Is Your Returns Process Undermining Profitability?

When thinking about order fulfillment, it's easy to forget that the process doesn't end with delivery to the customer. As much as we may wish it were never necessary, the fact is that how your order fulfillment team handles returns processing is as important as how it handles initial fulfillment. A new study from Voxware this week demonstrates just how critical returns processing is. According to their research, which collected responses from 500 consumers, a retailer's handling of the returns process impacts future shopping behavior for an astounding 97% of shoppers.

Other striking statistics from the study include:

  • 73 percent of consumers who receive an incorrect item after already returning it once are much less likely to shop with that retailer for future purchases.
  • 26 percent expect the correct item to be shipped to them within one to two days after returning the incorrect item.
  • 45 percent who experience ongoing return process issues with particular retailers decline shopping with those retailer altogether.

Clearly, handling returns in an effective manner is critical to retail success. In addition to increasing repeat business, effective reverse logistics also reduces charge-backs and customer disputes and complaints.

Unfortunately, it's easier said than done. The returns process is complex and often treated as an afterthought. Unlike new inventory, returns inventory must be received piecemeal as it comes from the consumer. It must be tracked through a process of assessment, and decisions must be made about its fate--will it be returned to inventory, returned to manufacturer, or discarded? Then it must be labeled, repackaged, and delivered to its next destination. Throughout, its status must be tracked and made visible to the entire system. While all of that is occuring, the correct order must be fulfilled accurately and quickly, to satisfy the customer.

An effective order fulfillment system also must solve the problem of the 54% of consumers who make returns due to incorrect size or color. By fixing quality control problems on the front end, returns can be minimized and resources invested in streamlining the returns that do occur.

For more interesting statistics like these, read the study from Supply & Demand Chain Executive.

How does your returns process stack up?
Contact SP Express to see how we can help.