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There’s a hidden cost to product returns and it’s being dubbed "trunk time" by reverse logistics provider Newgistics. The time an average returns rides in a customer’s car trunk before being shipped back is 26 days.
There’s a hidden cost to product returns and it’s being dubbed "trunk time" by reverse logistics provider Newgistics Inc. Trunk time, says Doug Kern, vice president of product management, is the time between when a customer decides to return an order and the time it finally gets shipped back, riding around in the customer’s car trunk until a stop at the Post Office or other shipping facility is convenient.
An analysis of 200,000 product returns by Newgistics found that 26 days is the average trunk time for a product return. The range, however, is much broader than the average would indicate, from as short as one day to as long as nine months. Reducing a returned purchase’s trunk time results in two benefits, Kern notes. One is that the item returns to inventory faster, which could preclude having to order additional merchandise to fill orders. The other is the carrying financial cost of the item while it’s waiting to return to inventory.
Newgistics conducted the analysis as part of the promotion for its SmartLabel product, which provides a postage-paid label to consumers and a consolidated return point for retailers. The company analyzed 100,000 returns using the SmartLabel and 100,000 not using it. Newgistics says using the SmartLabel reduces trunk time by a week, bringing the lag down to 19 days.
With the SmartLabel, customers who want to return an item drop it in a mailbox or leave it for their mail carrier. Coding on the package directs it to the appropriate consolidation facility, where Newgistics directs the packages according to the retailer’s instructions. Early retailer adopters of the SmartLabel report strong customer usage.
Retailers can mark up the cost of the postage as way to cover returns expenses, Newgistics says.