With less than seven weeks left in the make-or-break holiday shopping season, e-commerce retailers and brands are gearing up for the annual post-holiday ritual: the peak returns season.
According to a recent article in Internet Retailer, “returns typically vary from 10% to as much as 40% of holiday sales volume, depending on the merchandise category.”1 Shop.org predicts that e-commerce holiday sales will increase between 13% and 15% to as much as $82 billion in November and December, which means that merchants will again be faced with a record number of returns.
As eTailers prepare for the inevitable flood of returns, there are four key principles to keep in mind. By focusing on these, e-commerce merchants can make the most of the busy post-holiday returns season, providing a better experience for shoppers and improving their internal operations as well.
Examine your returns policy. Merchants should make sure that policies are clearly stated and easy to understand, and that their policies enable omnichannel returns. It’s not too late for a quick review. By doing a thorough returns policy review ahead of the holiday rush, retailers and brands can help ensure that returns don’t increase the demands on staffing, and they can also reduce wait times in order to deliver a better customer experience.
Simplify the process with pre-paid return labels. One of the easiest ways to simplify returns is to provide a pre-paid, USPS-based return label with each shipment. Newgistics is the #1 provider of USPS® Parcel Return Service solutions, and the Newgistics SmartLabel is widely recognized as a leading customer returns technology. Not only do pre-paid return labels such as SmartLabels reduce customer frustrations with the return process and improve satisfaction, but merchants can also choose to deduct the return shipping cost from the refund, or charge a small premium for the use of the service, resulting in an additional opportunity for incremental income.
Newgistics’ SmartLabels also provide an operational advantage for merchants, since the barcode labels contain a wealth of information that can reduce operational issues on the back-end. Door-to-door tracking visibility from the pre-paid labels will reach retailers far ahead of the returned merchandise. This will alert the retailer to potential issues with quality, sizing, or any other number of problems, in time for buyers and planners to make sale-saving adjustments and negotiate vendor concessions. Better data can also improve labor planning, inventory management and asset-recovery rates.
Be proactive with customer communications.
Whenever customers return merchandise, it creates an opportunity to reach them in new ways with personalized, branded messages based on specific actions. Merchants can proactively notify customers when a return has been received and when the refund is issued, creating a better brand experience, increasing the likelihood of repeat purchases, and letting customers know that they’re important. Proactive communications can also minimize unnecessary customer service calls, providing an important operational advantage.
Process refunds and store credits quickly. A common area of frustration for customers is the wait to receive a full or partial refund or store credit once the merchandise has been returned. Merchants should examine the current wait time to receive a credit and remove any roadblocks that can delay the transactions. As mentioned above, one of the easiest ways to do this is to communicate often and clearly with the customer.
The post-holiday returns season will always be a hectic time for retailers and brands. However, by taking a close look at their return practices and applying these four principles, merchants can make the most out of the busiest season for merchandise returns.
1Internet Retailer, “Ready for Returns,” Nov. 4, 2013
April has turned to May, and event season continues in full swing. This week, you can find Newgistics at the 8th Annual Green Mountain Consulting Leadership Summit, this Wednesday and Thursday in downtown Memphis, Tennessee.
This year’s focus is on the “Parcel network evolution: Executing for today, planning for tomorrow.” Summit participants will learn from case study driven sessions to gain a better understanding of the characteristics of each stage of the parcel network lifecycle and the strategies that can be used to optimize each stage, as well as how to better manage parcel networks at different points of maturity and growth.
Our director of sales, Patrick Allard, will lead a session Wednesday, May 15 at 4 p.m. He’ll speak on the topic Creating the Best Returns Processes in an Evolving Direct to Consumer Market.
Customers and prospects consider shippers’ returns policies and processes an important factor in their buying decision and brand loyalty. Yet, most merchants agree that their returns processes are far from perfect, especially in a continuously evolving “omnichannel” world. This session will present a case study on how Newgistics helped a shipper create a roadmap for implementing returns handling best practices to address customers’ needs for today and tomorrow.
Navigating the complexities of omnichannel retailing is daunting. We hope you’re able to attend this week’s summit, but if you won’t be there, please don’t hesitate to contact Newgistics to learn more about how delivering boxes can help you deliver the best customer service no matter how, where or when your customers shop.
For most Americans, shopping online is nothing new. In fact, 53% of Americans purchased something online in 2011. But while shopping online is not exactly novel, it’s still a process that can be fraught with indecision, uncertainty and, when something occasionally does not meet expectations, frustration for consumers. For some online shoppers, there are a lot of unknowns when buying sight unseen, such as:
Fortunately for e-tailers, many of these concerns can be addressed and minimized in two simple steps.
1. Have a clear, well-defined returns policy.
Returns policies that clearly state when an item can be returned and for what reasons can give would-be purchasers the confidence to click “buy.” Review your current returns policy and ensure that it includes specific instructions on how and where online returns can be made—can they be returned in-store? Do they include a pre-paid returns label? Can they be dropped off at any U.S.P.S. location?
2. Provider your customers with detailed package tracking information.
Partner with a reverse logistics company that provides detailed data for both retailer and consumer. Newgistics’ Transit Triggers service starts with dynamic barcodes on our delivery and SmartLabel® return shipping labels. They’re embedded with an extraordinarily rich level of data, integrating tracking information with order-specific details.
Here’s how Transit Triggers Work:
Once an order ships, parcel scan events can generate automated customer emails containing updates on shipment status as well as precisely targeted marketing messages. So while you’re providing peace of mind, you can cross-sell similar merchandise or offer promotions based on the customer’s order history. Newgistics even enables you to start notifying customers about tracking events sooner, since we provide visibility on outbound parcels as soon as they enter our network.
Even when orders are returned, you can transform the anxious wait for an account credit into a positive brand interaction that promotes repeat purchases.
Eliminating the “black hole” of uncertainty with an easy-to-understand, customer-centric returns policy and an accessible package tracking system goes a long way toward building a shopper’s confidence and improving their willingness to purchase online. While shopping online may have lost its novelty, shopping online with greater confidence will not go out of fashion.
Canada is much like the United States in many, many ways, though there are a few key differences within the respective retail industries. Not only do grocery stores sell milk in plastic bags instead of plastic jugs or cardboard cartons, Canadian shoppers also face a limited selection when shopping online with U.S.-based retailers due to restrictive shipping policies that do not accommodate shipping to Canada.
Newgistics believes this is an opportunity for, not a weakness of, U.S.-based e-commerce merchants and multichannel retailers. In this two-part blog series, originally featured at RIS News, we’ll share six key principles U.S.-based retailers should keep in mind when considering the expansion of shipping into Canada.
Reaching a ripe, untapped market
Eighty two percent of Canadians reported having shopped online by October 2011, and the rate at which Canadians click to buy is rising rapidly—Canadians spent C$16.5 billion ($16.0 billion) in online sales in 2010, and this is expected to double to C$30.9 billion ($30 billion) by 2015. Eighty three percent of online shoppers purchased goods through Canadian e-Commerce merchants, while only 60 percent reported they purchased from U.S.-based retailers or brands. The time is right for U.S.-based companies to tackle international shipping to Canada.
#1: Keep deliveries timely and cost-effective
Canada is massive, but fortunately for U.S.-based retailers, 75 percent of Canadians live within 100 miles of the U.S.-Canada border. As a result, Canadians across the country expect competitive transit times for U.S. goods at cost-effective rates. Target delivery times should be within 3-7 days to all Canadian provinces and territories.
#2: Simplify the returns process
One of the biggest hassles for online shoppers is when they decide a purchase must be returned for any number of reasons. This negative experience—a shirt that doesn’t fit, or a lamp that arrived broken—is a critical moment for an e-Commerce merchant, and they can reduce a customer’s inconvenience by simplifying the returns process. Make returns easy and create the opportunity to build loyalty by providing your Canadian consumers with a prepaid return shipping label, available in the delivery package or online, to be attached to the order and returned via any Canada Post location.
#3: Minimize Customs headaches
International shipping is complicated by the customs process, which includes taxes and duties and the reclamation of taxes and duties on returns, currency exchange, and product import restrictions. Eliminate paperwork problems and accelerate the process by providing documentation to customs before the shipment reaches the border.
Though the sales growth possibilities are quite lucrative, it is no small decision to begin shipping to Canada. However, the process need not be overwhelming for retailers and e-tailers. Stay tuned for the final three key principles to efficiently make the expansion into Canada, from handling returns and transit time to customer loyalty and shipment partner relations.
Retailers everywhere constantly ask themselves the question, “What makes our customers tick?” This question is quickly followed by, “What makes the consumers we want to be our customers tick?” These questions are difficult to answer, and can take an immense amount of resources to solve. At Newgistics, we liken this work to mapping consumer DNA. And we’ve decoded the shipping gene for you.
Newgistics recently sponsored an independent survey of consumers to study their shopping habits. Out-of-store shopping—particularly e-commerce—is booming; in fact, just this week Deloitte estimated that shopping online, or via mobile device or catalog will grow 15-17% this year. This comes on the heels of several consecutive years of very strong growth—e-commerce in particular had a banner year in 2011. Not only did online spending have its biggest day in history on Cyber Monday, but fewer customers waited until the Monday after Thanksgiving to shop online, spending 26% more online on Black Friday 2011 than in 2010. The research conducted by the third party looked at U.S. shoppers who had ordered from a catalog, e-commerce website, mobile device, television or ad, or home shopping party in the preceding three months, and at least one of the purchases was delivered via ground shipping, and what these consumers proved quite telling in what makes online shoppers tick.
It’s not surprising that traditional websites are the leading direct sales channel, but you may be surprised to learn that mobile and catalog shopping are now comparable to one another in popularity. You also might not realize the key role that shipping plays in selecting and staying loyal to a merchant, either. Here are a few other statistics that bore out how and why consumers decided to purchase (or not purchase) from a particular e-tailer:
Although shipping isn’t the top factor for consumers in deciding where to shop, it certainly is important. Specifically, the following emerged as the top considerations regarding shipping:
Meeting and managing the shipping expectations of consumers makes them more comfortable with the order experience. It can also help you allay any lingering concerns they may have about buying from e-tailers rather than brick- and-mortar stores. At Newgistics, we believe that meeting the expectations identified in the survey can help retailers not only retain customers—but also acquire them in the first place.
It’s all part of understanding consumer DNA and adapting accordingly.
By David Marinkovich, VP Marketing and Field Sales, Newgistics
Trends in consumer behavior continue to indicate a changing attitude toward shipping options within the overall shopping experience. Market analysis shows that, despite relatively flat growth rates in the U.S. shipping market as a whole, the acceptance of value-based shipping is rapidly displacing premium time-definite services.
Why this transition? Aside from consumers watching their spending more closely, some carriers are facing continued pricing pressures (tied to core transportation services) and high fixed operating costs, leading them to modify their billing procedures and negotiate service agreements with shippers – and the higher rates get passed on to consumers. However, there are alternatives that can help shippers not only control costs, but also improve base service levels by leveraging untapped information and opportunities.
This is about more than just shipping: a company’s brand and reputation is on the line every time a customer places an order. While some merchants get consumed with evaluating each individual transaction, intelligent merchants look at the lifetime value of customer and implement services that meet the customers expectations in price, service, and performance – encouraging the customer to continually ‘invest’ in their brand.
Certainly, there are still customers who want the option to purchase time-definite, higher-cost shipping services – but considering the growing number of consumers demanding economical alternatives, prudent shippers must offer an variety of services in order to appeal to a the needs of the their most valued asset, the customer. Otherwise, they risk losing that customer to the big box retailer who may not offer the same level of convenience, but doesn’t tack on inflexible high-cost shipping, either. A comprehensive shipping offering can tackle these challenges and more – from increasing the lifetime value of a customer and reducing call center costs, to creating new marketing opportunities and streamlining IT processes.
Every year, more than 1,500 people from around the globe descend upon Las Vegas on Super Bowl weekend for the annual Reverse Logistics Association Conference & Expo. The audience is comprised largely of supply chain executives from the world’s best-known technology companies and consumer electronics retailers. The conference is a great forum to exchange ideas as companies improve their reverse logistics processes, identify opportunities to refine their sustainability programs, look at solutions offered by service providers supporting the industry, and reduce costs. Today I’d like to take a look at that last topic, reducing costs.
Limited product lifecycles and complex supply chains
To put it simply, the consumer electronics industry is cut throat. You are only as good as your last product, and nobody is safe from consumer backlash if a product does not “Wow!” them and deliver bottom-line results for the manufacturer. And unlike many retail products, the effective lifespan of a product and its ability to win big in the market is not just seasonal, it may have only days or weeks to perform before it is more or less obsolete. For that reason, the complexity of the supply chain required to support returns in such an industry can be accurately described as a maze littered with the remains of products that need to find a resting place at the end of their useful life. But these questions remain: where do they go?; how do they get there?; and what is the most cost-effective way to make sure they get to their final destination?
Once the consumer is through with the device, the challenge becomes to identify the most optimal way to manage the flow of goods and materials. Unfortunately, many companies look at isolated areas of cost (such as transportation, for example) rather than the big picture, and are dissatisfied because they have a difficult time addressing other areas of the business where cost overruns are apparent. It is imperative to understand that any business, regardless of industry, is a delicate ecosystem that involves every area of the operation that relies on open communication among all channels. So while operations may try to save a few cents in one place, customer service may have a difficult time managing call center costs because the data required to support their environment is not necessarily provided through the ‘low cost alternative.’ As for marketing, well, if they cannot monitor consumer behavior and proactively market to them based on specific events observed through the use of the data, customer satisfaction may suffer and the business may miss critical revenue opportunities. It is enough to drive finance nuts, as the business as a whole may be headed in the wrong direction and with no clear answers as to how to go about fixing it.
The best solution for your business may not always be the least expensive. Trying to shave a few cents out of your operating costs may wind up costing you dollars in the end if you are not careful.
The future is the consumer
We have seen a complete evolution in the ways in which consumers shop. From the times of Ben Franklin (the original catalog marketer) until the 1990s, very little changed as people purchased through traditional brick & mortar outlets or through catalogs. The revolution in retailing brought on through integration of technology, customer buying preferences, and marketing is still in its infancy, as alternate retail channels accounts for less than 5 percent of total retail revenues. Whereas ‘mobile commerce’ was revolutionary a couple of years ago, we are progressing to the point of ‘social commerce’ as more and more people use alternate devices and mediums to fulfill their needs. As such, they demand that the information and services provided to them be easily accessible, have the ability to be consumed at a time when it is convenient for them, and have meaningful content.
Despite the wonderful advances that consumer electronics companies and their sales channels continue to make to offer products designed to support consumers’ lifestyles, they must also make sure their policies and the way they support the consumer after the sale supports their lifestyles as well. Trying to adapt old processes and unfriendly customer service policies in an effort to reduce costs or prevent returns may cost a company significantly in the new age of merchandising and retailing. As new thought leaders in the market emerge, it is likely that the focus will shift to service – based on a desire to build lifetime customer value rather than the idea of ‘saving’ a dollar here and there. For companies only focusing on the here and now, there may not be much to look forward to down the road.
*Originally published in PARCEL Magazine’s January-February issue.
With the holidays behind us, the logistics industry can finally breathe a collective sigh of relief. However stressful, the past few months of peak season have also shown more signs of economic recovery. Consumers came out in record numbers, making the fourth quarter of 2010 a bright spot on what was undoubtedly a barometer for future retail trends. Some may wonder, “What does this have to do with shipping?” The answer is quite a bit, actually.
Competing in a Changing Marketplace
The days of simply focusing on the creating a positive in-store experience are long past. New technologies, combined with an increasingly perceptive consumer, force all of us to find ways to meet growing customer demands without breaking the bank. The fact that many customers no longer ‘marry’ themselves to a brand (as price is the number one purchase factor) means that merchants’ ability to drive long-term customer loyalty is dependent not only on the products that they offer, but also on the total landed cost of putting those products into their customers’ hands. This is where shipping costs play a critical role in building customer loyalty.
The Rising Costs of Shipping
Nobody likes rate increases when it comes to shipping, especially when it can account for as much as 40 percent of an organization’s total landed operational costs. Nevertheless, there are several things to keep in mind as we negotiate contracts with carriers:
Because shipping is such a large factor in an organization’s budget, it is often one of the first places executives go to identify areas in which to reduce costs to remain competitive. While it’s always smart to work with your carrier to negotiate the best deal, I propose that you look even further than your rate chart for opportunities to save, which many merchants are missing out on today.
Additionally, as you look at alternative carriers, remember that your most loyal customers expect a certain level of service from you. As long as you establish customer expectations through a comprehensive policy that clearly communicates expectations, there is no harm in offering a lower-cost shipping alternative. Reducing costs may even help you attract new customers and build customer loyalty among long-time customers.
As carrier rates increase, one of the largest areas of opportunity is the manner in which corrugate costs are managed. Oftentimes, carriers face the challenge of reducing costs while merchants have not looked at their own shipping practices costs. Some questions to ask are:
There are many questions that can be asked, and my experience is that while many companies take the right approach to managing their business, there are an equal number that truly do not get everything they can out of the existing resources they have at their disposal.
In order to continue serving customers profitably, merchants must ensure that they’re doing everything possible to improve the level of service they receive from existing service providers, or be willing to utilize the services of others when their needs aren’t being met. And rather than placing the entire burden of cost reduction on service providers, businesses must also look to ways to reduce their own costs while meeting customers’ expectations. In an increasingly competitive market, your customers are not the only ones looking to you to deliver a better value – your shareholders are as well.
We are in the crosshairs of the busiest retail period of the year. As many retailers expect to realize as much as 40% of their annual revenues in the weeks leading up to December 25, most are pulling out all of the stops trying to bring those shoppers in the door — whether it is brick-and-mortar or e-commerce/catalog storefronts. As with years past, one of the biggest promotions used in the direct-to-consumer space is ‘Free Shipping.’ Therefore, the questions some may ask are:
• How effective is free shipping in bringing customers in the ‘door?’
• Do consumers expect free shipping after the cheer of the season has passed? and,
• What is the impact on the retailer’s bottom line?
Some questions are more easily answered than others are, and some may entirely depend on how a retailer chooses to market their products – so let us look.
Bringing Customers in the Door
One of the largest contributors to shopping cart abandonment is shipping costs. Many retailers have gravitated toward low-cost ground shipping to reduce consumer costs, but the fact remains that consumers are watching every dollar — and the carrot of free shipping is almost impossible to pass up. While that is great news for the retailers, they need to proceed with caution by informing consumers what ‘free shipping’ typically means. The package will typically ship via the most economical channel, and customers need to be aware that there are very specific cutoff times for orders to ensure its arrival on time. It sounds obvious, and to those of us in the industry – it is, but consumers oftentimes see what they want to see, and the frenzy created around ‘free’ anything oftentimes causes them to look past the fine print. A word of advice, proceed with caution when making decisions that could adversely affect the customer experience.
Setting Future Consumer Expectations
Online revenues this holiday shopping season are up, way up. Estimates have identified increases of up to 30% or more, meaning that more people are shopping online and buying more online than in the past. Some retailers have engineered entire marketing programs around free shipping to drive business all year, and others are just beginning to explore the opportunity. For the latter – it’s critical to understand what it may take to ensure future success while understanding free shipping’s impact on its holiday success. If your merchandise selection is unique in that consumers have a limited or no option in securing the same or similar items elsewhere, then it may not be a good strategy. However, if you find that the ability to offer free shipping for the same or similar merchandise to your competitors really helped to drive increased volumes, it may be an excellent opportunity to identify new, long-term customers.
Free Shipping and the Bottom Line
In an extremely competitive environment, every penny counts — as evidenced by some premium retail brands that have steadfastly refused to offer discounts in the past jumping on board to discount products this holiday season. Combined with the fact that total landed transportations costs can account for as much as 40% of a company’s operations budget, there is very little room for absorbing additional costs. So, the scenario any merchant needs to assess is if their business is healthy enough to absorb these incremental costs, how will it immediately impact operating income, and will it open the door to new, sustainable revenue opportunities that will pay dividends down the stretch? All of these are tough questions, and all of them require a merchant’s full attention — because once the decision is made to go down this path, changing course could create a sour taste in the mouth of its most valued asset, the customer.
I appreciate your time during what is undoubtedly a busy time of year for all of us in the industry. I wish you all much success for a strong close and an even better 2011.
After peak season, how can you take a fresh look at your business and make improvements for next year? Evaluating the previous season and assessing the performance of your company as a whole is one of the largest challenges coming out of peak, particularly when analyzing the impact something as ‘simple as shipping’ has had on the overall operating plan. But considering the fact that transportation can account for up to 40% of a company’s total annual operations budget, an accurate assessment is essential.
By establishing a formal process to measure post‐peak performance, your company can drive improved results for the year ahead. A thorough review of peak performance includes a taking hard look and asking the right questions of areas all across the business, including:
By establishing a formal process by which post peak performance will be evaluated, your company will be better positioned to drive improved results for the year ahead. So what questions should you ask of each area? Take a closer look by downloading the PDF “Assessing Performance After Peak.”