E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
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Online auctions, for instance, have grown in importance as retailers have discovered that they can recover 50-75% of the retail price of a product by selling at auction instead of selling to a liquidator, where they might recover 10-25%. NewRoads has created partnerships with other providers that allow it to sell items at online auction. Selling at auction comes at a higher price-$4-6 per item-than liquidation’s $2-3, but is worth it , Himes says. “It doesn’t work for items selling for under $20 or so, but once you hit $30 or $40, the reclamation process becomes important.”
Outsourcers also inspect and test merchandise and return to the retailer for re-sale when appropriate.
Newgistics introduced SmartLabel about a year ago. So far, it has been well received by retailers, Newgistics reports. Retailers include a SmartLabel with a business reply indicia and a barcode that represents the customer and the order. Customers returning an item affix the label to the package, then drop it in a mailbox or give it to a mail carrier. The retailer deducts the cost of the return postage-with or without a mark-up at the retailer’s discretion-from the returned merchandise credit. Aerosoles, for instances, charges $6.95 for one item, $8.95 for two, $10.95 for three and $12.95 for four.
Customers can, of course, still place their own label on a package and mail it themselves. Yet, 70% of customers who have the SmartLabel option use it, Newgistics says, a rate reflected at Aerosoles, Garriss says. “We make it really easy,” Kern says. In addition to better customer service and quicker disposition of the product, the SmartLabel offers other benefits, says Jonathan Dampier, Newgistics vice president of marketing. For one thing, it reduces what Newgistics has dubbed “trunk time,” the lag time between when a customer receives an order and gets around to taking it to the Post Office or a UPS or FedEx facility. With the SmartLabel, retailers are receiving returned merchandise an average of 19 days after the customer receives the package vs. 26 days without SmartLabel.
More e-mail communications
Another benefit is that the SmartLabel system can generate an e-mail to the customer that the returned product has been received. “It allows retailers to use returns as another touchpoint in its overall marketing communications process,” Dampier says.
NewRoads stresses that its returns process fits into the overall services that NewRoads provides, which includes warehousing, fulfillment and customer service. “Returns can’t be just a niche that a company serves,” Himes says. “It’s too important to the overall level of customer satisfaction.” Thus NewRoads has integrated the returns process into its other warehouse operations and is starting on an automation plan. It recently beefed up the returns portion of its Chattanooga, Tenn., warehouse, where it has dedicated some of its docks to returns and automated the movement and sorting of packages in the warehouse.
The upgrade of the Chattanooga facility will be completed by the end of this quarter, Himes says, and NewRoads will be looking at automating its other warehouses. “Retailers handling returns only for themselves have a hard time investing in automation,” Himes says. “We have the volume, so it becomes a productivity issue for us to invest in automation.”
No matter the approach, however, returns continue to be an important part of the online shopping experience and probably will be so for some time. “We are looking for ways to enhance the shopping experience, through bricks and mortar, catalogs and the Internet,” says Garriss of Aerosoles. “Having a hassle-free return is important to that.”