Parcel Returns and Reverse Logistics: Getting Ready for Holiday Returns Season

Parcel Returns and Reverse Logistics: Getting Ready for Holiday Returns Season

Managing returns is among the costliest of supply chain processes, and many supply chain professionals understand how much processing a single return can cost. Believe it or not, the average return costs 59% of an item’s original price, according to NBC News, and with all signs indicating the 2021 holiday season rush will outpace prior years, shippers need to know a few things about reverse logistics and parcel returns in this age of e-commerce dominance. Combined with the ongoing increases in shipping over recent years, it’s easy to see how quickly parcel returns can add to reverse logistics costs and undermine operational efficiency. Let’s take a closer look at what you need to know about parcel returns in anticipation of peak season, how e-commerce is impacting them, and what to do now to prepare for parcel returns management.

A Primer on Parcel Returns, Reverse Logistics, and Peak Season

Parcel returns are complex. Depending on the method of return, such as returning an item to a brick-and-mortar shipping location or requesting a home pickup, the costs can quickly spiral out of control. Parcel returns are closely tied to the overall flow of e-commerce goods. Remember that e-commerce growth amounts to a greater risk for returns. Why?

As noted by Forbes:

“E-commerce returns are much higher than those from brick-and-mortar stores, and are a significant but necessary cost of doing business for online retailers. While returns vary greatly by category, online returns are about 25-30% of e-commerce sales whereas physical store returns hover between 8-10%.”
Meanwhile, customers “want an easy return experience and 70% of consumers make a purchasing decision based on the return policy at the retailer; 60% of customers expect returns to be handled within one to seven days which puts further stress on retailers to meet these high customer expectations; 92% of customers will shop again if the returns were easy and most shoppers want to return items at a physical location without having to print, pack, and ship returns back to the retailer.”
As a result, it’s impossible to have more e-commerce without increased parcel returns and a need for a stronger focus on reverse logistics. However, there’s another issue at play.

Fast, Optimal E-Commerce Fulfillment Amounts to Reduced Returns Risk

There’s an assumption in logistics: e-commerce return rates remain high due to buyer’s remorse. But take a moment to consider the real customer experience. Buyer’s remorse occurs when a customer has ample time to think about whether he truly wants an item. Therefore, a longer delivery window opens the door to a greater chance for a return due to buyer’s remorse.
However, the other issue is whether or not the shipment’s estimated time of arrival (ETA) aligns with actual arrival. If the item arrives late, the customer already has a sour taste for the experience, and the slightest additional issue could push the customer to initiate a return. Most importantly, customers are more likely to blame the shipper and not the carrier when an item arrives late, says The Business Journals. That’s why it’s in the best interest of shippers to continuously look for the fastest way to get a package to customers without sacrificing the quality of the experience or profitability.
There’s an absolute need for ongoing routing optimization throughout transportation. Thus, fast, optimal e-commerce fulfillment, leveraging all modes is the only way to really reduce returns risk by getting packages to their destinations on time. Ironically, an optimal supply chain also results in efficiency gains that help to shorten the delivery window as well.

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How Shippers Can Prepare Earlier and Enable Effective Parcel Management

With all the pressure to get more shipments delivered faster, it can be difficult to visualize and enable effective parcel management. Even if throughput and on-time deliveries increase, the risk of a return is omnipresent. Fortunately, shippers can gain control over parcel returns management by following these steps:
  1. Increase the flexibility of your parcel courier network with a transportation management system (TMS) that continuously analyzes and re-evaluates pick-ups and drop-offs based on real-time data.
  2. Recognize that the blending of pick-ups and drop-offs means couriers must handle returns coming back through the reverse logistics flow, and shippers need to receive notice of these pick-ups in real-time as well.
  3. Streamline processing of returns by integrating your returns management authorization (RMA) process within the TMS, such as the way MercuryGate leverages MercuryMyEZClaim to eliminate delays in submitting, processing, and paying claims.
  4. Continuously capture data on shipping rates, including parcel and leveraging a real-time freight rate index, to recognize how total spend will change as peak season progresses. You must also keep customers updated regarding shipping costs along the way.
  5. Digitize document and parcel management simultaneously with link-based attachment uploads that allow couriers to capture signatures, upload proof of delivery or pick-up, and share an update based on the full context with all relevant paperwork retained with the TMS.

Be Ready for Holiday Returns Season With an End-to-End TMS

The 2021 holiday shopping season is shaping up to be a game-changer, and that will inherently mean a record-setting parcel returns season as well. It’s time to re-invigorate your approach to both the forward and reverse logistics flow of the final mile, regardless of whether that’s with B2B or D2C transactions. Check out how the MercuryGate TMS empowers your team before, during, and after the holiday shopping season.

Request a MercuryGate demo to get started today

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