DC Velocity - IdeaBook 2014

C onsumers who buy merchandise online oftentimes return all or part of their orders, and when they do, they expect that transaction to be a breeze. Free shipping, preprinted labels, instant return authorizations, and the option to return e-commerce merchandise to brick-and-mortar stores have become mandatory for e-tailers if they expect to stay in the game.

That was abundantly clear in UPS Pulse of the Online Shopper: A Customer Experience Study, a survey of 3,000 consumers conducted by the research firm comScore Inc. earlier this year. Nearly two-thirds ( 62 percent) of respondents said they have returned products they purchased online, up 11 percent from the previous year. Eighty-two percent said they would be more likely to complete an online purchase if they knew they could return the item to a store or have free shipping for returns; 67 percent said they would buy more from a retailer that offers hassle-free returns. Returns can be a deal-breaker too: 48 percent would drop a retailer with a less-than-easy returns process.

Therein lies the source of a reverse logistics
“vicious cycle.” In order to attract and retain
customers, online retailers must accede to con-
sumers’ demands for quick, easy, and no-cost
returns. Yet by doing so, they encourage their
customers to return purchases. As the consulting
firm Tompkins International noted in a recent
commentary on its website, consumers knowingly
order more products and different sizes than they
need because “they understand that the return
will not cost them.”
That’s why the volume of e-commerce returns
is growing, and knowing how to manage them is
becoming an imperative for an increasing number
of warehouses and DCs. There are some differ-
ences, though, between reverse logistics for online
purchases and goods sold through more tradition-
al retail channels. What follows is a look at those