Gaining return on returns: A retail imperative

By Ramsey Mansour, pr@ups.com

The retail industry has undergone significant changes over the past 18 months, some of which were temporary and many that are here to stay. One trend that continues to grow and evolve is the popularity of online and mobile shopping. Consumer empowerment enabled by technology has reached new levels and the retail industry will likely transform as a result. Last year, online sales grew to $32 billion with 60% of consumers purchasing their gifts online, according to comScore.

Along with those robust sales, there are returns. According to Consumer Reports, nearly 20% of shoppers plan to return at least one gift. Those retailers that make the best of incoming shoppers and handle customers with care can drive new revenue opportunities and build brand loyalty.

A study by Forrester Research showed that more than 80% of consumers are more loyal to online retailers with a generous returns policy. But if the returns process is a hassle, 73% of consumers said they are less likely to buy from that retailer in the future.

While most retailers understand that a convenient returns process is an asset in creating a loyal customer base and driving repeat sales, many are focused on cost. With oil prices rising, and drivers paying more at the pump, it’s understandable that consumers are watching their wallets. That’s forcing retailers to find more efficient and cost-effective supply chains. The good news is that retailers can offer a competitive returns policy while protecting – and possibly even growing – the bottom line.

The key to keeping costs in check and gaining a real return on the returns process is to assess the supply chain as a whole and identify opportunities for greater efficiency.

Here are some key tips for retailers to gain a competitive advantage:

Think Big Picture: Examine the entire supply chain to identify savings opportunities. Third parties such as UPS can work with retailers to perform a comprehensive supply chain analysis and map out the ideal returns strategy.

Location, Location, Location: Costs can creep into the returns process when facilities are located too far from customers. Many retailers benefit from a central distribution location or a model that includes multiple distribution facilities to cut down on shipping costs. This strategy also leads to faster customer service.

Keep It Simple: Customer convenience is paramount. Options such as pre-printed return labels on outgoing shipments and web-based returns simplify the process by allowing customers to instantly access and print return labels with the click of a mouse.

Track it Forward – and Back: Visibility is also critical. Customers want to know where their packages are at all times. Smart retailers should invest in technologies that allow customers to easily make purchases and track packages until delivery. 

Third-Party Logistics: Partnering with a third-party logistic provider can have a tremendous impact on speed, flexibility and cost. Corporations such as UPS have extensive networks of global distribution facilities. And for many Internet retailers, UPS offers returns processing in the same facility, further driving down costs.

Knowing where to focus when it comes to returns gives retailers an advantage in terms of improving the customer experience while keeping costs down and carving out a marketplace advantage. That’s gaining a real return on returns.

Ramsey Mansour is the director of retail and consumer goods marketing at the UPS headquarters in Atlanta. He can be reached at pr@ups.com.