Empowering E-Commerce Success

Why 2017 is the Best Year Ever to Update Your Returns Strategy

One thing’s for sure: No one likes returns. And I mean no one. They’re costly, they’re a pain for your warehouse and they’re a constant reminder that, no matter how much effort goes into wooing a customer to click ‘buy’, a good sale can always go bad. While retailers are always looking for new ways to reduce the number of returns, experts predict that returns will always be a part of the e-commerce world. As a retailer, you have a number of strategic decisions to make when it comes to handling returns. Do you want to make it easy for customers to complete a return? Or, do you want to make it not-so-easy? Do you want to offer free returns, or should the consumer pay? Should your customers take their goods back to the store, or should they ship them back to the distribution center? How will emerging technology such as drones affect your customer’s return experience? No matter which industry you’re in, there’s a lot to consider when finalizing your company’s returns strategy. And it’s important to get that strategy right because 85% of online shoppers reported that they would not buy again from a merchant after a poor return or exchange experience, according to a study by comScore. So, returns are a big deal, and they’re not going away anytime soon.

In my role at DHL eCommerce, I have the privilege of collaborating with all kinds of businesses, from emerging e-tailers just launching their website, to the largest and most complex e-commerce giants in the world. While each organization views returns a little differently, here are three budget-friendly tips that can save your company up to 50% on returns:

Looking to reduce returns-related shipping costs?
1. Rate-shop multiple returns carriers. For decades, shippers of all sizes have used rate-shopping software to dynamically route outbound packages to certain carriers based on which shipper offered the best combination of service and cost.-While rate-shopping concepts aren’t new on the outbound shipping side, we do find that very few retailers take advantage of rate-shopping strategies on the returns side. If your organization is looking to reduce supply chain costs, there has never been a better time to start rate-shopping returns across multiple providers. As of 2017, all major U.S. shipping companies offer viable returns products so retailers can pick and choose best value on a transactional basis. Whether you rate shop by weight, zone, SKU, service level or all of the above, the possibilities are endless, and the “carve out” approach can mean a big boost to your bottom line. Does rate-shopping returns sound too complicated? It doesn’t have to be. One of the easiest ways to start rate-shopping returns is to split your volume at one pound, using one carrier for > 1 pound and a different carrier for < 1 pound shipments. The reason this works so well is that UPS and FedEx Ground, Mail Innovations, SmartPost, Priority Mail, and others have a 1 pound minimum billable rate, which means all of your lightweight returns are being rounded up to a 1 pound minimum for billing purposes. For some retailers, this rounding up effect adds hundreds of thousands of dollars in costs every year. Many retailers have found that using a lightweight returns service for < 1 pound returns, like our DHL Parcel Return Light solution, can reduce costs up to 50% versus those carriers that enforce a 1 pound minimum billable rate.

2. Ask yourself: Is faster always better? Another cost savings opportunity is to reevaluate the service levels you use for returns. Many retailers provide a 2-day air or Priority Mail return label for customers when sometimes a return doesn’t have to travel that fast. We’ve seen many retailers switch to more budget-friendly ground-based options, such as DHL Parcel Return Ground, to save big while only adding a few extra days in transit. Or, if some SKUs need speed, carve out those orders for a faster service while allowing less critical SKUs to move a bit slower.

3. Consider removing the prepaid return label from the outbound box. There is no easier way for a consumer to return an order than to take a prepaid label out of the box and use it. In fact, about 30% of returns shipped in the U.S. today are shipped using a prepaid stuff-the-box label that was placed with the outbound order. Studies show that providing a stuff-the-box label in the box actually increases the likelihood that a consumer will return an order. In some cases, including a stuff-the-box label is the ideal approach because it fosters consumer loyalty and improves the post-purchase customer experience. But, in other cases, it may be more difficult to justify the R.O.I. of adding a prepaid label, especially when your brand specializes in one-time purchase items or flash sales. Consider removing the prepaid label from the box, or perhaps only insert it for high-dollar orders or VIP customers, in order to reduce your overall returns percentage.

Key takeaway: Using multiple returns carriers can add a new level of flexibility and cost-savings potential to your supply chain. Need help deciding the best carve-out or rate-shopping approach? DHL eCommerce can help by sharing best practices and industry success stories.

At DHL eCommerce, we’re here to support your business, your customers and you in creating a budget-friendly and best-in-class returns strategy. Want to learn more? Simply fill out this form and a member of our DHL eCommerce team will be in touch.

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