Returns Day: Holiday Hangover ??

2023 Holiday Shopping?

In the wake of the holiday season, retailers are grappling with the repercussions of elevated online return rates in early January. This costly ‘holiday hangover’ has become expected by retailers annually.???

What we know:?

• According to a Mastercard SpendingPulse report, U.S. retail sales grew 3.1% between November 1 and December 24 in 2023, versus the same period in 2022

• Online sales were up +6.3% and in-store sales were up +2.2% during this period vs the same period in 2022?

• More than 15% of the $966 billion in purchases nationwide this past holiday season will be returned, the National Retail Federation estimates. Most of these returns will occur in early January?

Returns generate extensive logistics costs, stemming from transportation, handling, and restocking. The complexity of inspecting returned goods to decide their resale viability only adds to these expenses. Furthermore, the environmental toll is considerable, with the return process contributing to excess carbon emissions and landfill waste, emphasizing the unsustainable cycle of online consumerism and returns.

The Cost of Returns?

Around 30% of online orders are returned, compared to 9% for items purchased in-store. Much of this gap is due to the inability of consumers to see, feel, and temporarily experience many of the goods they purchase online. And during the holidays, return rates are likely higher due to a natural disconnect between what gift recipients want and what gift givers give them.

Returns cause major headaches for retailers and their logistics partners as they are costly and difficult to orchestrate. Even some of the biggest retailers in the world now see rampant returns as an existential threat, says the Atlantic. Shoppers are expected to return $173 billion worth of holiday purchases in the U.S. for this past holiday season.?

Getting the returns process right and giving consumers a returns process worth coming back for is difficult for retailers. Online returns are costly, estimated to account for 60% of the sale price of a standard $50 order. Many times, merchandise must be written off and discarded, and there are more cases of fraudulent returns, where consumers are sending the wrong items back or items that have been worn repeatedly. Fifty-seven percent of retailers claim that dealing with returns has a negative impact on their business, while 20% would increase the price of their products to make up for the cost of processing returns. The timeliness, orchestration, and customer service are each pain points of the returns process that retailers must solve for.?

How can technology solve reverse logistics challenges??

The solution to the online returns conundrum lies in innovative technology and enhanced partnerships between shippers, logistics providers, and tech-enabled platforms. A perfect solution can offer free, fast, flexible, and sustainable returns to consumers and low-cost, resource-light processes for retailers, ensuring both parties are satisfied. Here are a few reverse logistics features that last-mile delivery platforms include to improve returns experiences and reduce costs:

• Returns Management DashboardA portal and dashboard for retail operations teams to create return requests, view existing returns, and track their progress.
• Self-service Page for ConsumersA branded, self-service page for consumers to initiate single or multiple-item returns. This is embedded directly into a retailer’s website or mobile app.
• API Capabilities?API can initiate returns as well as fetch catalog/order details from retailers. APIs stack to be shared with and communicated between retailer and consumer.?
• Return Policy Configuration?Retailers can dynamically configure return policies to govern what returns will be allowed based on conditional variables such as SKU, SKU category, etc.
• Consumer Pickup Slot SelectionConsumers can select the desired pickup location, date and time.
• Drop-off Location SelectionConsumers can elect to drop off the return at a carrier drop-off location or retail store that’s most convenient for them.
• Label and QR Code Generation?Retailers can generate a QR code that immediately identifies consumer returns at the carrier drop-off location or to the service executive at the door.
• Automated Route PlanningFor logistics carriers or retailers with their own fleets, reverse logistics software can select the most optimal route, accounting for forward logistics delivery vehicles with available capacity.?
• Automated Carrier Selection For PickupReturn pickups from consumers’ homes have the best carrier assigned based on retailer criteria for speed, cost, emissions, etc.
• Doorstep And On-receipt Quality ProcessingQuality checks can be done by the service executive upon receipt, enabling faster processing times.?
• Refund Processing Communication?Quickly inform consumers when their refunds have been processed after they have returned the item.
• Upload Picture of Returned Item?Both consumers and drivers can upload an image as proof of the reason they are returning the item.
• Embed Into the Retail Webpage or Mobile App?Reverse logistics software is often built with I-frame capability and can be embedded directly into a retailer’s website or mobile application.

How FarEye is Transforming Returns?

FarEye’s delivery management technology is transforming reverse logistics for shippers and carriers alike.?

Shippers?

FarEye works with shippers to remove the cost and difficulty associated with online returns logistics. There are two major levers we can pull to help accomplish this. First, we reduce the number of online returns made in the first place by improving delivery information at the time of checkout as well as while orders are enroute, thus reducing or eliminating the chance that the delivery process itself will cause a return. This is especially an issue with white glove delivery, where inconvenient delivery windows or late deliveries can prompt a return. Secondly, knowing that returns cannot be entirely eliminated, we work with retailers to streamline and optimize their reverse logistics processes. We enable shippers to more easily and effectively communicate with their customers regarding returns, allowing for easy refunds and fast payment processing. Our technology allows shippers to better integrate with a wide variety of carriers to match return demand with available capacity, reducing costs and time needed to complete returns altogether.?

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Carriers?

FarEye enables logistics companies to add revenue and optimize reverse logistics through a value-added service like "returns pickup and delivery." By integrating route optimization technology into both forward and reverse hauls, carriers ensure efficient use of resources and open up excess capacity for unexpected reverse logistics. Data analytics aids in refining the reverse logistics network, improving decision-making, and boosting efficiencies. Reverse logistics services, underpinned by advanced technology, can transform the returns process from an operational headache into a viable source of revenue.?

One European-based 4PL now offers a complete reverse logistics solution to its customers, whereas previously it was only able to offer forward logistics. FarEye has partnered with the company to help create a returns offering and optimize its reverse logistics processes.