“Customer-Centric eCommerce – Part 2”V. New Models: Returning
Moderator: Dr. Ian StanfordPublic Policy Analyst
USPS Office of Inspector General (USPS OIG)
Darren LambDirector of Research &
Business Development
The Colography Group
Tony SciarrottaExecutive Director
The Reverse Logistics Assn
Larisa SummersEVP of E-Commerce and Digital Marketing
Optoro
David LioneSr. Enterprise Account Director
OpenMarket
Returns ManagementA Pivotal Moment for the Package Delivery Industry
Ian StanfordPublic Policy AnalystU.S. Postal Service OIGPostal Vision 2020/7.03/22/2017
A Time of Transition
• In the past, large retailers relied heavily on liquidation.
• Current trends shaping the future of returns logistics
• Rising ecommerce volume
• Access to global markets
• Technology and data
• Shifting consumer preferences
How Most People Think Returns Work
CUSTOMER RETURNS
MAIL BOX STORE ?
How Returns Work
Source: USPS OIG, The Evolving Logistics Landscape and the U.S. Postal Service.
THE RETURNS MARKET
DELIVERY COMPANIES
3PLs
SOFTWARE DEVELOPERS
RETAILERS and MANUFACTURERS
LIQUIDATORSREVERSE SPECIALISTS
WASTE DISPOSAL
Critical Challenges
1. Cross border Returns
2. Integrating Omnichannel Returns
3. Efficient Routing and Return to Market
4. Linking Returns Costs to Customer Experience
5. Design with Millennials in mind
6. Corporate Reorganization
Source: Findings from USPS OIG Returns Forum, Aug. 2016
Source: LuxuryDaily.com
The E-Commerce Hangover: Reverse Logistics
Tony Sciarrotta
Executive [email protected] * 678-662-7767
The Reverse Logistics Associationwww.rla.org
Member Driven Global Trade Group For Returns Solutions
Overview
Make it easy for people to shop online:and oh, they will…
then returns will be 25-40% of sales vs. 8-9% in actual stores.
Landscape for Retailers
• Returns will continue to grow in volume and rate
• E-Commerce will grow as a % and drive overall return rates.
• Retailers will continue to enable returns with the customer
• OEM’s will look to limit their liability
• Regulations will become more onerous.
• Expenses will continue to grow
• Consumers desire for good secondary market product
The Next 5 Years
The Next 5 Years cont.…• Interactive Experience Predictor
(IEP)
• Out-of-Box Experience (OOBE)
• Human Factor Engineers (HFE’S)
• Net Promoter Score (NPS)
• The Reverse Logistics Association– Promoting returns solutions
Questions
Consumer behavior continues to shift:• Ecommerce growing 15% annually
• Ecommerce sales ~$500B by 2018
• 20-30% customer return rate
• Brick and mortar stores shifting to omni-channel
• Buyers expect no-hassle, cross-channel return policies
Customer Returns ~$450B in 2017:
• US GDP = $18T // US Retail = $5T
• 3% of the US economy // 9% of US Retail
• 95% sold on the secondary market
• 400M additional units returned in 2017 from ecommerce alone
RIPPLE EFFECT
What impact is this having on warehouse space? Human resources? 3rd parties? Technology developments? Tracking &
data analysis? Policies? Etc.
eCommerce Growth and Customer Demand Drive Need for
Returns Solutions
The Colography Group, Inc.
March 2017
Prepared ForPostal Vision 2020 7.0
The Colography Group, Inc. PostalVision 2020 7.0 | March 2017 | 2
Company Overview
• The Colography Group, founded in 1983, is a technical research,publishing and consulting company that specializes in the transportationmarket.
• The Colography Group conducts ongoing quantitative empirical researchon shipping establishments all over the world. Since its inception, TheColography Group has interviewed more than 600,000 facilities in 16countries to develop conclusions about the transportation market.
• The methods developed and used to amass shipping data represent allshippers proportionally and is arguably the industry’s most robust set ofdata on the shipping market.
• Our years of experience in sampling the transportation market results, inany given year, statistical confidence levels greater than 90%.
The Colography Group, Inc. PostalVision 2020 7.0 | March 2017 | 3
How are goods returned?
• Of returns that were originally shipped to the customer, 60% of the returns are shipped back either to company or to a 3rd party.
• A large portion of customers make use of taking returns in person to a business location -accounting for 40% of returns.
60%Shipped
40% In Person
Source: The Colography Group’s Business Returns Market Survey ©2016 CGI all rights reserved.
The Colography Group, Inc. PostalVision 2020 7.0 | March 2017 | 4
Where are the shipped returns going?
• The retail industry accounts for a majority of all returns with 55% of the returns being shipped back to retail businesses.
55%Retail
45% Other: Mfg., Whl., Other
Source: The Colography Group’s Business Returns Market Survey ©2016 CGI all rights reserved.
The Colography Group, Inc. PostalVision 2020 7.0 | March 2017 | 5
Source: The Colography Group’s Business Returns Market Survey ©2016 CGI all rights reserved.
What are the reasons for returns?
40%
exchange
20%15%
10%
ordererror
damage/defective product
other
15%
repair/ maintenance
• The most likely reason for having a return is to exchange an item purchased.
The Colography Group, Inc. PostalVision 2020 7.0 | March 2017 | 6
Source: The Colography Group’s Business Returns Market Survey ©2016 CGI all rights reserved.
• For the majority, the business selects the shipping provider for returns.
• Most often, the company considers the reason the item is being returned to determine who pays for the return shipping.
Business SelectsShipping Provider
Customer SelectsShipping Provider
25%
75%
Reason Is A Factor
80%
Reason Is Not A Factor
20%
Who is controlling and paying for the shipped returns?
The Colography Group, Inc. PostalVision 2020 7.0 | March 2017 | 7
Example Of Retailer’s Return Shipping Policy: Williams-Sonoma
Damaged or incorrect items Buyer's remorse
Who determines
return shipment carrier
Return shipment
carrier options
E-Mail return
label option No No
Carrier pickup
return shipment option Yes Yes
Who pays for
return shipment Recipient
Recipient return
shipment charge N/A
$6.50 for small packages
$13.25 for large packages
Reasons for returning an online order
Source: Williams-Sonoma.
The Colography Group, Inc. PostalVision 2020 7.0 | March 2017 | 8
Returns Trends
Large retailers would prefer returns be taken to a retail store.
Items with a low price point are not worth returning.
Some etailers offer cheaper prices in exchange for not
allowing product returns.
Using the offer of free returns helps businesses to promote
certain products. FREE
$
The Colography Group, Inc. PostalVision 2020 7.0 | March 2017 | 9
Thank You
Darren LambThe Colography Group, Inc.
47 Perimeter Center East, Suite 600Atlanta, GA 30346
678.385.2500www.colography.com
© 2017 Optoro, Inc. Proprietary & Confidential
DISTINGUISHING FACT FROM FICTION IN RETAIL RETURN TRENDS
P O S T A L V I S I O N 2 0 2 0
March 2017
Larisa Summers, SVP eCommerce & Digital Marketing, Optoro
P O S T A L V I S I O N 2 0 2 0
WHAT’S A FACT, AND WHAT’S FICTION?
© 2017 Optoro, Inc. Proprietary & Confidential 2
Millennial shoppers
have unique needs
Liquidation solves
returns problems
Omni-channel leads
to complications
Amount of returns is
increasing
Preventing returns
is a priority
P O S T A L V I S I O N 2 0 2 0
AMOUNT OF RETURNS IS INCREASING
© 2017 Optoro, Inc. Proprietary & Confidential 3
Fact
E-COMMERCE HAS MUCH HIGHER RETURN RATES … LEADING TO HIGHER RETURNS VOLUMEReturn rates, bricks vs eCom1 Returns value as % of total retail sales2
Brick & Mortar
5% - 10%
eCommerce
18% - 35%
7.6%7.1%6.7%6.4%6.0%
20182016 202020192017
Retail leaders and investors note growing focus on the
cost of ecommerce returns…[and] the need to minimize
the cost of returns without losing the customer. - Goldman Sachs
Seventh Annual dotCommerce Takeaways, 6/17/16 1Multichannel Merchant and The Retail Equation2Optoro analysis
P O S T A L V I S I O N 2 0 2 0
“OMNI-CHANNEL” CAUSES COMPLICATIONS
© 2017 Optoro, Inc. Proprietary & Confidential 4
Fact
42%online orders shipped from store
Source: Wall Street Journal
90%online orders returned at store
• Make more purchases online
• More likely to interact with brands across
multiple device types (PC, smartphone,
tablet)
• More likely to make a new purchase when
processing a return on the web
P O S T A L V I S I O N 2 0 2 0
MILLENNIAL SHOPPERS HAVE UNIQUE NEEDS
© 2017 Optoro, Inc. Proprietary & Confidential 5
Sources: Pew Research, UPS Pulse of the Online Shopper
Fact
These ‘tech natives’ will become even more prevalent in
years to come, as Generation Z emerges with even
more of the same tendencies.
- UPS Pulse of the Online Shopper, 2016
Loyal Customers
Other Customers
80%
20%
Revenue
P O S T A L V I S I O N 2 0 2 0
IT’S IMPORTANT TO PREVENT RETURNS WHENEVER WE CAN
© 2017 Optoro, Inc. Proprietary & Confidential 6
82%
92%
More likely to makeinitial purchase if
there are free returns
More likely to makefuture purchase if
initial returnexperience was easy
The top reason why consumers who shop only at physical
stores do not shop online is the perception that the returns
process will be a hassle.
– The Evolving Logistics Landscape and the U.S. Postal Service
RETURNS EXPERIENCE CREATES
CUSTOMER LOYALTY
AND LOYAL CUSTOMERS ARE
BETTER CUSTOMERS
FICTION
Sources: USPS Research, Loyalty
P O S T A L V I S I O N 2 0 2 0
INVENTORY LIQUIDATION SOLVES RETURNS PROBLEMS
© 2017 Optoro, Inc. Proprietary & Confidential 7
MYTH
Less than 40% of returns end up being liquidated… … remaining inventory has tremendous hidden cost
Liquidation Other RTV RTS
~ 25% of
value
Sources: Optoro market research and analysis
P O S T A L V I S I O N 2 0 2 0
WHAT’S A FACT, AND WHAT’S FICTION?
© 2017 Optoro, Inc. Proprietary & Confidential 8
Liquidation solves
returns problems
Millennial shoppers
have unique needs
Omni-channel leads
to complications
Amount of returns is
increasing
Preventing returns
is a priority
P O S T A L V I S I O N 2 0 2 0
WHERE CAN RETAILERS FOCUS TO SUCCEED?
© 2017 Optoro, Inc. Proprietary & Confidential 9
• Embrace e-commerce as a growing trend
• Consider how RL can help with omni-channel fulfillment
• Remember the importance of returns for CX and sales
• Keep the full cost of returns in mind, not just recovery
© 2017 Optoro, Inc. Proprietary & Confidential
Thank you.
Larisa SummersSVP, eCommerce & Digital Marketing, Optoro
Postal Vision 2020
March 22, 2017
David Lione
OpenMarket PowerPoint Template 2
80% of companies believe they are
providing a good customer experience
Only 8% of consumers agree
Source: Harvard Business Review
OpenMarket PowerPoint Template 3
Mobile has fractured the consumer journey into hundreds of real-time, intent-driven micro-interactions.
SMS, better known as text messaging, is the only channel that’s optimized for this challenge
The first phase was P2P (person to person) - texts to family, friends, or colleagues, which have been growing steadily for over a decade.
Now, we’re in an enterprise shift, where A2P (application to person) SMS delivers automated text alerts at precisely the right time for literally hundreds of use cases, across each industry vertical.
We call it The Empathetic Interaction, and it’s changing the way companies engage with their customers.
OpenMarket PowerPoint Template 4
EmpatheticInteractions
The Empathetic Interaction is all about seizing the countless invisible opportunities to help your customers whenever they need to know, decide, remember, or do something just when they value it most.
OpenMarket PowerPoint Template 5
That moment when…
…You saved your customer a
trip to the post office because
you let him redirect the
package to his neighbor –
with a simple text.
OpenMarket PowerPoint Template 6
Virtually all We read 95% Millennials
95%
77% of consumers like companies that text!
mobile plans include SMS
of text messages within 3 minutes
text more than they call or email
is overtaking voice for customer service
SMS
Businesses can text-enable any 800 number, so consumers get quick answers and call centers reduce costs
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