ANY RETURNS PROCESS NEEDS TO BE AS SIMPLE AND CONVENIENT AS POSSIBLE. BUT THAT NEED FOR SIMPLICITY REQUIRES SOPHISTICATED LOGISTICS. CHRISTIAN ANNESLEY LOOKS AT DEVELOPMENTS
Question: What’s driving the evolution and expansion of returns options for customers?
Answer: the need for convenience, simplicity and efficiency. Too glib? Maybe. But the logistics companies and retailers know that keeping things simple lies at the heart of the best returns processes. “A return should be a kitchen-table experience,” says Andy Hill, sales director for corner-shop courier network CollectPlus . “You take a parcel from the delivery person and decide at the kitchen table whether to keep it.
And ideally you should have everything you need to enable the return right there and then. The more you ask a customer to do for a return, the less likely they are to buy again.” Most in the industry would recognise the ideal set out by Hill, but what’s happening is that behind that vision we find more and more sophistication and process options being developed and rolled out – and all to deliver the right kind of customer convenience for as many as possible, plus the turnaround speed on unwanted items that retailers want.
The point is perhaps best illustrated by the multi-country online fashion retailer ASOS , which has collected together the full array of returns options for customers in most of the markets it serves, as it bids to compete with the convenience offered by its bricks-andmortar rivals.
“ A return should be a kitchen-table experience. You take a parcel to the kitchen table and decide. If it’s going back you should have what you need ”
Robert Muldoon, EU delivery solutions manager at ASOS, says the purpose of offering a broad range of return options is to remove any barriers to participation from those who might otherwise remain reticent about shopping online. “And there is plenty that is potentially a barrier, from making customers pay to
anything that is too complicated or slow or inconvenient,” he says. ASOS looks to have most of the bases covered these days: it offers returns that are free and trackable, plus return options that include doorstep pick-up, CollectPlus returns via a local convenience store, and standard Royal Mail returns.
“The majority of customers still prefer to use Royal Mail, but we are seeing a steady increase in customers using CollectPlus and our doorstep collection,” says Muldoon. ASOS brought in CollectPlus for returns more than two years ago. The fashion site has been analysing the data and the marketplace ever since and expects further change in 2013. “Usage of the CollectPlus service is increasing slowly, but partly that’s an awareness thing. Royal Mail is also responding to the need for longer opening hours and looking at making some of its services available at supermarket tills.
Added to that, new players are due to enter the convenience market, like UPS and Hermes, which will improve public knowledge about returns options – and our recent roll-out of the Click and CollectPlus service, which means deliveries go to the CollectPlus network for customer pick-up, means more and more customers are getting comfortable with convenience stores as a transaction point.”
READY FOR RESALE
But managing returns isn’t just about the customer. The other crucial factor driving the need for speed is so that stock can be resold. Home shopping specialist Shop Direct Group [irdx RSDG], with brands including Littlewoods and Very.co.uk, has just opened a state-of-the-art returns site in Oldham which implements its learnings over many decades in distance-selling returns. Chris Haighton, head of retail logistics for Shop Direct, says fashion return rates for the company can sometimes hit 60%, making the need to process and return items to stock very quickly and efficiently for resale an imperative. “Our high sales volumes mean we have literally millions of items a year coming back to us, and well over 90% of items get checked over and go straight back into stock. Speed is crucial – 60% of items are resold within a day – and we actually have lower returns rates on those returned items that are resold, because our experienced staff check items over when repack them, so they have benefited from having an expert eye on them.”
Shop Direct trades on a credit basis with most customers, so the imperative to process a refund quickly isn’t there in quite the same way, but Haighton says a quick turnaround is still important for customer confidence and for the fact that sometimes expensive items can take customers near to their credit limit, which can stop them from shopping again until the return is processed. “For customers, we want to deliver speed and efficiency, but we also want to minimise returns because the costs involved impact on profitability. So we spend a lot of time analysing the reasons for returns and making what adjustments we can to stop goods coming back,” says Haighton.
Sizing is one part of that equation, and the variations in sizings between brands means that Shop Direct has to work hard at this side of things. It also puts a lot of effort into ensuring product descriptions and images are consistent, since its department-store style offering, with a mix of brands on sale, means there is potentially lots of variation in the marketing collateral it receives from suppliers.
Shop Direct is also another that is offering multiple return channels for customers, with CollectPlus in the mix alongside post-office counter returns and other delivery company options.
ANALYSE AND LEARN
The significance of speedy resale in the returns equation is also emphasized by the third-party logistics company Amethyst, which operates shared-use warehousing across six UK distribution centres. Claire Muir, business development manager for Amethyst, says that while different companies will have different returns performance measures in place, the common factor is speed and accuracy, driven by the need to process customer refunds and by the need to resell stock quickly. “In fact, some companies will have two service-level agreements with a logistics provider like us,” explains Muir. “One will cover the refund service-level and one the back-in-stock variables.” “ One area retailers tend to be too concerned about is fraud ” And while it’s tempting to focus on the latest technologies and techniques in returns logistics, the experience of staff in garment-checking and garment processing still counts for a lot in terms of warehouse performance.
“If that’s one area that retailers might sometimes overlook, there are, conversely, other areas that they tend to be too concerned about, such as fraud,” adds Muir. “Amethyst works with many retailers, so we at least have the data that can show just how rare fraud and malicious activity really is. It’s a great help, because when it comes to returns what you hope for is an informed discussion with a retail partner about the issues that really count.”
SPEAKING FROM PRACTICE
“Convenience for the customer is driving change. Most retailers are focused on making returns easy and flexible, with a quick turnaround in the warehouse to enable a speedy refund. For retailers, accommodating the challenge of international fulfilment is a crucial issue. UK retailers are great at product, and are leaders in ecommerce, but to make the most of that competitive advantage they need to sell more overseas, with all the logistics and regulatory and cultural challenges that creates. It’s not easy but it cannot be avoided.” Andy Hill, sales director, CollectPlus
TRUSTING THE CUSTOMER
“One change we are seeing at Amethyst is more and more retailers choosing increasingly to trust the customer in relation to returns, and if that continues it could have a substantial impact on returns logistics. Trusting the customer means being prepared to process a return and a refund before the item has been received and logged. The logic is that malicious activity in returns is proportionally very small and the benefit generated in terms of goodwill and the further sales that materialise when you process a return immediately outweighs any negative impact.” Claire Muir, business development manager, Amethyst Group
SPEED SUITS ALL
“It’s all about choice and efficiency now. Just as delivery options have expanded, so returns options are moving in the same direction. It gives customers more to choose from and maximises the chances of a fast returns process, which suits the customer and the retailer. The customer gets a speedy refund and is happy to buy again, and the retailer benefits from an the item that is back in stock and ready for resale very quickly.
That’s what you want.” Rob Gittins, UK sales director, Palletways
CHOICE IS GOOD
“With returns I think everyone is learning that the more options you have the better, to cope with every eventuality. A service like Shutl, which can do an instant pick-up using a local courier network, is only rarely needed, but it can occasionally be the perfect way to appease an aggrieved customer where a return is required because of a particularly bad error – or if there is a real urgency to the pick-up for some other reason.” Tom Allason, chief executive, Shutl [irdx VSHT]