Global parcel delivery provider UPS designated yesterday as National Returns Day, and with good reason. It marks the busiest day for customer returning their goods from holiday online purchases and further reflects that just as online sales have driven permanent shifts in consumer shopping habits, holiday returns are also an important logistics factor. UPS alone expects to handle returns involving more than a million packages.
UPS executives Jim Brill writes that just as significant are the two peak online shopping days of Black Friday and Cyber Monday, there are also twin surge periods for online customer returns. Data collected by UPS for the years 2012 thru 2015 indicate that online consumers are returning items earlier, creating two peak periods. The first spike in mid-December reflects online Black Friday weekend purchases while this week, December purchases peak with customer returns. Consumers further demand that the returns process be easy and convenient.
Forecasting firms point to 2015 online sales as being anywhere from 15 to 20 percent higher than that experienced in 2014. As much as 25 percent of such purchases are returned by consumers, thus the final tally of revenue and profitability is very dependent on assessment of returns.
UPS cites studies indicating that expenses related to customer returns impact anywhere from 20 to as much as 65 percent of the cost of goods sold. UPS executive Brill further observes that in today’s Omni channel environment, the way returns are managed and communicated can have a high impact on customer satisfaction, brand reputation and retailer profitability. Other important insights relate to reverse logistics strategies that move goods from a return to saleable merchandise as quickly as possible. There are now booming secondary markets including salvage centers and auction firms that recover value from returned goods.
We extend a Supply Chain Matters “Tip of the Hat” to all providers who manage reverse supply chains, allowing retailers and online providers to expand their online presence. Just as important as the convenience that consumers seek in buying online, equally if not more important is the convenience of being able to painlessly return goods.