Following what is expected to be a record-setting holiday season for online sales and residential deliveries, retailers and eCommerce players are going to need a powerful multi-carrier management solution to help them process what is bound to be an equally busy returns season.
The 2020 U.S. Ecommerce Market Report from Digital Commerce 360 shows that eCommerce will top out at 40 percent growth for the year. And more traditional brick-and-mortar retail chains are leading the charge in online sales as North American retail chains will end the year with 76.8 percent growth in eCommerce, passing the $330 billion mark in online sales.
Just this holiday season alone, the National Retail Federation estimates that online sales could increase as much as 30 percent to $218.4 billion, up from 2019’s $168.7 billion.
Rising returns cost retailers
However, like a boomerang, many of those packages that were sent out for the holidays are bound to return to sender at record numbers.
Online purchases can have three times the return rate of brick-and-mortar purchases, mainly due to consumers’ inability to try products, ask associates for help, and browse products in the same way they can when shopping in-store.
Salesforce projects that there will be around $280 billion worth of returns this holiday season globally, with about $55 billion in the U.S. alone. And, returns can be costly. Retailers paid an average of $10 per return even before the pandemic.
Adding weight to the returns problem is, well, weight. Oversized and bulky purchases tend to have a lower return rate than more portable items such as apparel, hovering around 10 percent. However, as online sales of furniture and other bulky items have accelerated during the current crisis and holiday season, experts expect “the mother of all returns seasons for heavy goods” after the holidays.
Managing large and small item return shipments will be essential to maintain profit margins for retailers during the holiday season. Shipping costs are higher due to peak carrier surcharges, combined COVID-19 and holiday-induced carrier capacity crunch, and customers’ continuing expectation of low-cost or free returns.
According to a survey done by Commerce Next, the top consumer-related concern of retailers for the holiday season, cited by 63 percent of respondents, was their expectation that consumers will demand fast, free shipping at the same time that third-party shippers plan to charge peak-season surcharges. And retailers had good reason to be concerned with consumer demand for free shipping. Of consumers that responded to the same survey, 83 percent said that free shipping is the promotion most likely to appeal to them this year, which is consistent with pre-pandemic holiday trends, the survey stated.
Multi-carrier management solutions help manage returns
To help offset these costs, retail and e-tail logistics professionals will have to manage their shipping costs both when initially sending items and when they are on the way back.
Here are three ways to help keep returns from taking too big of a bite out of holiday sales.
- Encourage Exchanges: Offer free return shipping only for purchases over a certain amount, such as $50 or $75, as many do with initial free shipping thresholds. Another way to keep customers who want a liberal and cost-effective returns policy happy while keeping costs in line, is to provide free return shipping for exchanges or store credit, while charging for shipping on refund requests.
- Pack with Purpose: Items returned due to damage top the list for consumers’ reasons for sending an item back. According to SaleCycle, 80 percent of consumers surveyed said they returned a product due to damage, outdistancing the second-placed reason of the purchase not matching the description by 16 percent. In the consumers’ eyes, it is up to the retailer to provide accurate descriptions and get the product there in one piece. The right multi-carrier management solution can help retailers pack shipments efficiently in boxes that aren’t too big or small for the items. Proper packing not only reduces costs on shipping from surcharges and dimensional weight (DIM) fees, it also helps cut down on damage and reduces waste at the same time.
- Reduce Returns Resources: Automating eCommerce returns, such as with the Transtream Returns Widget, can save time and effort. From notification about the placed return request to printing the label to allow them to track the returned item, automation will speed the process and reduce labor costs on your side and frustration on the customer’s side.
With consumers expected to keep buying online in growing numbers, returns are bound to bulge as well. Managing the returns process with a multi-carrier management solution such as Transtream, can help mitigate costs.