.
2. A streamlined and efficient process will support generous and transparent return policies.
Having a streamlined and efficient returns management program is key to profitably delivering on generous return policies. When partnering with a third-party vendor, thoroughly understand how they receive merchandise. Look for one that uses technology to track products from receipt through final disposition. Make sure they can capture and report back data at all stages. This will go a long way in expediting customer refunds and ensuring maximum recovery. Retailers and manufacturers should also verify they have process that ensures that the process and cycle time is fast and efficient. Reducing the time it takes from the point the product is unloaded until the service provider has completed the receipt and sent the necessary messaging back to the partner is critical to ensuring efficient productivity.
3. A seamless returns process builds customer trust and loyalty.
Whether your returned goods end up with new owners or back with the original vendor, they must be transported there. The fulfillment and redistribution of returned goods is a crucial part of the returns management process. Efficiency, speed and coordination in this area are vital to ensuring your program operates effectively and profitably. A robust transportation and processing center network is key and should leverage a blended transportation model including parcel, LTL and full truckload options. A solid partner can fight the right solution that balances speed with the cycle time and cost of transport. Overall, shorter transit times mean faster credits for retails and consumers.
Fulfillment entails not just shipping, but all of the activities that occur before and after: repackaging, packing, fielding buyer concerns and questions, and soliciting and handling payment. An effective partner will tie up all of those loose ends, ensuring customers are happy and your sale is completed successfully. Look also for a partner committed to efficiency through proven processes such as Lean Six Sigma and Kaizen. These standardized ways of operating will save you time and deliver value more quickly.
James M. Rallo serves as the President of the Retail Supply Chain Group of Liquidity Services which helps hundreds of the world’s top retailers and consumer OEMs unlock strategic value in their reverse supply chain, enhancing brand protection for clients. His Retail Supply Chain Group team supports strategic supply chain initiatives which significantly drive recovery on surplus and overstock inventory through comprehensive and scalable multi-channel solutions.
Prior to joining the Company, Jim served as Chief Financial Officer and Treasurer of Sleep Services of America, Inc. He also served as Vice President of Deutsche Bank Alex. Brown’s Healthcare Investment Banking Group. Jim was recognized with top honors from the Tech Council of Maryland as CFO of the Year in 2013 and by the Northern Virginia Technology Council with the Public Company CFO of the Year Award for Outstanding Achievement in 2009. Jim is a CPA and serves as a founding member on the University of Virginia’s Darden School of Business Strategic CFO Roundtable.