18 Jan How to Increase Returns Profitability: Decrease Errors and Update Processes
In the wake of ever-increasing online sales, returns have risen to such a high level that UPS has dubbed January 6th “National Returns Day” in honor of the 1 million packages the logistics company expected to process on that day alone. According to projections, the company predicted a total of 5 million return packages by the end of the first week of January. This volume exceeds last year’s post-holiday return rush by 500,000 packages and points to a growing need for retailers to be able to manage returns without decreasing profitability.
There are two main reasons online shoppers return items, and the first one is that retailers often ship the incorrect item. A recent Voxware survey found that more than half of consumers have returned an item because the retailer sent the incorrect size or color. To decrease returns made due to retailer error, companies should implement technology like Voxware’s Voice Management Suite (VMS), which can increase item selection accuracy to above 99.9%.
The second reason is that online shoppers can’t try on items before purchasing them. A recent JDA survey that found 30% of respondents often buy more than one item in a different size or color while shopping online with the intent to return the item that doesn’t fit—and a UPS comScore study found that they look for free and convenient return policies before even checking out. Among shoppers who review return policies before purchasing them, 82% said that they would be likely to complete a purchase if a retailer included a return label in the box or provided free return shipping.
Retailers that want to capture sales should offer the policies consumers demand, but they must also implement the supply chain infrastructure that increases the profitability of returned items. One way to achieve this goal is to implement predictive analytics software that ties the entire supply chain together. Tools like Voxware’s Intellestra™ can allow fulfillment professionals to more analyze and more fully understand opportunities to reduce the number of returns. Fast and easy access to better data is the key here… and it’s finally available to those fulfillment managers seeking to improve results.
Unfortunately, JDA found that only 16% of CEOs were making a profit on their omnichannel fulfillment, and one factor may be the struggle to meet consumer demands for inexpensive and flexible return options. Companies that modernize the supply chain will have the best opportunity to increase omnichannel fulfillment profitability in the future.