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Return to sender

Written by Liz Morrell
07/10/11

If they thought organising deliveries was a headache, then the ambition of a smooth running online reverse logistics operation is enough to send even the most seasoned retailer to bed with a migraine. Although delivery propositions have moved, in most cases returns policies still lag far behind. “It’s something retailers have to sort out but a lot of them aren’t and for many retailers it’s just an afterthought,” says Mark Hewitt, CEO at iforce.
He believes part of the problem is
structure. “Even in some of the big retailers if you asked who did returns they wouldn’t be able to tell you but at the likes of John Lewis and Tesco there is someone senior with responsibility for returns.”
But it is a problem that will continue to escalate unless retailers invest the time, systems and businesses processes they
need to not only minimise their handling and losses from returns but to reduce the incidence of returns in the first place. Returns should no longer simply be treated as product to be written off, but a channel to make efficiencies in and to maximise the volume and value of product it as retailer can resell.
“Customers need to know there is an easily executed returns strategy,” says Iain Beveridge, vice president of operations at GSI Commerce International. If there isn’t then retailers may mistakenly think they have a controllable amount of returns, but it may simply be that their customers aren’t ordering as much as they potentially might.
For those goods returned through stores the same returns patterns and policies of the past generally apply but the
challenge of dealing with online reverse logistics is a heftier one.
Greater challenges
Some returns of goods bought online will be made through the store and in truth retailers will encourage this because it gives the customer the opportunity to exchange or source an alternative there and then, increasing retailers’ conversion rates. However, such a seemingly simple initiative relies heavily on systems.
Many customers, however, will send their online purchases back through the same route it was delivered however. Courier services play their part – especially with lifestyle couriers who work for themselves and so are a little more flexible in their timings. A similar option, more suited to high value products, are doorstep exchanges.
UPS tested its Swap Service in Europe last year (known as UPS Returns Exchange in the US). It allows a UPS driver to pick up an item for return while simultaneously delivering a replacement item and will officially launch in October.
“The driver then packs the product to be returned, scans the shipping label and takes the package for delivery back to the product provider,” says a spokeswoman for UPS.
Not only does the service eliminate a return leg of the returns process it also creates a more positive customer experience
with a brand. Similarly DHL has a Collect & Return service for technology retailers.
Self-service returns portals are also increasing in popularity. DHL uses a web based propriertory application – the Express Logistics Platform (ELP) which ensures full end to end visibility
of transport flows between multiple parties by way of a single dedicated e-commerce platform.
The customer’s call centre will access ELP to arrange the booking, the designated repair vendor has access to anticipate inward shipments and plan workflows and DHL Express has access to manage courier movements and prepare the paperwork for reverse flows,” says David Paisley-Smith, director of industry sales international at DHL Express UK.
But Collect+, which allows customers to send returns through a network of over 3,500 corner shops, rail stations and petrol forecourts says that, as with deliveries, a suite of returns options will increasingly become popular.
“It’s about being able to offer a choice of returns whether that’s through store, courier or through convenient routes like ours,” says Matthew Jacques, client development director at Collect+.
For some retailers returns labels are inserted with the goods. Others operate through a personalised webpage option. Other customers yet are integrating Collect+ barcodes on to dispatch notes. “The really clever ones are putting their customer detail on their barcode so that you can tell exactly who has sent what back and when. Traditionally you would open the van at the returns warehouse and not know how many parcels were going to be in there.
“Now they know by the minute how many parcels to expect back, but also the more advanced ones can see what has been sent back so there is an opportunity to refund earlier or to do marketing communications for example saying sorry the product wasn’t quite right,” says Jacques of Collect+.

Returns abuse
Retailers are increasingly tracking returns to cut down on abuse returns, something GSI is doing for one of its fashion customers. “If the customer wants to return the goods they will contact us for a returns label. We will then give them a tracking number and they drop if off the Post Office,” says Beveridge. However, he says so far there has been little difference in loss rates between a tracked and untracked service.
Retailers have to have policies on whether to refund
before goods are returned and to ensure their customer
service teams also comply. “Companies occasionally ship
replacement items without getting a return from the customer. It’s estimated up to 20 per cent of returns don’t arrive aback at the distribution centre which can mean a loss in profitability,” says Paisley-Smith.
At Amazon if goods are not received after 30 days the
customer is automatically billed again for another item because the system stores the credit card details “This policy is clearly stated and is a very good deterrent to eliminate abuse,” says Pascal Durdu, director of innovation at Zetes.
Monitoring is vital. “Retailers run the risk of customers
abusing the returns systems by keeping the item and returning a counterfeit which is a growing problem for high value retailers to manage or by ordering a duplicate new item and trying to return the old worn one so retailers need to monitor purchase history and be aware of possible misuse,” says Durdu.
He says retailers should consider the benefits of RFID in beating such abuse.
Retailers have to place more importance on their returns processes. “Returns are integral to the business model and the trick is to exploit the opportunity it brings. For example if early in the season you see lots of returns of a particular item you can see they aren’t working. It’s about being on the ball and learning everything you can from this part of the business model we call returns,” says Beveridge.
Shaun Buckley, customer services home delivery operations
at Argos, says it is vital to a good customer proposition. The company allows returns to store but also has a seven days a week contact centre that will arrange free collection of larger items from customers’ homes:
“Retailers need to ensure that the returns process is trouble free and simple, giving a quick refund where appropriate. Multichannel retailers have an advantage over online exclusive retailers because they can also help customers in-store,”
he says.
Whichever returns model retailers choose, systems are vital. Management of information is crucial for reverse logistics, both for managing returns and for reducing the likelihood of them happening in the first place.
“For example an average customer will buy clothing in two different sizes as they aren’t sure what will fit them. If online retailers can improve this by offering front end information on sizing and measuring or in the case of the tech market if they can offer a really accurate portrayal of the product with detailed spec, you can significantly reduce the amount of returns,” says Paisley-Smith.
Retailers can no longer afford for returns to simply be
an afterthought because a bad aftersales experience will affect their brand and while the goods may return their customers may not.



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