What’s the answer for costly online returns?
A new survey from HRC Advisory (HRC) identified online returns — with their high occurrence and direct and indirect costs — as the biggest pain point facing retailers seeking to transform their supply chains to a customer-centric, omnichannel model.
In the survey of 20 North American supply chain executives from a wide range of retailers, 95 percent said their biggest issue in transforming their supply chain was how to mitigate online returns.
The survey found online returns can run as high as 30 percent and "be quite expensive," according to the statement from HRC, the retail advisory firm.
Of the supply chain executives, 85 percent noted the high cost of online returns to a store, particularly when the item is not carried in that store. When returned to a fulfillment center or supplier, retailers incur incremental freight costs, the possibility of shipping-related product damage, as well as a lost opportunity for a replacement sale in-store, HRC noted.
HRC said all of the retailers surveyed agreed that fully integrating inventory and fulfillment between the online and physical store channels would help overall omnichannel logistical challenges.
However, the study found stores greatly held back by outdated systems and infrastructure:
- About half (52 percent) admitted that they do not have the systems in place to provide the required visibility to inventory in each store;
- Only 35 percent had online capabilities such as vendor drop ship, or order in-store and deliver to the customer;
- More than half (55 percent) of the retailers continue to have dedicated fulfillment facilities for each channel. Only 25 percent of these retailers are launching initiatives to combine these;
- Only half of the retailers are able to ensure fulfillment from the closest location when an item is available in multiple locations and distribution centers;
- Only 53 percent of retailers are currently able to present customers with accurate inventory information and to fulfill the entire order at the time of online purchase.
The findings come as countless surveys have shown consumers have high expectations for friendly return policies. A survey of 1,000 consumers sponsored by Synchrony Financial in May 2015 found hassle free returns was noted by 41 percent of respondents as important, with favorite benefits such as no time limit, no need for a receipt and free postage on returns.
- Retailers Found Unprepared to Meet "I Want It Now" Consumer Demand – HRC Advisory/Business Wire
- Four Key Customer Experiences Drive Long-term Loyalty for Retailers Synchrony Financial Study Finds – Synchrony Financial/Business Wire
Which supply chain enhancements would do the most to reduce the losses caused by online returns? Do you see return policies needing to tighten in order to reduce the burden of online returns?