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July 12, 2024
Can Doorstep Returns Streamline the Returns Process?
Sway, a startup specializing in doorstep returns, recently netted $19.5 million in a funding round as many retailers are increasingly seeing advantages in speeding the returns process by picking up packages from customers’ homes.
During holiday 2022, Walmart added a “Return Pickup from Home” option as a perk for Walmart+ members. Walmart said at the time, “Walmart+ members will be able to schedule a return from the comfort of their home and complete the process without having to leave their doorstep. Members won’t need to provide a box or a label — simply hand off the return to one of our delivery drivers, and Walmart will handle the rest.”
Last year, DoorDash began offering doorstep returns for packages going to UPS, FedEx, and USPS. Returns management software provider Optoro also announced last year that it was adding “Home Pick-ups” to its Express Returns program for retailers.
For consumers, doorstep returns promise the convenience of box-less, label-less returns without leaving their homes, potentially offering a goodwill boost for retailers. A survey of 1,000 online shoppers in 2023 from Veho, a last-mile logistics platform that supports doorstep returns, found that nearly half (49.2%) would be more likely to shop with a brand that allows customers to make doorstep returns.
Sway, formerly Returnmates, also offers doorstep exchanges with its overall gig-driver model supported by next-day and two-day delivery services. Sway’s co-founder and CEO Eric Wimer said, “When you maintain an open channel with the shopper, deliver their package seamlessly, and pick up their return if it doesn’t work out, you redefine the shopper’s relationship with the brand.”
For retailers, Sway said that returns handled through its network are consolidated and shipped back quickly, thus reducing per-unit costs by 15% and shortening cycle times from seven to less than three days.
Optoro said that its Express Returns program with doorstep pick-ups “improves processing speed by directly connecting return and pick up data to the warehouse, and by returning inventory faster to stock, keeps returns out of landfills too.”
A Wall Street Journal Video piece last year indicated that luxury retailers are more likely to offer doorstep returns as a free option since they have less inventory and more to lose if a pricier item gets bogged down in the returns process. However, doorstep returns may make sense for many retailers, with an Optoro 2023 report finding the majority of retailers stating that it costs between 20% and 39% of an item’s price to process it as a return.
“All the value of getting a return back faster accrues to the retailer,” Christian Piller, co-founder and chief commercial officer at inventory management startup Pollen Technologies, told the WSJ. “There’s no reason to charge the consumer another subscription fee or per package pickup fee.”
The interest in doorstep returns comes as retailers are increasingly adding restrictions or charging fees to offset the costs of returns.
Discussion Questions
Can doorstep returns be a better way to manage the costs and environmental toll of retail returns?
Do you see the doorstep return process working smoothly and offering enough appeal for consumers?
Should doorstep returns be offered as a free perk or will it need to be subsidized with a fee?
Poll
Loading …BrainTrust
Bob Amster
Principal, Retail Technology Group
Georganne Bender
Principal, KIZER & BENDER Speaking
Cathy Hotka
Principal, Cathy Hotka & Associates
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Doorstep returns are great for the shopper as they’re convenience and hassle free. That can improve the customer experience and increase confidence and loyalty in online ordering. There are also some advantages for the retailer as returns can be directly integrated with distribution center operations. The downside is cost. It costs money to handle and process returns, especially if a doorstep service is offered. These costs are arguably part and parcel of doing business online, but they deplete margins. That’s why more retailers are charging for returns.
There are a lot of costs involved with returns, and some methods are surely “better” than others, but isn’t the main problem with the return itself? At the basic level, it’s inherently an example of failure. So while this method may be easier, I’m not sure “easier” is ultimately what we should be aiming for…it just encourages what we really don’t want to have happen.
No matter how they’re processed, returns are a drag on the business and immensely costly. Retailers should concentrate on process improvements that can render returns irrelevant, like predictable sizes and more accurate product descriptions.
As a consumer, doorstep returns sounds like a great idea, and for me, a consumer who constantly forgets to return things until it’s too late, a money saver. At present, returns are a big issue for retailers. Why make it easier for shoppers to do anything that you already know is a major pain point?
Doorstep returns are viewed as a major perk by consumers and will enhance greater sales.
Doorstep returns could mitigate the process assymetry between order deliveries and returns.
I think they make sense for orders above a certain dollar value. Customers know it’s a drag to repack an item and make a special trip to a drop-off point.
Since the delivery vans are already passing by their doors every day, they may well be the quickest and most efficient way to get items back into inventory.
Those same delivery vehicles could also be making ride-along deliveries from local merchants, another way of making every mile count.
Doorstep returns removes a huge pain-point for customers, saving them time and money. Offering the service for free as a perk to attract or retain customers would be even more attractive and compelling. So the value proposition to consumers is obvious and clear, but the question remains: can companies that offer these services be sustainably profitable? It’s one thing to attract investment and generate top-line revenue, but if you can’t be profitable, then it’s not sustainable. Any firm that can offer doorstep returns service and be profitable will have the makings of a very successful venture.
Doorstep returns pick-up will really work if retailers charge for the service. There is a value to the customer – don’t have to go anywhere to return an item – and that has a value. That value should be reflected in a fee. Retailers cannot continue to offer free returns ad infinitum, let alone doorstep pick-up.
I see the doorstep return process working smoothly and offering significant appeal for consumers, especially with the convenience of not needing a box or label. It’s a hassle-free experience that many shoppers would appreciate. Plus, the items can be examined for damage, tags etc. right at the doorstep, so that it doesn’t end up in landfill at later stage.
However, whether it should be a free perk or subsidized with a fee depends on the retailer’s strategy. For high-end brands, offering it for free might enhance customer loyalty. For others, a small fee could help offset costs while still providing added convenience.
Just another reason to not leave the house. Ever. No wonder loneliness is apparent in such epic proportions, at least according to the Surgeon General.
There is no “one approach fits all” for returns. Doorstep pickup is a valuable offering for many retailers, and it significantly shortens the return timeframe, getting inventory back to stock faster than ever. (Considering inventory is the largest capex for retailers, this can reduce their need to overpurchase to reduce stockouts.) While there are higher operational costs with this white-glove approach, retailers need to diversify their returns options and convenience and costs, but always have ONE free option for price sensitive consumers.
The challenge with making returns process easier is that it may increase the returns you need to handle – and hence the cost.
In the days of in-store only shopping, if you needed to return something there was friction involved in that you made the journey back to the retail store. This may make you think twice before buying. Add in to that the fact that when you buy clothes on line you may buy different sizes – knowing your will return at least one – and when you reduce returns friction for the consumer you may increase your returns needs.
In reality this is not a new issue – I worked with a catalogue clothing retailer 15 years ago where returns volumes were a larger source of inventory supply than any single vendor.
As a consumer doorstep returns are amazing. Amazon provide these in the UK in partnership with Royal Mail – who visit homes every day anyway – for smaller items this minimises the environmental footprint.
In the digital era, free returns have undoubtedly become more costly and inefficient for retailers. Doorstep returns, though incredibly convenient for the customer, put even more burden on the retailer, often requiring outsourcing to a third-party partner that cuts into already shrinking margins.
As the data shows, consumers are attracted to the convenience of free doorstep pick-ups, but given the high volume of returns for enterprise retailers, the financial impact is just too costly. Once a fee is factored in, many consumers will likely choose an alternative return method, such as in-store drop-off, defeating the purpose of implementing such a program.