Putting logistics into reverse

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Like all distance selling, online retailing involves a great many returns and customers are already opting for easier ways to send back unwanted good.

It used to be said that retailing was the art of selling goods which don’t come back to customers who do. As mail order companies long ago learned, distance selling involves the return not just of customers but goods – in abundance.

For women’s wear, returns were frequently around 40 per cent with shoppers regularly buying a line in three sizes and then sending back the two which did not fit. In a world where there were two “seasons” a year and styles could remain in stock for several months, such tactics could be managed reasonably well.

Today “distance selling” means online and the same “buy-three-return-two” approach is becoming commonplace – especially for low value, fast fashion lines. Now, if an item is effectively in transit from warehouse to shopper and back again over several weeks it can wreak havoc with stock management, product availability and margins.

Big business

Today, reverse logistics is big business. Estimates of e-commerce returns vary by sector – some quote figures of between 1 and 60 per cent. Certainly that 40 per cent figure for mail order women’s wear is already regularly replicated by online fashion sites. For e-tailers returns can mean lost sales and additional carriage charges – many include a reply paid label for returning goods with their delivery notes.

For international orders it is also often cheaper to simply write off the goods rather than go to the expense of repatriating them.

According to Alek Adamski, associate partner at Kurt Salmon, it is not worth even considering the return of goods worth £10 or under: “If you look at all the international handling costs involved in bringing items back into stock,” he says, “then the goods have to be worth several multiples of £10 before the return is economic.”

Returns can also mean lost customers: a survey by YouGov has found that 58 per cent of consumers would stop buying from a site if they had a poor returns experience. With the competition only a click away keeping shoppers happy is a key priority for online retailers – and that means making returns as straightforward and pain-free as possible.

While a return postage label may be ideal for smaller items, large consignments may need collection by a courier and that can be neither straightforward nor pain-free. Just as consumers want their orders delivered in a timed slot, at weekends or in the evening so collections need to be similarly organised.

Few online shoppers these days are prepared to wait at home all day for a courier to turn up. They increasingly expect a text message or e-mail giving the ETA of any delivery and woe betide any driver who is late – and it will be the same for collections.

Small wonder then that e-tailers and logistics companies have been focusing on alternatives.

Collect Plus is now working with dozens of major e-tailers and more than 5,000 corner shops nationwide where customers can both collect their online orders and leave items for return. According to the company 40 per cent of returns are dropped off at neighbourhood stores in the evenings or at weekends – outside normal Post Office opening times. Parcels are limited to 10kg so the system is not suitable for very large items.

Drop boxes

Others are introducing drop boxes – strategically located locker units where goods can both be delivered and left for collection.

In the UK ByBox now has 18,000 drop boxes at 1,500 locations, as well as 175 hand-over sites, and delivers 20 million parcels a year. To return items, shoppers simply register the return on the website and are sent a unique number.

They then can either print a label or use one contained in their parcel, stick it on the front and return it to their nearest ByBox locker location.

Once the customer has scanned the bar code on the label and entered their unique number, a locker door will open and they simply pop the parcel inside – job done. Although comparatively new in the UK drop box systems are well established in many other parts of Europe and are often the preferred delivery method for shoppers.

“Offering a choice of post or courier is no longer enough,” says Andreas Kopatz, head of product marketing at Intershop. “Online retailers have to offer a drop box option and the shopper simply enters the address of the drop box location as the delivery address.”

With online retail continuing to grow the IMRG estimates total internet sales in 2012 will have reached £77 billion.

With total UK retail sales in 2011 put at around £303 million, and allowing for inflation and minimal growth, that means that online now accounts for almost a quarter of retail activity.

Small wonder retail analysts talk of a “revolution” in the way we shop – and small wonder that demand for efficient reverse logistics will become even greater in the years ahead.

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