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.
A weak returns process can cause chaos. Warehouses get flooded with products waiting to be sorted. Packages sit in limbo whether intact, damaged or expired all together. All the while, customers grow frustrated waiting for their returns to be processed and accounts to be credited.
An inefficient system not only slows operations, it can also cost a company money, by allowing products to depreciate, or perish, in the case of food products. Building a robust reverse logistics flow takes time, but with a few simple steps, any retailer can introduce efficiency into their operations. Here we outline five ways to optimize your returns.
Include a merchandise return label with your shipments.
Make your return experience more convenient by adding a return label to every outgoing package. This can help boost customer satisfaction without breaking the bank, as many return labels do not incur shipping costs until they are used.
Dedicate a space for returns in your warehouse and implement a three-bin system.
Return to supplier. Restock. Discard. By using these three sorting bins for returned merchandise, your warehouse can begin routing the packages in the right direction.
Integrate items from the “Restock” bin back into the stocking process.
Merchandise that can be sold again should enter your forward-moving flow as quickly as possible. Check your bins frequently to ensure that items ready to be restocked are scanned back into the system and made available for purchase.
Keep high-priority and fast-selling items in a buffer zone.
Designate a space for high-priority return items. That way, you won’t spend time moving them to their original storage location, allowing them to be picked for resale more quickly.
Ensure your packaging is sturdy enough to travel back safely.
Poor packaging leads to damage and even loss of merchandise. If you intend for your customers to use the original packaging when returning their purchase, make sure it can handle the wear. Invest in thicker cardboard boxes and tear-proof poly mailers to prevent issues down the line.
Every returns process presents opportunities for improvement. By keeping an eye on your processes’ pain points and introducing new strategies for efficiency, your company can streamline its operations and improve its outbound flow.
More and more customers expect an omni-channel experience. They want the freedom to shop on any channel they choose. They also want the products they love to always be available. To answer these demands, companies have invested in a new fulfillment strategy: Ship from Store. Read on to learn more about today’s consumer mindset and the power of Ship from Store.
After a decades-long career in shipping, including eight years at USPS, Ashok Parasuram knows a thing or two about global expansion. Parasuram, the Manager of International Products and Global Accounts at USPS, has established trade lanes between the United States and Asia, managed freight forwarding at private companies, worked in cargo, the airline industry and more. He’s seen businesses develop global exporting strategies in countries around the world. So we sat down with the industry vet to tap into his experience and learn more about international expansion—from customs to costs.
Some business owners looking to ship internationally wrongly believe that they need exporting licenses. What are some other big exporting misconceptions?
Depending on the nature and value of the commodities being exported, an exporter may or may not require a license. There are several misconceptions about exporting and they usually center on the complexities associated with international trade: specifically, the documentation involved, customs, language, culture, etc. While exporting does require knowledge of a foreign market and the cultural nuances of that country, there are plenty of free or low cost resources that are available to exporters of all sizes. USPS has resources and an international sales team that can assist new and existing exporters with competitive and easy to implement shipping solutions. In addition, the US Department of Commerce (export.gov) and US Census Department (trade.gov) websites contain a lot of important and useful information to assist exporters with any concerns they may have with doing business in a particular country.
How do companies decide which countries to export to? How do customs and taxes fit into that decision?
In many cases, US companies who are new to exporting will typically target English speaking countries. Canada is usually the first country that most companies target as the language, culture and close proximity to the US make that country attractive.
Customs and duty thresholds play a part in the decision making as well. Depending on the country being exported to, the duty free threshold (aka de minimus), the value and nature of the product can impact an exporter’s decision on which country to target. For example, Australia has a duty threshold of $1000 Australian dollars, so almost all ecommerce shipments enter that country duty free. Duty thresholds vary by country so it is important to do one’s research up front.
Is it necessary for these smaller companies to have a large team handling customs?
In my experience, generally not, however, depending on the volume of exports, the company’s international customer base and the nature of the products being shipped, they may need more than one person dedicated to customs. Many of the small and medium-sized companies that I have come across have had one or two people responsible for that aspect of the business. Most of these companies started out small, and eventually grew the size of their export departments in line with the growth of their international business. Depending on volume of exports, the nature of the commodities being shipped, and regulatory environment, some companies hire outside consultants to deal with customs compliance.
Looking to zero in on the biggest issues in global expansion, we tailored the rest of our conversation to the international apparel industry. This area of business boasts success stories from companies small and large. Pulling from his career experience, Parasuram was able to shed light on many facets of global expansion—all through the lens of the apparel industry.
On the Global E-Commerce Apparel Market
First, Parasuram gave a bird’s-eye view of the e-commerce apparel industry, noting the strength of the dollar, and how U.S. exporters function in this economic arena.
Can you describe the current state of the e-commerce apparel market?
Brand name apparel exports to Asia and other emerging areas continue to grow despite the strong dollar. There is a trend among consumers living in countries impacted by the strong dollar to source from countries like China due to the low cost of goods. It’s interesting to note that many apparel importers, who source products offshore, export their products back to the same country where they were manufactured due to the trust that their customers have in US brands. Aside from trust, consumers in some instances purchase from US websites for status reasons.
What types of commodities are sold on the international market?
Depending of course on the country, brand name apparel, home textiles, small electronics, books/media and home furnishings are the types of commodities being exported by companies of all sizes. In general, apparel is the primary product that is being exported.
Where do small and medium-sized apparel businesses export to?
Canada is typically the first market that small and medium-sized businesses target once they enter the international arena. In addition, the EU countries, Japan, Korea, China, Mexico and other emerging markets are common places to export to.
How has the strong dollar affected global apparel exporting?
That depends on the geography and how much the local currency is impacted by the dollar. In the case of Europe, Western Europe with the exception of the UK has been impacted negatively. To combat the weakening of local currencies, consumers in South America and Europe have been purchasing directly from China. Despite that, there is plenty of opportunity for US based apparel exporters.
On International Returns
Understanding the challenges of shipping returns across borders, Parasuram zeroed in on the biggest pain points exporters face.
Let’s take a more granular look at global shipping. When it comes to international returns, do small apparel businesses offer them and, if so, do they charge for them?
It really depends on the commodity and value of the product. In certain parts of the world like Latin America, returns aren’t as big a factor because consumers prefer to resell their online purchase locally. There are markets like Europe where it is very important to offer returns. In that region, not offering a return service can negatively impact an exporter’s business. The cost of returns can vary and vary by retailer as well. In many cases, high-end retailers offer free or low-cost returns options.
What are the greatest operational challenges that apparel companies face when it comes to returns?
In my experience, customs can be challenging, however, if a commodity is exported to a particular country through a shipping company, the return should preferably be handled by that same shipping company to facilitate easy customs clearance.
The cost of returns can be a challenge for many online sellers. Depending on where the return is being exported from, the shipping cost can sometimes outweigh the cost of the product. The USPS is in the process of developing returns solutions that will address the needs of the e-commerce marketplace. For undeliverable and incorrectly addressed mail and parcels, shipments made through Priority Mail Express International® service (PMEI) are returned free of charge.
On Shipping Costs & Expansion Strategies
Finally, Parasuram spoke to the price of shipping and how companies, both small and large, have doubled their exports in the last five years.
Let’s transition the conversation over to another important subject – shipping costs. How do apparel companies deal with the high cost of shipping internationally?
Dealing with shipping costs is not industry specific, but a universal concern. Unlike many shipping companies, USPS does not levy surcharges, so shippers are better equipped to predict and manage their shipping costs. This predictability enables companies to keep the price of their products consistent and more attractive to prospective customers.
Have you seen apparel companies fold the cost of shipping into the price of the product?
In my experience, depending on the value of a brand and product, companies may include the cost of shipping into the product price. This is very typical among high end apparel brands.
Do you think limiting the types of products an apparel company sells internationally can help ease the expansion process?
In my experience, companies who are new to the international market place will test their products and depending on demand, will either reduce or expand the number of lines offered online.
Consumer expectations are changing faster than ever. To achieve success, a retailer must meet or exceed these needs ahead of the consumer, especially when it comes to shipping costs. For this reason, Ship from Store is one of the most invested in omni-channel opportunities today.1
In the Ship from Store Webinar, guest speaker Brendan Witcher of Forrester Research and Jim McNally of the USPS shared their industry perspective on the popular fulfillment strategy, with McNally focusing on the USPS’ ability to meet Ship from Store needs.
Explore some related shipping content.
Your shipping processes can have a major impact on your bottom line. Get tips and strategies to boost efficiency, conduct invoice audits, and more.
In this interview series, the USPS will share the unique knowledge and insights it has gained from serving businesses, both small and large.
Acing return logistics presents its fair share of challenges for any-size business. How does a company measure the success of their return model? What steps can it take to combat higher-than-average return rates? The average retailer must answer these questions and more to keep their business afloat. Finding the answers can be time-consuming and frustrating, so we’ve brought the key information to you. Here we talk to the Director of Operations Integration at the USPS, Jim McNally, about the worth of analytics, loyalty programs and how to leverage your return rates.
What are the cornerstones of a good return strategy?
The answer depends on a company’s business model. At the end of the day, what experience does a company want the customer to have? That depends on customer needs and business needs. For some, returns are a function of revenue. One of the fastest-growing industries is saliva swab DNA testing. Companies in that sector want to see 100% of their shipments returned. As a result, they focus on providing crystal-clear instructions and pre-paid envelopes as incentives.
If you look at standard retail clothing companies, returns are also part of the business. Though these retailers want to keep returns down, they understand some customer groups tend to buy things in multiple sizes and multiple colors, and so they institute a liberal returns policy to keep their customers shopping. In comparison, electronics or appliance companies would rather keep their return rates low to cut back on expensive shipping costs. They’d rather customers call into a service line before sending anything back. Whatever strategy a company settles on, it’s important to strive for simplicity. This will drive additional loyalty and revenue.
What data should a company analyze?
First off, you want to know your return rates. Restocking charges can weigh a business down. Data can help you combat high return rates. The more sophisticated your measurements are, the easier it’ll be to pinpoint your problem areas. Trunk time is an important factor any business should consider. It indicates how long the shipment sits at the customer’s home before it’s dropped back into the mail stream. Being able to measure that time will help you understand whether or not you should include a late fee for packages sent back after a certain date. This will help you restock as frequently as possible.
Companies should also look to qualitative factors. Is one product being returned all the time? Is sizing becoming a major concern? Reading customer feedback and reviews can offer clues to these issues. Maybe it can help you improve the way you message something on your website. Maybe it’ll push you to include sizing guidelines. Studying this collected data can help a company improve its return rate over time.
Where can a company find this return data?
There are simple ways to do this. Companies can measure trunk time and transit times by printing their own return labels and utilizing the tracking information available to them. For those looking to get to the heart of their numbers, they could consider investing in a shipping software provider. These providers can support you with analytics to help you better manage your cost and services. They can help you collect the nitty gritty data. In some cases, they can even help gather information by product. For example, if you’re a mom-and-pop shop with a jewelry line and a shoe line, your reports could be separated by ounce-based returns and pound-based returns.
How should a company manage shipping costs?
We’ve seen this done a few ways. One company wanted their products to be at the top of the search engines, so they priced their items low and charged for shipping. Another company sold similar items but at a higher price point that included the shipping costs. Their items may have been more expensive, but as a result, the company was able to offer free shipping. Why take this route? They believed a liberal shipping policy would allow customers to order more items, which would result in higher profit margins. Some companies go even further and offer free return shipping as an even greater incentive for customers to shop with them. The fact is many shoppers seek out the cheapest shipping options available before choosing a retailer. In the end, a company should weigh the pros and cons of these strategies and consider their own long-term priorities before deciding which choice is best for them.
How can a business leverage credentialed accounts and loyalty programs to improve their return process?
Credentialed accounts are saved customer accounts with valid login and credit card information. When it comes to shipping, companies can use the data in these accounts—everything from order history to credit card information—to handle and optimize a return. How? From order history, they know exactly what weight the returns will be, because on the back end they have stock-keeping units, or SKUs, with all that information.
If they’re dealing with repeat customers or preferred customers who pay for a higher-level service, as soon as they see the tracking number for the return shipment hit the mail stream, they can credit the customer’s payment source. Any company with a strong loyalty program has the option to give credit immediately versus doing it at a later time, once they receive and scan the package in their shipping area. Refund time can have a profound effect on customer experience. Being able to offer your loyal shoppers an almost immediate refund leaves a positive impression, and may push them to frequent your business in the future.
How can a company make their warehouse return process more efficient?
It’s important to designate special areas for returns. A company doesn’t know which products are coming back when. If they have a catalog with a lot of SKUs, they could have pieces worth $25 and pieces worth $900 sitting in their returns area. To keep the packages safe and separate from outbound shipments, companies should, at a minimum, lock them in cages or keep them in a designated space. That way, you don’t mix them in with your outbound operations. To help ease this process, a company should also dedicate a special person or group of people to handle the products in the cage or designated area. They should be the ones to scan the products and ultimately restock them.
How can a home try-on company improve their refinement process?
We actually touched upon this with one of our clients a couple of weeks ago. Their clothing club business functions off stylist suggestions and algorithms. As the algorithm grows stronger, stylists are able to make smarter product decisions and the refinement process becomes more efficient. Here’s how they do it. Working off customers’ profiles, the company sends products tailored to their preferences. Once someone returns the shipment, the company keeps track of what’s sent back, plus any comments customers submit about what they liked and what they didn’t like. The algorithm then becomes more and more intelligent as the customers deepen their relationship with the company. As a result, customers are sent products they’re more likely to purchase, and profits go up. Not all companies will be able to invest in an algorithm, but including questionnaires on return forms can help a business learn more about their customers’ preferences and understand why their products are being sent back.
How else can returns help a business keep margins down?
Companies that see, through tracking, a large amount of returns coming back can plan around that volume. They can hire people to handle these difficult times. There’s nothing worse than being understaffed during the holidays or after the holidays—a big returns season. All of a sudden the volume is too high to handle, and there’s not enough personnel to keep your return process working smoothly. You need those extra hands to get your products restocked in a speedy manner. When dealing with temporary workers, companies should look at their return rates to help decide exactly how many people to hire.
A strong return strategy is instrumental to any retail business, especially a growing one. It’s important to nail logistics, look at analytics and tackle inefficiencies. Mastering these aspects will only make your business stronger, your profits higher and your customers happier.
Companies with return-based business models have become increasingly popular and profitable in recent years. The home test-kit industry, for one, is booming. The home test-kit model, which pivots on returns, allows customers to complete test kits in the privacy of their own home, then send them to a lab to get their results. In only a few decades, many businesses have found success in this niche market.
The Rise of Home Testing
It all began with the pregnancy test kit. Before the advent of the modern pregnancy test, women had to send their tests directly to the lab. The success of this very first at-home test kit led to the development of DNA tests. Home tests followed soon after. At the same time, e-commerce was on the rise — all key factors that spurred growth for the home test-kit industry. Today, the applications are numerous and span countless fields of business, from personal health to home safety.
As evidenced by the graphic, home test kits require an intricate return model with complex shipping and return needs. For such a process, simplicity is key. Brand loyalty is earned in the many touch points between the company and the customers. To make the model work, a business should study companies that have nailed the process. The best of the best spell out their customer journey in a few simple steps — explaining each stage, the price of the return, how long customers will have to wait to get their results. Some include a section of frequently asked questions. There they answer pressing questions about how the tests work, how a customer can access their results and more. To counteract the off-putting effect of bad returns processes, companies must create a convenient experience for their customers with clear communication at the final results stage.
Planning for Peace of Mind
Those interested in starting a home test-kit business usually start by mapping out their customer journey. This insightful practice can help a company learn how to serve its clients and ultimately boost its sales. Once customers have completed their test kit, how will they send it back? When it comes to returns, there are many options available to the modern business:
- Hand-Off: In this interaction, customers can hand off the test kit directly to their mail carrier. This is a low-effort option that nixes their travel time.
- Pickup: Here, a customer can schedule a pickup at a time that is most convenient to them. This tailors the experience to their needs.
- Drop-Off: Finally, a drop-off option allows customers to get the ball rolling by immediately bringing the kit to the shipping center.
Getting the Results
In a typical e-commerce transaction, refunds and refund time have a major impact on the customer experience. For the home test-kit model, results play a parallel role. Many companies set clear expectations from the get-go. This ensures that customers understand how long it will take to process and determine the results of the test. Those that provide results through multiple channels — e-mail, website or mail — make the process even easier for the customer. Creating a system with multiple access points gives customers control. Clearly communicating these policies in the early stages of the marketing journey allows for an even greater conversion rate. In-the-know customers are, of course, happy customers.
Home test kits provide an invaluable service for users. Though the process is complex, when done right, a good shipping experience delivers better results for everyone. Learn more about how an optimized return strategy can positively affect your bottom line.