The retail world is full of outside forces that can negatively impact customer experience. In this white paper, we dive into the macro forces that most affect e-commerce businesses and share six tactics that leading logisticians use to mitigate them.
The growth of the e-commerce industry is changing the way businesses of all types operate. As younger generations come into leadership positions and begin dictating purchases, traditional models and operational practices are shifting.
This growth and change is most often discussed in terms of B2C e-commerce brands, but B2B businesses are feeling it, too. The B2B e-commerce market in the U.S. reached the $1 trillion mark for the first time in 2018 and projections show that the $2 trillion milestone could arrive in just a few years.1 That means B2B shippers will need to stay on top of what’s changing and know when to adjust.
In our recent white paper, The Latest Trends in B2B E-Commerce & Shipping, we dig into actionable learnings to help your B2B business do just that. Here, let’s take a high-level look at some of the key trends and opportunities at play in the market.
Here are the latest developments in the B2B shipping market.
Half of all B2B buyers are millennials.2
This generation has had a huge effect on almost every piece of the economy. Now, they are growing into decision-making roles at businesses and have expectations about what a strong, positive B2B relationship looks like.
What this means for you:
Look to B2C shipping and e-commerce practices for inspiration. Millennials grew up with tailored, targeted and increasingly simple buying and shipping experiences. It is likely that, as B2B buyers, they will look for the same standards and values in the businesses from which they buy.
Smart, connected technology is transforming logistics.
As e-commerce evolves, so too does shipping technology. While autonomous vehicles for shipping are further from adoption, others, like Internet of Things devices, are already being implemented. Gartner predicts there will be around “20 billion internet-connected things by 2020. These ‘things’ are not general-purpose devices, such as smartphones and PCs, but dedicated-function objects, such as vending machines, jet engines, connected cards and a myriad of other examples.”3
These devices can help with tracking, optimization, efficiency and more, and they communicate with each other to make automatic adjustments.
What this means for you:
By using technology to optimize your logistics, you can better scale your B2B shipping business and continue to impress clients with fast, informed deliveries. Find ways to incorporate new technologies to assist in scaling operations and potentially cutting down on costs. We suggest specific tools in our white paper on the topic.
Keep your eyes on these opportunities to continue your business’s growth.
Develop a sustainable omni-channel strategy
Tackling omni-channel sales and distribution is an important step toward minimizing waste and maximizing flexibility. Research shows that many B2B companies plan to use online channels for sales and cut down on other methods.4
Once you open your business up to online channels, prepare your operations to answer the potential demand. Make sure you’re ready to fulfill additional orders by evaluating your network of distribution centers and finding ways to streamline logistics concerns.
Build loyalty with an easy returns process
In the B2C e-commerce world, returns are seen as an invaluable place to build loyalty. Companies that make returns easier, simpler and more convenient for customers can win more repeat sales. This is no different, and may even ring truer, in the B2B world.
When a business needs to send something back, it is most often because of a fault with the product, so it matters how quickly the issue can be resolved. Clearly articulate your return policy to avoid unwelcome surprises. Maintain strong communication with your customer. Make it simple to initiate a return, then proactively share information with your customer about the order’s status.
This high-level peek at some of the defining trends and opportunities in the B2B shipping market can help you see how your company could grow in the e-commerce space. Get a more in-depth and actionable look at the market by downloading our white paper, The Latest Trends in B2B E-Commerce & Shipping.
When it comes to the holidays, retail businesses must keep a laser focus on the busiest season of the year. The final months of the year are filled with shipping deadlines, peak shopping days and peak return days. Beyond capitalizing on profits, businesses can get an early start making decisions about stock replenishment, holiday marketing and return communications—all by using the calendar below.1 Print it, bookmark it or download it for easy access in the busy season ahead.
Retailers of every size know the pleasure of making a sale, and the letdown that inevitably comes when a product is returned. Rather than lamenting the loss, companies should dig deep and implement tactics to help them understand the reason for the return. With that knowledge, they can learn how to turn a return into a sale. Read on for a three-step process to do just that.
1 Ask why the item is being returned.
Before you can offer a solution, it’s important to understand the root cause of the return. Empathize with the customer and actively listen to their needs. Implement a protocol, in-store, online and at home. If a customer returns a product in-store, have your employees ask questions about why the product is being returned. If a customer is returning an item through the mail, include a survey in the packaging that asks the same questions, or create a microsite online as part of the returns process, where customers can answer questions as well.
Tip: Set up a Return Merchandise Authorization
Return Merchandise Authorization is a reverse logistics process that requires a customer to contact you before making a return, whether on your website, through email or by phone. This communication allows you to catch the customer in the midst of a return and propose another solution, preventing you from losing a sale.
2 Suggest an alternative.
Once you know the reason for your customer’s return, offer them another, more appropriate product for purchase. Base your recommendation on their answers. If a color or fit was off, show them products better suited to their specific needs in-store and across multiple channels. If you can’t find a replacement product, be sure to let them know of any special promotions going on or try to cross-sell them products from other departments.
Tip: Monitor the products your customers are returning. That way, if you find an item consistently being sent back, you can use return data to understand why it’s defective, if it’s overpriced or just not matching up to its advertising. This will allow you to address the issue and prevent returns in the future.
3 Suggest a gift card or store credit.
If the customer is intent on returning their merchandise without making a purchase, propose in-store credit or a gift card instead of a full refund in cash or on their credit cards. You could also enforce a policy that requires returns to be redeemed as store credit only. That way, the value of the sale can still be used exclusively in store or online.
A healthy returns process is the cornerstone of a successful retail and e-tail business. By studying your customers’ return habits and implementing a system to track the reasons for their returns, you can find multiple avenues to convert their dissatisfaction into another purchase.
With the increasing competition in ecommerce, retailers that offer free shipping, dependable deliveries, accuracy, and free return shipping are potentially more likely to attract customers than those that don’t. While free shipping is an obvious perk, a recent survey discovered that the majority of respondents also consider free returns an important factor in their ecommerce purchase decision.1
53 percent of respondents said they would pick one store over another if the store offer free returns.2
34 percent of respondents revealed they would only purchase from a store if they knew they could return or exchange for free.3
Why Do Customers Love Free Return Shipping?
Aside from the obvious cost-savings, free returns can provide customers with a sense of security. A study found that in 2015 Americans returned more than $260 billion in goods.4 When customers know they don’t have to pay for return shipping, it allows them to be more indecisive, which is particularly useful when shopping online for clothes, shoes and accessories where there are multiple options, sizes, etc.
Companies That Offer Free Returns Boost Customer Satisfaction
By offering free returns, brands convey that their customers’ interests are top of mind, which can help brand loyalty and lead to repeat business. Given the potentially high costs associated with acquiring new customers versus keeping existing customers, companies are smart to consider free return shipping as one way help to increase sales.
Shipping and Returns Can Be Costly for Retailers
However, offering free shipping and returns can be a significant financial undertaking for businesses. Retailers not only have to cover shipping costs, they also need to staff people to inspect returned packages, and if items are damaged, the company will need to pay money to repair or write them off. Additionally, return delays could affect inventory.5 All of these costs add up, which is perhaps why among the Internet Retailer 2017 Top 500, only 13.2 percent of companies offer free returns.6
How to Incorporate Free Return Shipping on a Budget
Free return shipping isn’t a deal breaker. Here are a few strategies that companies can employ to meet their customers’ needs while being mindful of costs:
Be strategic on when you offer free return shipping. Since nearly a quarter of returns occur over the holidays, consider offering free return shipping during windows with lower return volumes.7
If you choose to offer free return shipping, be economical by selecting the most cost effective return option. Of note, it’s unlikely that customers will be concerned about speedy shipping when returning an item unlike when they are receiving an item.8
Use free return shipping as a marketing tool to gain repeat customers.9 This especially works well with retailers selling clothing, shoes and accessories. When customers know they don’t have to pay for returns, they might order multiple items as options and end up keeping more than one.
Remember that free return shipping isn’t the only way to keep customers happy. If your business builds a trustworthy reputation through reliable delivery, your business can still be competitive without undertaking the costs associated with free return shipping.
While offering free return shipping may contribute to building brand loyalty and a competitive advantage, it’s important to evaluate if it makes sense for your business. There are multiple routes to achieving customer satisfaction without breaking the bank. To ensure long-standing success, always think strategically and economically, while keeping customer needs top of mind.
When it comes to the holidays, retail businesses must keep a laser focus on the busiest season of the year. The final months of the year are filled with peak shopping days and peak return days. To help capitalize on profits, we’ve made sure to note 2016’s highest grossing billion-dollar shopping days. Get an early start making decisions about stock replenishment, holiday marketing and return communications—all by using the calendar below. Print it, bookmark it or download it for easy access in the busy season ahead.
Returns are a critical part of the customer experience. A poorly run system can have a major impact on your business. With shopping behaviors changing—from seasonal to on-demand—customers are expecting products to always be available so they can shop whenever they want to. Many companies have had to modify their operations to keep their customers happy. Terry Bicycles, an apparel and bike parts distributor from Vermont, is one of those companies. We spoke to Liz Robert, the company’s CEO, to learn just how Terry Bicycles altered its return strategy to find a better solution for their customers and their business.
How have your customers’ shopping behaviors changed in the last 15 years?
Today’s customers are typically ordering online shortly before an event. Maybe they’re going on a group ride for the weekend. The closer that they order to the date they need the product, the more critical it is that we’re able to respond if the product isn’t satisfactory. The on-demand nature of our consumer has inspired us to be on-demand reactionary.
How has the on-demand shopping model affected the apparel industry?
We have a lot of sizing issues, obviously; it’s technical athletic wear. It’s difficult to get things to fit properly, particularly with a new customer who isn’t familiar with our size charts. We have to be much more responsive in being able to get the product back and replacing it in the correct size or something more suitable for their needs. So it’s not just that the consumer is behaving in a more on-demand fashion with their purchases. Their expectations around getting it right are much higher and require a much quicker turnaround.
How has the on-demand shopping model changed your return strategy?
What’s been impacted is the flow and the fact that we need to respond quickly. I’ve been giving you the consumer’s perspective, and obviously customer satisfaction is very important to us. There is also a benefit to us, as a manufacturer and as a brand, to be able to get that product back as soon as possible, particularly when it’s on demand and particularly as we get deeper and deeper into the season.
Because our products are fashion-oriented, they are very seasonal. So the prints that we create for Spring 2016 are different than the ones that we create for Spring 2017. It’s important to us to sell returned product again at full-price and in the same season.
What challenges do you face in this environment?
Mondays and Tuesdays are our largest return days. They’re also our largest selling days. We can’t afford to have the staff on the phone and in returns to meet that volume on those two days and then have them sitting around and twiddling their thumbs for the last three days of the week. In order to keep our work force flexible, we cross-train individuals in the warehouse. Obviously, our process isn’t perfect, but we try to keep the flow under control and as even as can be without having to hire more people certain days of the week.
How does your warehouse process change to fit this new demand model?
I think the biggest impact that it has on the warehouse process is the need to be able to be flexible by day of the week. We do a lot to cross-train our workforce in the warehouse, so if the phone’s not ringing, we can have people in the calling center help with certain aspects of returns. Vice versa, there are certain people who are involved in pick, pack and ship who can be involved in the returns process—specifically the opportunity to put the product back into inventory.
What tactics do you implement in order to be more responsive?
In the past, up until three or four years ago, we sent out returns information on the packing slip or invoice. It listed the returns department and our address. We posted it on our website, catalog and customer service notes. Now we send out a return label, so customers don’t have to go to the website and find out the return address or take it to the Post Office. They can simply take the label that’s in the package and use it on the same packaging let’s say a pair of shorts arrived in. They’ll put the shorts back in the package with the packing list and send it back. From the consumer’s perspective, it takes many steps out of the processing of the return.
What effect does including a return label in your shipments have on your customers?
Honestly, they prefer it. I would say the majority of our consumers use the pre-printed label, even though it costs them perhaps a few dollars more. We include a small handling fee for arranging and processing, which is why the price is higher. Because of the convenience and again because of the speed at which they’ll be credited for the return, they choose to use the label provided. It’s all about convenience and expediency. We also allow them the option of making the return themselves. This way, if the customer wants to handle the return at the Post Office and not pay the handling fee, they can. It takes the pressure off and that, I think, is very important to them.
What is one thing that surprised you about this new process?
The biggest skepticism I had in doing this was whether or not people would pay more for the convenience of the label. We were extremely surprised that most of our customers now use that label to return the product. It taught us a lesson on the value of convenient service. People will pay for it. That to me was a big breakthrough.
Take a page out of Liz Robert’s book. Even though every company has its own pain points, it must adapt to shopping behaviors. By offering multiple return options, tweaking your warehouse processes and cross-training employees, you too can meet your customer’s ever-growing demands.