The issue of returns is fast reaching boiling point for retailers and carriers. In our latest research 67% of merchants across European ecommerce markets reported that return rates have increased in the past 12 months, and 63% confirmed that returns are a “significant” or “very significant” problem for their business.
The question is what can the retailers and carriers do to address this, and can embracing technology help them to do so?
Currently for every £794m in sales, retailers incur £131m in returns – understandably bringing reverse logistics to the top of the agenda for many retailers. The costs associated with the ‘traditional’ returns process are complex, including drop off costs, transportation costs, processing costs, and associated re-sale costs.
This year ASOS has attributed £100m loss to just 6% of customers based largely on their returns profile, and the wider market is reacting; we are seeing retail giants like Zara, Next and Boohoo starting to charge return fees. It’s likely that others will follow suit.
As a result, carriers are also prioritising the returns process. DPD’s head of pickup Tim Davies recently stated that as a carrier, DPD is aiming to bring a similar level of service to returns as it offers on the outbound journey, where it has a premium delivery experience with clear visibility and communication with the customer.
Big players in the logistics world are also making sure they have the capability to cope with, and benefit from the returns market, and if they don’t have the capability internally they’re buying a company who can!
In 2022, global contract logistics company GXO purchased Clipper Logistics, the UK based retail logistics company for a reported $1.3bn. Our recent acquisition by Blue Yonder is another great example of a leading supply chain provider recognising the importance and opportunity that a successful returns strategy can deliver. Blue Yonder chose Doddle deliberately for our returns management and final mile delivery experience. With our expertise plugging their previous product gap they are now able to self-manage the full lifecycle of an online order.
In order to transform the current returns crisis, we desperately need to shift the balance away from the consumer’s role towards a greater reliance on technology throughout the whole reverse logistics chain. It’s not enough any more to give the customer a form in their package, expect them to manually fill in the reason why box, and return the package via the Post Office. This system gives the customer a relatively poor returns experience and the retailer has zero control over what comes back to their processing centre, limited understanding of the volume to plan for, and frequently poor data about why returns are being made.
In contrast, digital returns provide retailers with valuable data and insights into consumer behaviour. This data can be analysed to improve product descriptions, sizing recommendations, and inventory management. Retailers can also identify patterns in returns to address quality issues, ultimately enhancing the overall shopping experience.
By digitising and connecting returns data with order data, retailers can unlock plenty of value in returns, and carriers and 3PLs are in a great position to bring these platforms to their retailer customers.
Carriers that work with their retail customers to prioritise returns, implement user-friendly processes, and leverage data and analytics will not only exceed customer expectations but also gain a competitive edge in the increasingly important returns market.
Bob Griffiths, chief strategy officer, Doddle
