GUEST COMMENT Changes to the Consumer Rights Directive have brought a welcome level playing field for retailers

Aimed at bringing consumer rights across Europe into line, the 2014 amends to the EU’s Consumer Rights Directive created a raft of new rules for retailers which may have, at first, created a considerable administrative and financial burden. While some retailers will have already been compliant with several aspects of the new regulations, many others will have had to implement more wholesale changes to their operations and practices.

Yet despite the initial upheaval, implementing measures that protect online shoppers and provide greater transparency and clarity is clearly a positive move, and further to that, bringing retailers across Europe under one standard has created a welcome level playing field and has provided certainty about ‘the rules of engagement’.

In particular, the directive has brought the delivery and returns process for online purchases into sharp focus, namely the obligation to explicitly display the final cost of the goods (including insurance, tax and delivery) before the purchase is finalised; to provide either a free returns service or clear and accessible information about the cost of returns via the postal network; to deliver goods purchased online within a maximum of 30 days unless a specific date is given; and to inform the customer about their right to cancel the purchase within 14 days.

As a third party logistics provider that works closely with major supermarkets and retailers, we know that working to a clear set of regulations on the delivery and returns processes is beneficial to both customers and retailers. However what is also clear to us and our customers is that there is now even greater emphasis on the delivery and returns, which is increasingly complex and challenging, as retailers seek to minimise costs and meet customer expectations.

According to IMRG, over the last 12 months 11.6% of orders have been late or were not delivered. It estimates that the overall cost of online delivery failure to UK retailers will be £473m in 2014. In May, its UK Consumer Home Delivery Survey 2014 found 46% of consumers have abandoned an online basket due to concerns about delivery and while 82% are satisfied with their overall e-retail delivery experience, only 70% are satisfied with their overall returns experience.

Clearly, getting the delivery and returns process right means more than simply avoiding falling foul of the directive and the associated reputational risk of such an error. While a level playing field is one of the most important aspects of a healthy and competitive industry, and a fairly-treated customer, the directive has not necessarily made managing the delivery and returns process any easier.

Those retailers that had pre-empted the directive’s rulings are most likely to be in the strongest position, but with consumer demand changing apace, there is no time to stand still. And this is where third-party logistics providers can add significant value, particularly as a delivery driver is the first and only retail representative a customer will have contact with during the entire online purchase process.

A logistics partner can act as a consultant for retailers, reviewing current transport and logistics management and identifying areas to improve efficiency, drawing on their extensive knowledge and data to which few retailers have access. Working together in this way allows a logistics partner the scope to design a tailor made solution that is able to grow and retract with customer demand.

Another way to reduce the cost of missed delivery is to ensure a seamless click and collect offer. Ultimately customers are looking for certainty and this is possibly one of the key factors in the growing appetite for click and collect. Amazon opened its first ‘bricks and mortar’ store this month in New York in response to the growth of this trend, whilst many major supermarkets are trialling click and collect locations at London Tube stations.

Sharing and using data is also a crucial element of managing the delivery and returns process. Retailers that are prepared to share their returns data will be in a better position to work with their logistics provider to reduce waste and increase efficiencies throughout the process. Access to returns data over the past six months is essential to design a more efficient reverse logistics service.

And when a product is returned, it is important to treat it with as much care as an inbound product, ensuring its speedy progression through the returns process so it can be made ready for resale where possible.

Working collaboratively with other retailers is another way to reduce costs before returns are even incurred. These managed partnerships are becoming increasingly common with companies sharing warehousing and transport space, meaning retailers can keep overheads lower.

Offering flexible home delivery and a re-booking service can also help avoid the need for returns, as every product reaches the end user. However more flexible deliveries puts even greater pressure on back office processes, which need to be operating as accurately and effectively as possible in order to avoid returns arising due to incorrect picking at the warehouse.

Whilst it is possibly too early to know how the Consumer Rights Directive updates have impacted upon the industry, in the long term the objective of the directive is to create a competitive arena that provides certainty of delivery and transparency to customers. This principle is unlikely to change and therefore retailers must be alive to the possibility of further changes as consumer behaviour evolves further still.

Ultimately, we are all striving to continuously improve the delivery and returns process, and those retailers that continue to shape their operations so that they are as flexible, efficient, effective and, above all, as certain as possible will be in the strongest position to meet the demands of future directive updates as well as increase customer satisfaction and market share.

Liam McElroy is managing director, retail, at Wincanton