Andrew TavenerAndrew TavenerMarch 20, 2018
online-3217733_960_7201.jpg

8min429

Online retailing has expanded rapidly; the growth of the internet and advancements in delivery capabilities have seen many small businesses take advantage of this, selling through online marketplaces to maximise their reach.

These global marketplaces are predicted to own 39 percent of the online retail market by 2020. On the surface, this approach is perfect for consumers who can easily shop from their favourite retailers all in one place. However, underneath, retailers are faced with the difficult and sizeable task of managing the deliveries and returns efficiently and at a low cost.

For while more marketplace exposure means more sales, it also equals more returns; made even more complex by the requirement to offer the return policies designed by the marketplaces. For example, Amazon now requires third-party sellers to accept “automatically authorised returns”.

This means retailers must accept returns without having any direct contact with the customer, exactly when many businesses try to resolve customer issues to preclude returns. There are, however, ways to improve the control of online returns in the face of changing customer expectations and marketplace practices, which are critical in this competitive environment.

Understanding how best to manage product returns to reduce costs and maximise efficiency is key. Here are four strategies online retailers can use to tighten the returns process:

Return policies must be a forethought

Marketplace policy changes give retailers the opportunity to rethink how they handle returns. According to recent research from Royal Mail, nearly half of shoppers (47 percent) said they would be unlikely to shop with a retailer again if it charged for returns, and 60 percent would be less likely to shop with them again following a difficult returns experience.

Clearly a well thought-out returns policy is critical to good customer relations. Sellers need to decide whether to offer one return policy – for example, Amazon’s – or different policies for each marketplace/channel or for various product offerings (for example: low-end versus high-end).

Some businesses set policies based on the most generous marketplace policy. If sellers choose an ‘Amazon-style’ return policy with instant returns and free shipping, this can be promoted up front as part of a company’s brand. Unmistakably, a simple online returns process helps drive sales and cement customer loyalty – and overlooking the impact of a poorly considered returns opportunity can be costly.

A free returns policy might not always work

Returns can have a big financial impact on profits. Depending on the industry, return rates can be very low or very high. Book and video returns can run two/three percent, while clothing and jewellery can run upwards of 30 percent. Companies should right-size return policies based on industry standards and actual return rates.

Businesses with healthy profit margins can build the cost of returns into a product’s price. Charging restocking fees or not accepting online returns is less common but, for certain products or industries, it makes financial sense. For example, companies selling new laptops might find a restocking fee may be the only way to support thin margins. Likewise, for clothing subscription services a restocking fee for returns makes sense, since the items are essentially specifically tailored for an individual.

Evaluating whether the return policy of a particular marketplace works is therefore a critical part of the business decision to sign up to the marketplace in the first instance.

Sellers should right-size returns automation based on business needs

Retailers with high return rates may need a great deal of automation. Small businesses with fewer returns can often manage them in-house using cloud-based shipping solutions that simplify printing, or electronically creating return postage labels that customers print themselves. Barcodes on labels quickly identify customer records and product numbers to speed the return process, cut down on errors, and save time.

Integrating with internal systems is important for large retail operations with high return volumes. Returned packages sitting on the warehouse floor cannot be effectively put back into stock without the right system in place. Connectivity must flow from the customer to the warehouse to the shipper into marketing, sales, and accounting.

For companies with few internal fulfilment resources, a third-party processing service can help. Merchants need to weigh the benefit versus the cost of using fulfilment and returns processing by marketplaces or third-parties. Another way to manage returns if there aren’t in-house resources is to monetise returns by sending returned merchandise directly to a reverse logistics partner that liquidates inventory.

Returns cut into profits so minimising them is important

Good customer service helps avoid unnecessary returns by solving a customer’s problem with support, rapidly replacing missing/damaged items, or making exchanges. However, heading off an unnecessary return is hard when marketplaces allow automated returns with no merchant contact.

To combat this, sellers should use ‘scan-based’ return labels when possible. With these labels, the retailer is only charged if the label is used. Some retailers report that 10 percent or more of the requested returns are never actually sent in, making scan based return labels an instant money saver.

Providing customers with current, accurate product information is also important. By connecting ecommerce marketplaces to internal order status, pricing, and inventory processes, customers know if a product is in stock and when it will ship. Detailed product descriptions and quality images help to avoid misunderstandings. Customer feedback/review functions provide even more information to support making the right choice.

Finally, it’s useful to track which products are returned and why. Develop a ‘reason for returns’ report by manufacturer and SKU. This allows vendors to troubleshoot and avoid future returns.

Changes in return policies by Amazon and other marketplaces are an opportunity for ecommerce businesses to take charge of returns. Online sellers can use this as a chance to create better customer communication and loyalty, whilst addressing how returns affect the bottom line and streamline logistics.

 


Andrew TavenerAndrew TavenerMarch 12, 2018
money-3205560_960_7201.jpg

6min356

During Christmas, £17billion worth of goods are said to have been bought online alone, with an expectation for £2.5billion worth of returns to come back.

With retailers and suppliers feeling increasing pressure to fine-tune their logistics and supply chain strategies in order to cope with these levels of orders, and a drastic growth in returns, retailers are under intense financial pressure to get shipments right. Every, single, time!

As a result, to get the level of performance they need from their suppliers, these retailers are increasingly turning to chargebacks. Chargebacks are fees that a retailer charges a supplier for errors as a result of not following business guidelines.

As such, they are a way for retailers to offset the additional expenses incurred if suppliers are non-compliant. Indeed, major retailers globally have been imposing much tighter controls on suppliers in the recent years to help speed up their supply chain. This squeeze on suppliers is seen in fees for late shipments, wrong bills of lading, incorrect labelling or invalid Advance Ship Notices, and many other seemingly small mistakes that can make a big impact. For some retailers, chargeback fines make up as much as 13 percent of their account revenue.

While compliance is a must, suppliers still fail to provide retailers with accurate, timely, and complete information for a number of reasons. These may include differing compliance requirements per retailer; the sheer number of protocols and systems that need to work together successfully; the number of retail trading partners a supplier deals with on a daily basis; and the overall varying IT capabilities of businesses. With all of these factors combined, there are seemingly an infinite amount of issues that can trigger a chargeback, especially during peak seasons or events.

Getting vendor compliance right will have a positive impact on the bottom line. For many suppliers the only true way to overcome the looming risk of chargebacks is to think long term and put an effective programme in place to manage against them. This should identify what triggered a chargeback, how it was calculated, and a way of indicating that a problem has occurred before the penalty is even received.

Here are seven best practices suppliers can build into a chargeback programme to successfully meet retail vendor compliance expectations:

Know the cost: Suppliers should be aware of the cost of chargebacks and ensure that chargebacks are properly detailed in their accounts to assess the true scale of the problem. In this case, what you don’t know can truly hurt you.

Grasp the details: Having insight into individual chargeback information that includes where and when a chargeback occurred and under what circumstances is critical for reducing the chargeback risk. Errors can be missing, incorrect, or non-scannable shipping labels; unauthorised product substitutions; incorrect shipping location or using the wrong shipping provider. Keeping detailed information on file will make it easier to catch small issues that could turn into something larger in the future.

Get the bigger picture: Use tools that can analyse and review larger chargeback trends at a dashboard level. While there is much to learn in the finer details, technology can help automate the process, helping you to find repetitive tendencies that may have previously gone unnoticed.

Understand retailers’ requirements: The truth is every retailer’s requirements are different. It is important to make sure you are clear on each and every one’s specific rules and act upon this knowledge by implementing systems that can keep pace with a broad range of retailer trading partner business rules.

Revisit requirements: It’s good practice to revisit requirements at least annually to keep chargebacks at a minimum over time and break the chargeback cycle. With chargebacks becoming more prominent, retailers’ requirements can change over time with little to no communication.

Chase up or refute chargebacks: Should a penalty be improperly applied, suppliers should arm themselves with information to support a change. The more detail you have, the better off you are in the event of a disagreement.

Invest in automation: Automation can help your business to seamlessly connect to trading partners, rapidly on board new retail customers, identify problems by exception and minimise the use of IT bandwidth. All of these items help to minimise chargebacks in one way or other.

As online shopping and return volumes grow, so do consumer expectations for products to be on the shelf or in the warehouse ready to ship at a moment’s notice. Chargebacks make for a strong incentive for suppliers to keep all the key aspects of their relationship with the retailer in check. However, even though chargebacks are common, there is no reason a supplier should suffer extensively from them.

Getting communication right can drive chargeback costs down, but when ‘perfect’ processing doesn’t go perfectly, knowing how, why, and where an issue occurred helps to proactively address discrepancies and minimise the time it takes to resolve them.


Andrew TavenerAndrew TavenerNovember 9, 2017
pexels-photo-186613-1024x683.jpg

4min43

Bargain days are growing increasingly popular since the rise of Black Friday and Cyber Monday.

Amazon Prime Day is another that has recently joined the ranks, and its huge success in 2017 has encouraged other retailers, such as PC World, to follow suit with flash sales of free delivery and cheaper prices.

But what effect is this additional strain, previously contained to the Christmas period, having on the supply chain, and can the traditional approach to peak planning withstand the added pressure?

It is expected that bargain days will become increasingly popular over the coming years, with more and more retailers feeling compelled to lower their prices as a result, in a bid to retain customer loyalty while bringing in new business.

But this places a huge strain on the supply chain due to the sheer number of deliveries, the amount of preparation, and the extent of stock management needed for these days to run smoothly.

For retailers to succeed in these changing times and comply with their customers’ evolving needs, they must ensure they have the supply chain infrastructure in place to plan effectively for peak demand generated by sales and marketing campaigns, and to meet the expectations set by them.

In doing so, there’s an intrinsic need to become ever more innovative, flexible and data-driven with the management of expectations for faster delivery and instant stock replenishment. Bargain days can, after all, cause more harm than good if, on the day, stock is not available or can’t be delivered within the allotted delivery time.

Leveraging real time information and real time demand, advanced route optimisation can transform supply chain performance, but this must be as part of joined up, end-to-end operations, taking into account both in-store and online demand.

As peak planning becomes more of a day-to-day consideration than an annual one, warehouse management systems are key to unlocking the flexibility and agility to react swiftly to surges in demand, while reducing error margins and saving costs – ensuring the delivery process meets customer expectations while also proving profitable.

With a clear view across the supply chain, alongside real-time visibility of new orders and existing commitments, retailers can lead the way with next-level customer convenience. For example, with the introduction of unique profitable choices specific to them through a dynamic booking strategy – based on factors such as address, products purchased, delivery network capacity, value added services such as installation, and orders already in the booking system.

Automation is now the only effective route to achieving the level of flexibility and scalability needed to achieve this. From strong interfaces for data exchange, through to stock receipts, cross-docking, over-refilling, pick-pack-ship, local carrier integrations, reverse logistics handling ,and order-status updates along the whole order lifecycle, automated processes via a warehouse management system specifically geared to e-commerce fulfilment are key to this joined up approach.

The result is not only a solution to effectively manage peak times and alleviate the pressure applied by bargain days, but to also instil optimum performance throughout the supply chain day-to-day. Only with the right level of automation in place can retailers run bargain days with the confidence in their operational ability to better manage stock availability, meet customer demand, and ensure profitable order fulfilment.




Inform. Inspire. Include.
A free way to improve your business.

Customer Experience Magazine is the online magazine packed full of industry news, blogs, features, reports, case studies, video bites and international stories all focusing on customer experience.


CONTACT US

CALL US ANYTIME



Contact Information

For article submissions:
Editor
Paul Ainsworth
editorial@cxm.co.uk

For general inquiries, advertising and partnership information:
advertising@cxm.co.uk
Tel: 0207 1932 428

For Masterclass enquiries:
antonija@cxm.co.uk
Tel: 0207 1937 483

Customer Experience Magazine Limited
Acacia Farm, Lower Road,
Royston, Herts, SG8 0EE
Company number: 7511106


Newsletter