Closing Gaps in eCommerce Returns Through Centralized Management

Managing returns efficiently has become an essential component of success in eCommerce and omni-channel retailing. According to CBRE, up to $70.5 billion worth of product purchased during the 2020 U.S. holiday season is expected to be returned. This creates a huge stress on supply chains already maxed out by continued eCommerce growth.

Retailers should, of course, take steps to minimize returns where possible. Ensuring online product descriptions are accurate, continually improving the accuracy of order fulfillment processes and developing packaging that minimizes the risk of damage during shipment can all have a positive impact on return rates. But in eCommerce and omni-channel retailing, returns are not only part of the cost of doing business, they play an important role in enabling customer loyalty and growth.

An analysis of the impact of return policies on retail sales published in the Journal of Retailing found that, “overall, leniency increases purchase more than return.” In addition, making returns easy for consumers can promote customer loyalty—the lifeblood of retail. According to a survey conducted by Narvar in 2020, 76% of first-time customers who had an “easy” or “very easy” returns experience said they would shop with that retailer again.

The challenge retailers face is managing resources across outbound and inbound processes amid growth in both. Without the resources to manage both effectively, the natural tendency is to prioritize outbound orders. That can result in delays in returns processing, reducing the value of returned goods, compromising the brand image and eroding customer loyalty.

Shifting to a centralized returns management strategy can ensure the necessary resources and expertise are available to protect the brand image, enhance customer service and maximize the value of the returned product.

Brand Protection

One of the most important steps in the returns process is the inspection of returned goods to determine whether they can be re-sold. When returns processes aren’t centralized, it can be difficult to ensure consistency in how goods are inspected across multiple sites. It can also make it more difficult to manage the disposition of damaged or unsaleable goods in ways that protect the brand image and promote sustainability objectives through product and packaging waste recycling wherever possible.

Centralized returns management helps ensure consistency in the inspection process and facilitates the execution of brand-sensitive and sustainable disposition processes.

Customer Satisfaction

The most valuable asset a retailer has is consumer trust. Lose that and consumers will almost certainly shift their loyalties to competitors. Waiting too long for refunds on returned goods due to lack of resources can erode trust and diminish consumer loyalty.

With a centralized approach to returns management, returns get processed quickly and the risk of large queues of returned product forming as a consumer awaits confirmation that their return has been accepted is eliminated. Consumers get their refunds fast and instead of losing confidence, they gain trust in the brand and are more likely to become repeat customers.

Maximize Value

One of the most important metrics for any returns management program is the percent of returned product that can be resold as new through existing channels or via eCommerce partners such as TROVE.

The goal is to maximize the product value while ensuring brand standards for quality aren’t compromised. Consistent inspection by trained personnel can help increase the percentage of products that can be resold. In addition, having the resources to prevent a backlog of returns following peak periods ensures product is returned to inventory quickly when its value is highest.

Thirty-seven percent of consumers said it was easier to return an online purchase at the retailer’s brick-and-mortar location than to have to ship it.

Clearly, including drop-off options as an alternative to return shipping can be a valuable addition to an omni-channel retailer’s return policy. But this also significantly increases the complexity of returns management as stores are often not in a position to put returned items directly into store inventory.

A centralized approach to returns management can consolidate returns dropped off and shipped while also integrating store pullbacks into the return inventory. This creates a consolidated return inventory that can more effectively support higher margin resale through the established eCommerce channel rather than having to, for example, liquidate store pullbacks through a discounter.

Retailers face multiple barriers in establishing a purpose-built returns storage solution that enables them to maximize the value of returns, including costs, available floor space, and system challenges.

DHL Supply Chain has the scale and expertise to efficiently establish and operate centralized returns management. Working with a large retailer across two regional return centers, DHL processed 4.6 million returns in 2020—a 20% increase from the previous year—of which 42.5% were returned through stores.

To maximize returned product value, particularly those that have never been opened, we now provide direct-to-consumer fulfillment through the return centers, fulfilling orders from several platforms to achieve an 87% recover rate.

Partnering with DHL Supply Chain

As eCommerce continues to grow, more retailers have discovered the value of outsourcing order fulfillment to experienced third-party logistics specialists such as DHL Supply Chain. Working with DHL Supply Chain has enabled retailers with growing eCommerce channels to minimize complexity, remove capacity constraints and improve service levels.

These same opportunities exist with returns. By transitioning to centralized returns management through DHL Supply Chain, retailers can free up resources to focus on core functions while managing returns in a way that supports sustained eCommerce growth.

To learn more about how DHL Supply Chain is rethinking the marketplace supply chain, visit http://app.supplychain.dhl.com/e/er?s=1897772577&lid=7347.

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