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

Parcel returns season is coming after the peak shipping season.

Managing parcel returns at historic levels is costly. 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. With all signs indicating the 2021 holiday season rush will outpace prior years, shippers need to know a few things about reverse logistics in this age of e-commerce. 

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 costs can quickly spiral out of control. Was the item returned to a brick-and-mortar location? Does it need home pickup or simply another mailing sleeve? 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 1-7 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 return costs 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, another issue is whether the shipment’s estimated time of arrival (ETA) aligns with actual arrival. If the item arrives late, the customer already has a poor experience. The slightest additional issue could push that customer to initiate a return. Most importantly, customers are more likely to blame the shipper (not the carrier) when an item arrives late, says The Business Journals. That’s why it’s in the best interest of shippers to look for the fastest way to get a package to customers without sacrificing experience or profitability.

There’s an absolute need for ongoing routing optimization throughout transportation. Fast, optimal e-commerce fulfillment, leveraging all modes really reduces parcel returns risk by getting packages to their destinations on time. Ironically, an optimal supply chain 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 Returns 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 5 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 returns processing by integrating your returns management authorization (RMA) process within the TMS. MercuryGate leverages MercuryMyEZClaim to eliminate delays in submitting, processing, and paying claims.
  4. Continuously capture data on shipping rates, including parcel, and leverage a real-time freight rate index to recognize how total spend will change as peak season progresses. Keep customers updated regarding shipping costs along the way.
  5. Digitize document and parcel management simultaneously with link-based attachment uploads. This allows couriers to capture signatures, upload proof of delivery or pick-up, and share an update based on the full context of the delivery. The TMS retains all relevant paperwork together.

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. That means 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. Learn how 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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